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SEARCHWe compare industry-specific fleet operating costs for companies in the pharmaceutical, insurance, and energy industries. Although fuel costs have increased dramatically, operating costs have remained stable.
If you ask Josie Sharp, manager of fleet and fleet safety for Aventis Pharmaceuticals in Parsippany, NJ, about her fleet’s operating costs, she gives a simple answer.
“Our operating costs are up because of the price of fuel, but not in any other areas,” she said.
Sharp’s comments are reflected in interviews Automotive Fleet conducted with other fleet managers in the insurance, pharmaceutical, and energy industries, who say their overall fleet operating costs have remained stable, with the exception of fuel.
That also can be seen in composite fleet operating cost charts for insurance, pharmaceutical, and energy companies. The data in charts 1-4 were compiled by PHH Arval in Hunt Valley, MD.
Pharmaceutical & Insurance Fleet Operating Costs Stable
John Majchrzak, manager, global fleet services for Bausch & Lomb in Rochester, NY, said his overall operating costs have remained stable.
Majchrzak oversees about 350 cars in the United States and another 250 in Europe. “Depreciation is about the same.”
Joe Cannavo, manager, fleet operations for Berlex Laboratories in Wayne, NJ, said his company has been expanding, and that automatically causes operating costs to increase.
“Other than that, there have been no significant changes in operating costs except for gas,” he said.
Cannavo said his fleet replaces its vehicles at 55,000 miles, which is before major maintenance problems begin. He said brakes in his fleet are replaced before 55,000 miles, but muffler systems are not, since they are now made with stainless steel.
“Plus, the manufacturers are building cars to last longer,” Cannavo said. “Pharmaceutical companies more than others try to create an image. Because we’re out talking to hospitals and doctors, we keep the vehicles up more.”
Operating costs are also stable for insurance company fleets. Rick McVeigh, who oversees about 600 vehicles as director of purchase administration for Shelter Insurance Co. in Columbia, MO, said non-depreciation expenses have gone up. He said his fleet started using Ford Escapes in the 2000-model year. “But if you include depreciation, they have gone down because we’re using a different type of vehicle,” McVeigh said. “Overall, operating costs have probably gone up a little bit, but not much if you put the two together.”
Running Cost Tracking Decentralized for Two Oil Companies
Two oil company fleet managers contacted for this article, Ken Filip, fleet manager for Texaco in Houston; and Scott Darling, manager, strategic procurement and logistics for BP Oil in Warrenville, IL, said they don’t keep track of operating costs on each vehicle; it’s all decentralized. Each business unit manages its own operating costs. “A business unit within Texaco, a region like Denver, or Bakersfield, operates autonomously,” Filip said. “We provide them with vehicles, but as far as operating expenses, they make their own decisions on whether they want a fuel or maintenance card, for example.” Darling agreed, adding that the various business units of BP handle certain aspects of maintenance differently. “Some do in-house maintenance, and some outsource,” Darling said.
“We have a number of industry composites we maintain so our clients can benchmark their performance against a composite of fleets in their industry,” said Greg Corrigan, director of business consulting services for PHH Arval. In comparing Charts 1-4 to the previous year, Corrigan said the only difference he sees is that fuel costs have risen. “Everything else has held fairly constant,” he said.
Corrigan noted that one of the main differences between the pharmaceutical, insurance, and energy company operating cost charts are in the area of maintenance. “And you can correlate the differences in maintenance numbers to the line at the bottom of the charts, which is replacement months,” Corrigan said. “So the longer the vehicles stay in service, the higher the maintenance cost per mile.”
What the Numbers Include
Each chart contains a 12-month look at the expenses of eight to 12 fleets ending July 2000, with ranges between 4,000 and 20,000 vehicles for each chart.
Included are charts for the upstream and downstream operations for energy company fleets. Corrigan explained that upstream operations means exploration and production. “They’re vehicles out in the field around the oil rigs and pumps, involved with production of the product to transportation to the refinery,” Corrigan said. Downstream operations are refining, marketing, and transportation, he said.
Vehicle types included in the survey are mostly mid-size passenger cars such as the Ford Taurus, Pontiac Grand Prix and Dodge Intrepid, and passenger minivans for the pharmaceutical industry, while the insurance industry includes compacts such as the Pontiac Grand Am, Ford Contour, and Dodge Stratus, Corrigan said. Vehicle types included in the energy company information are light-duty trucks, most typically Ford F-150, Dodge Ram, and Chevrolet C/K 1500.
