The high cost of fuel was the key reason for increased operating expenses. The spike in fuel prices also contributed to the higher cost of replacement tires and, indirectly, to higher maintenance expenses.
Operating costs for medium-duty trucks in utility/railroad, delivery, and service company fleets increased for preventive maintenance (PM), replacement tires, repairs, and especially fuel during the 2005 calendar year. This assessment is based on a study of the operating expenses for 35 medium-duty truck fleets, which cumulatively operate 10,857 medium-duty trucks. The study, conducted by GE Commercial Finance Fleet Services, tracked operating expenses between Jan. 1 to Dec. 31, 2005 for Classes 3-6 trucks rated 10,001 to 20,000 lbs. GVW.
Although all operating expense categories witnessed an increase, the underlying cause was the increased cost of fuel.
“The high cost of fuel impacted not only the cost of the fuel itself, but also all other costs associated with it,” said Dan Kratz, truck operations manager for GE Commercial Finance Fleet Services. “For example, high fuel prices increased the cost of mobile fueling services along with other PM expenses.”
The cost increases indirectly caused by higher fuel prices created inflationary pressures throughout the supply chain.
“It is a trickle-down effect,” said Eric Strom, maintenance product manager for GE Commercial Finance Fleet Services. “The increased cost of fuel is passed on from suppliers to therepair shops. Maintenance shops are charging more, due to the indirect expense of higher fuel prices.”
Another indirect expense associated with higher fuel prices has been the increase in replacement tire costs.
One mitigating factor is that truck tire technology is increasing tire tread life. “The average tread life for a medium-duty truck hauling its maximum load is about 80,000 miles, compared to 50,000 miles 15 years ago,” said Eric Hjerpe, customer reporting manager for GE Commercial Finance Fleet Services.
The trend for fuel economy in medium-duty trucks is complicated with the introduction of the 2007 diesel emission standards. Fuel economy is lower with 2007 engines. “We are not only anticipating lower miles per gallon, but also increased fuel costs due to the higher cost of ultra-low sulfur diesel required for those engines. Additional PM costs for special motor oils necessary for the hotter-running 2007 engines and replacement of diesel particulate filters will also increase costs,” said Kratz. “We also anticipate repair costs may go up as these new engines generate a higher heat, which may lead to increased wear and tear.”
“On average, medium-duty trucks are kept in service between 70 to 80 months and approximately 160,000 miles,” said Douglas Smith, truck technical advisor for GE Commercial Finance Fleet Services.
Common service problems for Class 3-6 trucks occurred in fuel and electrical systems. “We have seen an increased amount of electrical problems, in particular with sensors,” said Smith. “Most of these are false alarms, but they result in truck downtime while the problem is diagnosed,” added Smith.
Despite these service issues, overall quality for medium-duty trucks is at an all-time high. “The trucks themselves are built better, are lasting longer, and with the improved quality, require less warranty work,” said Strom.
Modify Truck Specs to Improve Fuel Economy
Reducing fuel expenditures is a key focus for today’s fleet managers.
“Fleet managers are exploring the modification of truck specs to increase miles-per-gallon fuel economy and are adopting key performance indicators to monitor drivers in an effort to curb wasteful fuel consumption,” said Kratz.
Fleets are also investigating the acquisition of more aerodynamic trucks and different driveline components.
“More and more fleets are interested in increasing miles per gallon by modifying truck specifications,” said Strom.
Another fleet initiative is the adoption of anti-idling awareness programs with drivers. “Fleet managers are ordering trucks with idle cutoffs after five to 15 minutes,” said Kratz. “They are also installing telematic systems to monitor fuel usage and employing geo-fencing products.”
There has also been an ongoing trend to spec automatic transmissions.
“In the medium-duty truck market, approximately 70 percent of the trucks are spec’ed with automatic transmissions,” said Smith. “Automatic transmissions are being spec’ed for driver retention. Fifteen years ago, you couldn’t find an automatic transmission. Many times it was driver pride, and these drivers didn’t want an automatic.” However, as the number of new drivers who could operate a manual transmission dwindled, the shift toward automatic transmissions started. “Automatic transmissions allow fleets to increase their candidate pool,” said Kratz. Another reason for the shift was improvements in automatic transmission technology. “Fifteen years ago, automatic transmissions were very, very expensive. Also, the automatic transmissions back then were not reliable,” added Kratz.
As with light-duty trucks, there has been a trend to add some extras to medium-duty trucks. “The reason was to increase driver retention, but it has affected operating expenses,” said Smith. “Today, there isn’t a truck without air conditioning, but air conditioning uses horsepower and fuel.”
Using Telematics to Modify Driver Behavior
A growing interest among truck fleet managers has been the use of telematics. “We are seeing fleets look to telematic technologies to reduce fuel expense by reducing hard braking, speeding, unnecessary idling, driving outside normal business hours, and to improve routing,” said Strom. “Years ago, telematics was viewed as a routing tool, but today, fleets are using it as a tool to reduce fuel expenditures.”
Telematic devices are also being used to identify costly driving behaviors.
“Fleet managers are using telematics to drill down and identify costly fuel behaviors,” said Dave Mellon, lead customer solutions advisor for GE Commercial Finance Fleet Services. “This can save a tremendous amount of fuel. When drivers know they are being monitored, they tend to modify their behavior, decreasing fast take-offs and speeding,” added Mellon.
