Downsizing for Efficiency

The nation’s largest commercial truck fleets will buy fewer vehicles over the next 12 months, and those they do buy will be smaller and more fuel efficient.

The recession has left its mark on the nation’s top commercial fleets. While economic data suggest that business is no longer shrinking, fleet managers are cautious about purchasing new equipment. Instead, they are trying to do more with fewer vehicles and buying smaller, more fuel-efficient vehicles. In some cases, they are exploring alternatives to diesel-powered trucks.

Most fleet managers surveyed in April and May by LIGHT & MEDIUM TRUCK plan to buy substantially fewer trucks in the next 12 months than they did in the previous year.

In a survey of 53 commercial fleet managers, companies intend to buy 6,937 straight trucks in the next 12 months, compared with 8,978 in the past year, a decline of 22.7%.

The number of pickup trucks and cargo vans to be purchased in the next year compared with the past 12 months is much closer: 7,941 versus 8,813, a decline of less than 10%.

The biggest reason for the planned reduction in equipment purchases is weak customer demand, especially in home building and some service sectors, and the unwillingness of some fleet owners to pay higher prices for 2010 model trucks.

Even companies that are expanding their fleets are doing so with an eye on mitigating the financial pain caused by higher fuel prices in 2008 and a major business downturn in 2009.

“The recession has caused us to keep some trucks longer than we had originally anticipated,” said Butch Christian, fleet manager for Quanta Services Inc., Houston, a utility and infrastructure contracting firm that is active in all 50 states. Quanta plans to buy 200 more trucks and 150 more pickups and cargo vans in the next 12 months, compared with the past year.

“We budgeted for more purchases, but that does not guarantee we will pull the trigger,” Christian said.

“While it is possible to prolong the life of a truck,” he added, “there still comes a point in time for which you must replace it, and that is why we anticipate more purchases in 2010 than 2009.” Quanta ranks No. 12 on the LIGHT & MEDIUM TRUCK 2010 Top 100 Commercial Fleets list.

The rising cost of new equipment and concern about new emissions technology is making the truck-buying decision more complicated for some fleet operators.

“We’re looking at leasing versus buying,” said Laura Lueder, public relations manager for MDU Resources Group (No. 10), Bismarck, N.D., a company that provides utility and highway construction services.

“One of the challenges for us is the increasing cost of [vehicles]. The company is trying to cut back on spending so we can purchase fewer units with the same money.”

To save money, Lueder said, the company instituted a program to encourage drivers to shut off the engine when the truck is parked, which saves fuel, and also has closed some maintenance shops in areas where business activity was slow.

“We’re optimistic that the economy will pick up,” Lueder said. “We definitely see a swing in terms of private- versus public-sector work. We’re doing many more public jobs than two years ago.”

Other companies that plan to boost truck purchases in the next year include:

• Uniform suppliers Cintas Corp. (No. 8), Cincinnati (+499 straight trucks) and AmeriPride Services (No. 79), Minnetonka, Minn. (+150 pickups and vans).

• Waste Management (No. 4), Houston (+147 trucks and 210 more pickups and vans).

• Rollins Inc. (No. 20), the Atlanta-based parent of Orkin Pest Control (+100 pickups and cargo vans).

A number of fleet managers indicated they are making changes in the type of equipment or the vehicle brand.

General Motors’ decision to end production of medium-duty trucks will force Installed Building Products (No. 84), Columbus, Ohio, to buy new vehicles from another manufacturer, which is “undetermined,” said fleet manager Pamela Matunas.

Ted Phillips, vice president fleet operations for Dr Pepper Snapple Group (No. 59), Plano, Texas, said potential changes with chassis and engine manufacturers “are under review” and that the company is purchasing two hybrid tractors.

Interest in vehicles that save fuel and emit fewer pollutants remains high among commercial fleet managers.

“We are looking at ‘green’ vehicles to test in markets where they might work,” said Erin Gilchrist, fleet manager for Belron U.S./Safelite Autoglass (No. 24), Columbus, Ohio.

Jim Bigelow, director of fleet operations for DHL Express (No. 50), Erlanger, Ky., said his company is testing diesel-electric hybrid trucks, and “[we] plan to put 10 or more into our fleet in 2011.”

