Wayne Lasinski, who oversees a 22-vehicle fleet as general manager for Standard Parking in Chicago, came to the Fleet Expo 2000 conference with one general purpose in mind.

“I came to see what fleet management software is available,” Lasinski said.

Another Fleet Expo attendee was Mike Reisin- ger, fleet & maintenance supervisor for Tampa Armature Works in Tampa, FL, who oversees 200 vehicles, mostly trucks and vans. “Our fleet has grown 15 percent over the past year due to expansion,” Reisinger said.

And Scooter Chandler, who is program administrator overseeing 900 pieces of motorized equipment for the city of Waco TX, said “We’re currently looking for lease vs. buy software.” He attended the Fleet Expo session on the lease vs. buy software produced by the National Association of Fleet Administrators (NAFA) Foundation, and said he was considering ordering the product.

The above three fleets illustrate the range of fleet sizes that attended Bobit Publishing’s Fleet Expo 2000, which took place Sept. 17-19 at the Rosemont Convention Center in Rosemont, IL, located next to Chicago’s O’Hare International Airport. More than 800 fleet managers, exhibitors, and vendors attended the event, which was co-sponsored by Ford Motor Co. through its Business Preferred Network and Ford Credit. Companies in attendance included those with fleets of 20 vehicles or fewer, all the way up to larger fleets with a thousand vehicles or more, including a good number of municipal fleets.

If there was a general theme to come out of the conference, it was that fleets of all sizes are concerned about the same issues, whether it be how to perform the best preventive maintenance on vehicles, how to select a dealer, or the top 10 ways to cut fleet costs. Attendee Vanessa Flemons, who oversees 760 vehicles as fleet manager, supply chain management, for NeighborCare in Baltimore, MD, said the top issue she faces daily is “making sure drivers do preventive maintenance.” She said she tracks the vehicles’ preventive maintenance schedules through the use of coupons distributed by her fleet management company, LeasePlan. Drivers then take the vehicles to businesses covered under the fleet management company’s national account program, she said.

For a smaller fleet such as the Federal Reserve Bank of Cleveland, maintenance is an equally important issue. “The fleet I operate is mostly a pool fleet where I have 40 to 50 people who use the vehicles on a daily basis,” said Scott Melda, who is transportation coordinator overseeing 25 vehicles. ”My daily problem is maintenance of the vehicles, because of the turnaround time. And with the vehicles traveling around 30,000 miles a year, the price of fuel has been a high cost in my daily operation.”

The event featured seminars in two tracks: a “Graduate School” professional track, and a “Boot Camp” introduction to fleet fundamentals.”

Vehicle Service, Maintenance & Cost Control

This session was aimed at providing an overview of the various options available to fleet managers with regard to the servicing of fleet vehicles, tracking of repairs and managing the expense of these assets for the organization. The speaker was Greg Carson, national sales director for Consolidated Service Corp. in Elk Grove, IL.

The session began by profiling those fleets in attendance so that the material presented was germain. Fleets represented ranged from private sector to public sector to reimbursed fleets constituting an array of vehicle types and sizes. Specific emphasis was placed on selecting the proper vehicles for the job, knowing the realistic expectations of the field operators in assisting with maintenance and information processing, and how to structure a program dependent on the multiple needs of varying end users (such as sales, service, and executive fleets).

This session stressed basics such as creating necessary “preventive maintenance” schedules, information gathering and computer assisted tracking, as well as aggressive management of both inside and outside repair situations. The program was aimed at creating multiple fleet solutions simultaneously, as this is a common challenge in today’s fleet environment. Attendance for the program was strong numbering in excess of 100 participants. The question and answer session was interactive allowing fleet managers to share positive fleet initiatives and discuss those that were not well received by their respective organizations.

When to Replace Vehicles & How to Remarket Them

Theresa Ragozine, commodity director, fleet management for Johnson & Johnson, New Brunswick, NJ, gave a presentation on “How to Replace Vehicles and How to Remarket Them.” She said Johnson & Johnson has 9,200 vehicles in the U.S., and more than 25,000 worldwide. She said the fleet incurs vehicle costs associated with the purchase of vehicles, driving them, and ultimately selling them.

“Vehicle selection and the resale process have the greatest impact on the largest fleet expense: depreciation,” Ragozine said. She defined depreciation as the net acquisition cost minus the resale proceeds.

