The cost of fuel is at the highest level in the past 20 years and it is straining the fleet operating budgets for many utility fleets, which tend to operate heavier, less fuel-efficient vehicles and whose operations require excessive vehicle idling.
These findings are based on a survey of actual operating expenditures incurred between July 1999 and June 2000 of 28,079 vehicles in utility fleet operations, which are managed by four fleet management companies: Associates Fleet Services, Automotive Resources International (ARI), GE Capital Fleet Services, and PHH Vehicle Management Services.
The surveyed vehicles comprised:
2,602 intermediate-size cars.
14,993 Class 1 and 2 trucks.
1,942 Class 3-5 trucks.
3,785 full-size vans
1,420 sport/utility vehicles.
One point to note is that depending on the utility’s primary business — either gas, electric or water — the equipment on the vehicle can vary greatly, which can cause operating costs for like vehicles to differ.
Lower Miles by Older Units
Utility fleets, in comparison to commercial fleets, typically keep vehicles in service longer and tend to operate more older vehicles that accumulate lower monthly mileage. According to data provided by PHH Vehicle Management Services, utility fleets, for Class 3-5 trucks, on average, keep the vehicles in service for 121 months and average 694 miles per month. “The typical amortization we see is anywhere from eight to 10 years, depending on the type of vehicle,” said Tom Coffey, vice president, Truck & Utility Fleet Services for GE Capital Fleet Services in Minneapolis, MN. Operating older equipment is a key reason why utility fleet operating costs are higher. “When comparing utility and commercial fleets, you may have vehicles in the same mileage window, but there is a big difference in age of the vehicles,” said Mike Southwick, vice president, fleet management for Associates Fleet Services in Carrollton, TX. Oil expenses for trucks in utility fleet operations are higher on a cents-per-mile basis than commercial fleets. “The reason is that many of these vehicles are used in an idling situation,” said Southwick. As a result, many utilities perform preventive maintenance based on engine hours rather than mileage. “When measuring expenses in specific mileage bands, this causes utility fleet cents-per-mile preventive maintenance expenses to seem higher,” agrees Bob White, manager, fleet services for ARI in Mt. Laurel, NJ. This is a key consideration. Instead of miles, utility fleets have higher engine hours because many of the truck units sit idling at a particular location using the PTO (power take-off) to operate auxiliary equipment such as buckets or augurs. “Utility fleet vehicles have a great deal of ‘idle’ time, but for every hour of idling, you can add 24 miles to the odometer,” said Greg Corrigan, senior business consultant for PHH. “In some cases, this could nearly double the actual final odometer reading.” Also, with medium-duty trucks, there are A, B, and C services, as opposed to just oil changes, as is the case with light-duty vehicles. If the entire B service expense is classified under oil, then that cost will be driven up significantly. For instance, a B service includes not only oil and fluid changes, but also a full vehicle inspection. Finally, fuel costs are higher with utility fleets primarily because they tend to run heavier GVW trucks hauling more payload.
Utilities Eat Up Tires
Tire expenses, especially in the less than 24,000 mileage range, are also far higher for utility fleets than for commercial fleets. One reason is the off-road usage and heavier payload that utilities carry, according to GE Capital Fleet Services. Utility fleets have accelerated tire wear because of the road conditions they drive in and the loads they carry.
Outsourcing Car Maintenance
Typically, maintenance for medium-duty and heavy-duty trucks is handled at in-house facilities. There is a trend, however, for maintenance work for light trucks and cars, in particular preventive maintenance, to be outsourced so as not to tie up bays in the in-house facility for more mission-critical trucks. “The feeling is growing at many utilities that it is highly inefficient to do maintenance work on cars at their in-house shops,” said Coffey.
There are three reasons why utilities are looking to outsource and reduce costs such as fleet maintenance, according to Coffey. They are:
2.Mergers and acquisitions, which are prompting utilities to look at different ways to lower their overhead expenses.
3. Share price, which again is influenced by the desire of utility management to lower its overhead costs.