Pharmaceutical Industry
MONTHLY MILEAGE RATE (PER CAR MONTH)
Business Miles 1,731
Personal Miles 215
Total Miles 1,946
RUNNING EXPENSES ($ per month ¢ per mile)
Gasoline $129.21 6.64¢
Oil $3.89 0.20¢
Maintenance & repair expenses $33.86 1.74¢
Tires and tire repairs $7.20 0.37¢
Total running expenses $174.17 8.95¢
STANDING & INCIDENTAL EXPENSES
Depreciation $319.66 16.43¢
License & taxes $16.72 0.86¢
Insurance $62.32 3.20¢
Accident & theft loss expense (net) (1st party property damage only) $24.06 1.24¢
Total standing expenses $422.76 21.72¢
Parking & storage $30.71 1.58¢
Washing $1.34 0.07¢ Tolls $0.57 0.03¢
Total Incidental expenses $32.62 1.68¢
Total Standing & Incidental $455.38 23.40¢
TOTAL COST Total Expenses $629.55 32.35¢
INDUSTRY STATISTICS Avg. acquisition cost of vehicles in service: $17,919.02 Fuel stats 21.1 mpg; $1.40/gal. Replacement months in service 30.0
Insurance Industry
12 months ending July 2000. Avg. per vehicle
MONTHLY MILEAGE RATE (PER CAR MONTH)
Business Miles 1,691 Personal Miles 334 Total Miles 2,025
RUNNING EXPENSES ($ per month ¢ per mile)
Gasoline $126.72 6.26¢ Oil $4.05 0.20¢
Maintenance & repair expenses $36.24 1.79¢
Tires and tire repairs $9.51 0.47¢
Total running expenses $176.58 8.72¢
STANDING & INCIDENTAL EXPENSES
Depreciation $298.27 14.73¢
License & taxes $14.45 0.71¢
Insurance $51.25 2.53¢
Total standing expenses $363.97 17.97¢
Parking & storage $4.31 0.21¢
Washing $1.80 0.09¢
Tolls $2.62 0.13¢
Total Incidental expenses $8.73 0.43¢
Total Standing & Incidental $372.70 18.4¢
TOTAL COST
Total Expenses $549.28 27.12¢
INDUSTRY STATISTICS
Avg. acquisition cost of vehicles in service: $16,987.50 Gasoline 22.5 mpg; $1.41/gal. Months in Service (avg. replacement vehicles) 28.6
Energy Industry (Downstream companies*)
*Downstream energy companies are those involved with refining, marketing, and transportation.
12 months ending July 2000. Avg. per vehicle
MONTHLY MILEAGE RATE (PER CAR MONTH)
Business Miles 2,030
Personal Miles 233
Total Miles 2,263
RUNNING EXPENSES ($ per month ¢ per mile)
Gasoline $152.29 6.73¢
Oil $4.07 0.18¢
Maintenance & repair expenses $50.46 2.23¢
Tires and tire repairs $13.12 0.58¢
Total running expenses $219.94 9.72¢
STANDING & INCIDENTAL EXPENSES
Depreciation $322.28 14.24¢
License & taxes $13.07 0.58¢
Insurance $71.52 3.16¢
Accident & theft loss expense (net) (1st party property damage only) $27.98 1.24¢
Total standing expenses $434.85 19.22¢
Parking & storage $18.92 0.84¢
Washing $1.25 0.06¢
Tolls $5.88 0.26¢
Total Incidental expenses $26.05 1.15¢
Total Standing & Incidental $460.90 20.37¢
TOTAL COST
Total Expenses $680.84 30.09¢
INDUSTRY STATISTICS Avg. acquisition cost of vehicles in service: $18,184.09 Gasoline 20.5 mpg; $1.38/gal. Months in Service (avg. replacement vehicles) 35.4
Energy Industry (Upstream Companies*)
*Upstream energy companies are those involved with exploration and production.
12 months ending July 2000. Avg. per vehicle
MONTHLY MILEAGE RATE (PER CAR MONTH)
Business Miles 2,083
Personal Miles 240
Total Miles 2,323
RUNNING EXPENSES ($ per month ¢ per mile)
Gasoline $160.05 6.89¢
Oil $4.18 0.18¢
Maintenance & repair expenses $54.36 2.34¢
Tires and tire repairs $13.24 0.57¢
Total running expenses $231.83 9.98¢
STANDING & INCIDENTAL EXPENSES
Depreciation $337.80 14.54¢
License & taxes $13.69 0.59¢
Insurance $76.51 3.29¢
Accident & theft loss expense (net) (1st party property damage only) $28.94 1.25¢
Total standing expenses $456.94 19.67¢
Parking & storage $20.67 0.89¢
Washing $1.17 0.05¢
Tolls $6.47 0.28¢
Total Incidental expenses $28.32 1.22¢
Total Standing & Incidental $486.09 20.89¢
TOTAL COST
Total Expenses $716.26 30.87¢
INDUSTRY STATISTICS Avg. acquisition cost of vehicles in service: $18,210.62 Gasoline 20 mpg; $1.38/gal. Months in Service (avg. replacement vehicles) 36.2
Pharmaceutical Industry Monthly mileage rate (per car month) Business Miles 1,731 Personal Miles 215 Total Miles 1,946 Running Expenses $ per month ¢ per mile Gasoline $129.21 6.64¢ Oil $3.89 0.20¢ Maintenance & repair expenses $33.86 1.74¢ Tires and tire repairs $7.20 0.37¢ Total running expenses $174.17 8.95¢ Standing & Incidental Expenses Depreciation $319.66 16.43¢ License & taxes $16.72 0.86¢ Insurance $62.32 3.20¢ Accident & theft loss expense (net) $24.06 1.24¢ (1st party property damage only) $422.76 21.72¢ Total standing expenses $30.71 1.58¢ Parking & storage $1.34 0.07¢ Washing $0.57 0.03¢ Tolls Total Incidental Expenses $32.62 1.68¢ Total Standing & Incidental $455.38 23.40¢ Total Cost Total Expenses $629.55 32.35¢ Industry Statistics Avg. Acquisition cost of vehicles in service: $17,919.02 Fuel stats 21.1 mpg; $1.40/gal. Replacement months in service
30.0
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