She emphasizes the importance of “buying smart and selling smart.” She said, “What you buy will impact what you sell,” Ragozine said. When considering the factors that affect the replacement decision, fleets have to start with vehicle selection. Among the key factors in vehicle selection are: safety, residual value, company image, employee satisfaction (which go hand-in-hand with employee recruiting and retention), job function/compensatory requirement, territory requirements, and special equipment. Think of it as “building a good used car,” she said. In addition to the above, consider: overall value retention, “smart” equipment (consider resale), “smart” color (potential $600 resale differential between best and worst), and driver-paid options. And, when it comes time to establish a replacement policy, she says to avoid setting expectations based on arbitrary months or miles.

“Set general guidelines, but in practice, be flexible,” Ragozine said. Factors that fleets need to understand when considering when to sell: used-car market conditions (simple economics: supply and demand), resale outlet, and vehicle condition. She said that by maximizing driver/employee sales, remarketing costs are eliminated ($300-$1,000), employees benefit (better value than retail purchase), and the company benefits (better value than wholesale). Other factors involved in optimizing wholesale prices: sell vehicles in the fall, vehicle choice and condition, and cyberlots.

Two fleet managers interviewed by Automotive Fleet after the session said they found Ragozine’s presentation useful. James Van Harte, fleet manager for the Developmental Disabilities Resource Center in Golden, CO, said he got some useful information from Ragozine’s presentation. “Some of the insurance liability information was useful and I got some good information on when to purchase and re-sell vehicles,” Van Harte said. Kenneth Godburn of the transportation office for Watchtower Bible and Tract Society of New York in Brooklyn, said “This seminar had some useful information on using the intranet to sell vehicles to employees.”

How to Control Losses For Your Fleet

Ray Alexander, national director of loss prevention for Liberty Mutual Group, said fleets need a safety program, since the cost of property damage in the U.S. increased from $12 billion in 1972 to $176 billion in 1998. One reason is that registered vehicles in the United States increased from 122 million in 1972 to 209.1 million in 1998.

Employee selection is one way (among others suggested) to lower accident rates. Fleet managers need to verify that the driver has a current license and fleet managers need to conduct a motor vehicle record check on drivers. Your fleet should have a written policy that states vehicle eligibility ends if the driver has more than three serious moving violations or a suspension due to substance abuse in a three-year period.

Interviewed by Automotive Fleet after Alexander’s session, Vanessa Smith, who oversees 14 vehicles as shipping and receiving supervisor for Ottawa Dental Labs in Ottawa, IL, said the session included a lot of information new to her. “There was a lot I didn’t know, and I liked hearing what bigger companies did, like checking driver’s licenses frequently to make sure they are valid,” she said.

Truck Spec’ing: Many Factors Need to be Considered

Russ Cass of Piemonte National Fleet in Melrose Park, IL, gave a presentation at the Fleet Expo on “Truck Spec’ing, Still a Mystery.” He said factors to consider in truck spec’ing are:

1. What type of environment you are driving in?

2. Is it city or highway driving?

3. What are the usual weather conditions?

4. What is your budget?

To illustrate that some fleets buy trucks that don’t suit their business use, Cass mentioned one municipality that bought Chevrolet Suburbans for its meter readers. “With the price of one Suburban, they could have bought two S-10s,” Cass said. “Get enough truck for the job.” Other factors to consider in truck spec’ing are: What weight are you carrying? and How experienced are your drivers? Cass said you shouldn’t buy a Ford F-750, for example, if the driver doesn’t have a commercial driver’s license.

One member of the audience asked Cass to address the four-wheel drive vs. two-wheel drive issue. Cass said many fleets don’t really need four-wheel drive, but in many parts of the country, fleets may have trouble re-selling the vehicle without it.

Cass also stressed the importance of keeping up personal contacts with suppliers. “Get to know your body companies, and their salespeople,” Cass said.

Evaluating Lease Proposals and Calculating Lease Rates

This session covered the various means by which fleet managers can review and evaluate the merits of fleet leasing proposals, and what parts of those proposals can be negotiated to their best advantage. The speaker was Bob Cavalli, regional director at Consolidated Service Corp. in Elk Grove, IL. The presentation began by providing a brief overview of the two basic forms of fleet leases, open end and closed end.

