Fleet managers are assessing the first half of 2016 and shaking their heads a bit. Fuel prices are at near-historic lows: great. Driver and mechanic shortages are troubling: that’s a tough one. Regulations are escalating: what else is new? Freight is steady but not growing as it was in 2014 when the economic recovery was in full swing: have to keep an eye on that.
In other words, it’s a typical year in the fleet operations game. Fleet managers assess risk and solve logistical problems all day, every day. Even for this group, the balance of 2016 has a handful of business opportunities (and speed bumps) that require vigilance. Here are five opportunities that managers of any size fleet need to monitor closely.
1. Dedicated Scores a Win. Astute fleet managers are planning ahead, and it’s paying off. The TruckingInfo.com article, It’s Wait and See for Fleets in 2016 quotes John Larkin, managing director of transportation and logistics research at financial services firm Stifel, as saying, “A lot of shippers are looking as much as three years ahead and are seeing an increasing number of trucking regulations coming down the pipeline that are expected to tighten capacity. These shippers want to avoid a repeat of the tight supply demand seen in 2014. Their goal is be a little less dependent on the spot market and the irregular route truckload business, so they can know their base load volume is going to be handled at a cost that has been predetermined.”
2. Maintenance Forecast is Cloudy. In recent years, fleets have enjoyed relative stability with regard to maintenance costs. Savings on fleet repairs tend to drop right to the bottom line, which has been great for balance sheets across the industry.
But the situation may change. In the WorkTruckOnline.com article Class 3-6 Truck Forecast: Operating Costs Stable, author Mike Antich writes, “One factor putting upward pressure on maintenance costs is the shortage of technicians. It is expected that maintenance costs will continue to be slightly above the rate of inflation as qualified mechanics continue to be in short supply. This is especially true with diesel mechanics…”
Antich notes that labor rates—especially with the growing number of selective catalytic reduction (SCR) emission systems now being serviced—are slowly but surely driving costs up. “The current diesel emissions standards and the related components have had an adverse effect on fleet operating expenses,” Antich writes. “Repair to these systems is expensive, time-consuming, and requires specialized equipment and training that is not available in every market.”
3. ELD and Fleet Telematics Get Real. What began as a simple suite of GPS location and dispatch functionality has grown by leaps and bounds. Starting this year and advancing rapidly, fleet managers will have more data at their fingertips than they expected. A staff report by Automotive-Fleet.com summarizes the future of telematics with these highlights:
• The proliferation of driver smartphone apps for fleet monitoring and control
• More OEM provided telematics solutions, requiring some data standardization
• In-cab video monitoring and driver alerts (this may be a plus for liability)
4. Utilization Analysis Gets off the Couch. Whether its telematics data or plain old fleet manager know-how, there will be more emphasis on efficiency this year and going forward. Sending the right truck for the job is finally getting the respect it deserves—it touches everything from fuel consumption to driver dispatch.
Rich Zambroski, manager of truck excellence for Element Fleet Management, told WorkTruckOnline.com, “In 2015, utilization analysis was used to help ‘right size’ fleets, particularly in the oil and gas sector. These reviews can result in significant vehicle reductions, leading to a substantial cost savings.”
5. “It’s the Economy, Stupid.” Deep into campaign season, this obnoxious old piece of political wisdom is always top-of-mind with fleet managers, no matter who is sitting in the White House. In its article 6 Trends to Track in 2016, TruckingInfo.com dug into recent numbers crunched by global business research association The Conference Board. They concluded the following: “…the economy might return to trend at some point in 2016 because low investment and productivity continue to be a weak spot. And labor shortages might add to upward pressure on wages and start to pinch corporate profits…But if investment or trade turn out to be more positive than anticipated, above average growth may even extend longer.”
The words “above average growth may even extend longer” from The Conference Board should be music to the ears of fleet managers. It means they can make reasonably accurate projections, and allocate resources accordingly to achieve their goals. But transportation logistics is a chess game: there are millions of potential moves, and you can never be absolutely sure what your opponent is going to do.
Fortunately, fleet managers know the board, and for the moment at least, their chief adversary—uncertainty—is behaving predictably. That’s a game they can easily win.