Cavalli covered the basic structure of both types of leases, and the various items which make up these lease products. He emphasized that the open end lease provides a “master” lease agreement, which enables the lessee to lease vehicles going forward without executing individual leasees, and the simplicity of the closed end lease, which provides a fixed term, with the same payment for the life of the lease.

As he covered these lease "building blocks," he discussed in some detail how some can be negotiated by the lessee to advantage. Without getting into too much arcane mathematics, Cavalli then went through how lessors calculate both open-end and closed-end leases, how the payments are structured, and, again, which portions of the lease payment may be subject to negotiation. Open end lease payments, he explained, "step down" each year, as the interest factor is applied to a declining capitalized balance. Closed-end payments do not change, as they are simply calculated on the difference between the original cost and the lessor’s projected residual.

Why an Alt-Fuel Vehicle May be the Answer for Your Fleet

Why should your fleet consider buying an alternative-fuel vehicle? One reason is to comply with government mandates. “Other reasons are potential cost savings and for good corporate citizenship,” said Paul Cowan, alternative-fuel vehicle manager, North American Fleet Service, Ford Customer Service Division.

Cowan, along with Bob Lawler, fleet account executive for General Motors; and Mark Charlson, zone fleet manager for DaimlerChrysler, spoke about the various alternative-fuel vehicles their companies have to offer for the 2001-model year. Some of the models Cowan highlighted were the Dedicated Natural Gas Crown Victoria, the Bi-Fuel Propane F-150, and the Flex-Fuel Taurus. He said the Taurus wagon was also available as flex-fuel. He also highlighted the Ranger EV, an electric vehicle available on a three-year lease. He said it gets 50 miles per charge.

“The Ranger EV is ideal for closed communities like a campus,” Cowan said.

GM vehicles highlighted in Lawler’s presentation included the bi-fuel compressed natural gas (CNG) Cavalier, the dedicated CNG Chevrolet Silverado/GMC Sierra, and the dedicated propane Silverado/Sierra.

DaimlerChrysler vehicles highlighted by Charlson included the natural gas Dodge Ram van and wagon, and the E-85 Chrysler Town and Country, Dodge Caravan, Dodge Grand Caravan, and Chrysler Voyager.

One audience member at the session said that alternative fuel is lower priced, but what about maintenance of the engines? Charlson answered that you will see less maintenance with an alternative-fuel engine. Lawler said parts on the vehicles are pre-adjusted, so no adjustments are needed. Also, Lawler said, alternative fuels burn cooler than gas, so there are fewer maintenance issues relating to high-combustion temperature. Another audience member asked Charlson if the B-Series van, which was discontinued after the 2002-model year, was available as an alternative-fuel model. Charlson answered that DaimlerChrysler is “evaluating its product lineup as possible replacements in this segment down the road.”

Alternate Ways to Remarket Your Vehicles

Mike McFall, the new president at Fleet Lease Disposal, and Bill Cieslak, vehicle operations manager at PHH Vehicle Management Services, spoke on “Alternative Ways to Remarket Vehicles.” McFall said things that help increase value are: 1. Employee sales and 2. Dealer Internet Remarketing Channel: “You’ve effectively eliminated the auction,” McFall said. “We don’t discount the use of auctions, but we think you should look at alternative methods.”

 One good method of remarketing is what McFall called “carbitrage,” which would be to take a vehicle worth $9,700 in one part of the country and sell it in another part of the country where it’s worth more.

Cieslak said the total cost of operating a vehicle is not known until the vehicle has been sold. Depreciation represents the largest cost and needs to be effectively managed. He said the sale of vehicles through a retail consignment sales channel has been quantified to return a premium of several hundred dollars per vehicle. “In order to be sure your vehicles are being sold through the optimum channels, always ask your vehicle managment provider to quantify the performance of their sales channels,” he said. To minimize depreciation costs, he suggested the following: 1. Find a fleet management company with a consignment program. 2. Shoot for fall replacement. 3. Ensure asset quality through good maintenance programs. 4. Cycle vehicles before the mileage gets too high.

10 Ways to Use the Web to Manage Your Fleet Operations

Larry Runge, vice president and chief information officer for Wheels Inc. in Des Plaines, IL, spoke on “10 Ways to Use the Web to Manage Your Fleet Operations.” The No. 1 item was new-vehicle ordering by drivers via the Internet, and Runge said the 24-hour access of the Internet had an impact. “We get a fair number of orders between midnight and 4 a.m.,” Runge said.

Other ways to use the Internet to manage fleet operations are: delivery status, reporting and analysis, the ability to put selectors, paper forms, and policy manuals online, eliminate mailing costs, odometer reporting via cellular phones, and alternative vehicles.

Runge said the Internet started an “information arms war” between lessors, raised the level of expectations among drivers, made vast amounts of information easily available on many topics, and allows fleet offices to tap directly into their lessors’ database with no downloads.

Expectations in Selecting A Dealer

The discussion “Expectations in Selecting a Dealer” was hosted by panelists Sue Knutson of Napleton Cadillac, Park Ridge, IL; Rick Nicoletti of Napleton Fleet Group, Oak Brook, IL; Mike Bridges of Liberty Auto City, Libertyville, IL; Don Fenton of Piemonte National Fleet in Melrose Park, IL; and Ray Sarbiewski, of Grossinger Autoplex, Lincolnwood, IL. The panel moderator was Mike Lureau of Elmhurst Lincoln-Mercury, Elmhurst, IL.

The panel’s goal was to inform small fleets (50 and under) about the advantages available to them through a fleet dealer.

Initially, the panel covered the definition of a fleet dealer and the advantages of choosing one.

The consensus was that a true fleet dealer will be committed to the fleet business. This includes the hiring of a full-time fleet manager and other necessary personnel and equipment, and a long-term commitment to servicing fleets, Fenton pointed out.

This commitment also extends to the dealer’s pricing, professional approach to helping small fleet buyers, and keeping in inventory the types of vehicles that fleet buyers need. The panel then covered how a fleet dealer can drop ship a factory vehicle to out-of-state locations. Many small companies have vehicles in a two- or three-state area; by centralizing their purchases through a fleet dealer, vehicles can be provided to their drivers in other states.

Lifecycle Costing for Selection, Cycling and Resale Decisions

Mike Antich, executive editor for Automotive Fleet magazine, spoke on “Using Lifecycle Costing to Make Selection, Cycling, and Resale Decisions.” Real-world lifecycle costing applications include that it is used to make objective comparisons between comparable vehicle types during the selection process, it is used to determine a vehicle’s total cost during its entire life, and it is used to determine the most cost-effective replacement cycling for your company’s vehicles, Antich said. The five-step process to calculating lifecycle costs is as follows:

1. Determine the net acquisition cost of a vehicle.

2. Estimate vehicle depreciation.

3. Estmiate other fixed costs (including incidental expenses).

4. Calculate estimated operating costs.

5. Calculate estimated lifecycle cost.

Ride and Drive Features More than 70 Vehicles

Fleet Expo 2000 included a Ride and Drive in which fleet managers were given the opportunity to drive more than 70 of the latest vehicles from domestic and import manufacturers. Vehicles were driven through a prepared course in the parking lot of the Rosemont Theater. “The ride and drive provided the best opportunity I have ever experienced to test and examine a wide variety of products from multiple manufacturers,” said Carl Nelson, motor vehicle administrator for AT&T Corp. in Summit Point, WV.

Crown Wins Upfitter Innovation Award

Fleet Expo featured the first annual Upfitter Innovation Award, which was presented to vehicle upfitting companies that showed innovation, practicality, and functionality in the upfitting products it produced. The 16 industry peer judges awarded first place to Crown North America, for its entry of a garage style roll-up door application for vans such as the Ford E-350 Cargo Van and the Chevrolet-Express and GMC-Savana type unit. The concept came from a request from Gerry Madrid, fleet manager for Airborne Freight. Todd Sturgin, design engineer for Crown, went to work and developed the product. The prototypes of this unit are currently under evaluation by Airborne Freight. Sturgin received a check for $1,000 for his efforts. Second place went to Stahl Commercial Truck Equipment of Wooster, OH, for its entry of the “Grand Champion,” a dump body that emulated the curves and features of the cab/chassis it was mounted on. Recipient of the award was John Ricker, Stahl product sales manager and the company’s New Product Development Team.

The third place plaque went to Morgan Corp. of Morgantown, PA, for its entry of a custom-designed route delivery truck for Superior Coffee. Bob Raclaw, design engineer and the regional sales manager, accepted the award. In the wings to view the presentations were John Kocinski, vice president of purchasing for Superior Coffee; and Carmella Walsh, Superior’s fleet coordinator. “Superior is pleased with the new route truck configuration,” Kocinski said.

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