Dan Kratz, director of fleet operations for Safety-Kleen Systems (No. 62), Plano, Texas, said he is replacing full-size cargo vans with 4-cylinder Ford Transit Connect vehicles that get 24 miles per gallon and will consider purchasing all-electric vans in 2011.

The company also has managed to reduce its vehicle count by centralizing its budgeting and purchasing activity after making numerous acquisitions in recent years.

“We identify trucks based on head count at each location,” Kratz said. “Typically, four drivers get four vehicles and one spare.”

Previously, he said, some locations had as many spare vehicles as active units.

Mark Smith, a strategic consulting services leader for GE Capital Fleet Services in Eden Prairie, Minn., said a combination of high fuel prices and declining resale values in 2008 has altered the way many companies evaluate equipment needs.

“There is a desire to be in more fuel-efficient vehicles,” Smith said. “Many companies are trying to move down from three-quarter-ton pickups to half-ton pickups and from half-ton pickups to [smaller] vehicles.”

Fleet operations also are subject now to more intense scrutiny by top corporate executives.

“Company executives re­quire more visibility into fleet operations,” Smith said. “Fleets have gone from being ‘out of sight and out of mind’ to ‘we need a better understanding of our fleet operations.’ ”

The new mindset is making it easier for some fleet managers to win support for changes in operations and investment in technology, such as onboard computers and mobile communications systems, that make the driver and the vehicle more efficient.

“These are things that fleet managers have wanted to do for some time and now are getting a proper airing,” Smith said.

Michael Payette, fleet equipment manager for Staples Inc. (No. 73), Framingham, Mass., said he is adding electric vehicles in Ohio and California and would like to move away from his current dependence on diesel engines to power the nearly 1,900 trucks in his fleet.

“At least 15% of our fleet could use electric [trucks],” Payette said.

For longer routes, Payette said he would like to move to vehicles that use gasoline or compressed natural gas because the costs of maintaining more complex diesel emissions systems have priced those trucks “beyond what makes sense” for an urban delivery fleet like Staples.

“Increased miles per gallon would be the only reason to remain with diesel,” Payette said. “Until that happens, gaseous fuels present a compelling case.”

Michael Moser, director of fleet and purchasing at Lewis Tree Service (No. 65), West Henrietta, N.Y., said he also is replacing diesel-powered vehicles with gasoline for Classes 3-5 trucks and he is spearheading an effort among utility line clearance companies to convince truck manufacturers to offer gas-powered models for larger trucks (see “Looking for Medium-Duty Gasoline Power,” page 26).

Moser said his company bought 2007-model medium-duty trucks with diesel particulate filters that were supposed to regenerate without any input from the driver, but the system never worked properly and the company was forced to retrofit the 150 trucks with a manual switch.

Still, Moser said, trucks had to be driven on the highway sometimes for the DPF regeneration process to work properly.

Moser said he is also concerned about diesel exhaust fluid required on some 2010 model trucks.

“Because of our duty cycle, we anticipate a very low consumption rate of DEF,” Moser said. “In the hot southern climate, the DEF can deteriorate very quickly. Most trucks on the highway consume it before it has a chance to degrade. We don’t.”

Because trucks used for utility line clearance and construction work often operate in remote areas, Moser said drivers may also not have easy access to DEF.

Spec’ing lighter vehicles is a major priority for waste hauler Republic Services Inc. (No. 5), Scottsdale, Ariz., said fleet maintenance executive Roy Svehla.

“Our equipment is very heavy from the start,” he said. “There’s a lot we can do working with body and chassis builders to lighten up.”

Using a smaller fuel tank and lighter axles and substituting aluminum for steel components, Svehla said,

he expects to shave off up to 8,000 pounds on a 40,000-pound garbage truck, save money on fuel and increase hauling capacity.

Unlike utility crews, Svehla said he is pleased with 2010 model trucks with SCR emissions technology, though it adds $8,000 to the price tag.

“We’re getting better performance and fuel mileage,” he said.

Diesel particulate filter regeneration also is more reliable and less frequent than in earlier models, he said.

At Stanley Steemer International (No. 68) in Dublin, Ohio, fleet engineer Sean Vrenna said the recession “encouraged” the company to re-evaluate its fleet in several ways.

“With the slight downturn in business, we fixed a few more of our older vehicles rather than replacing them with new vehicles,” Vrenna said. “At the same time, we removed a number of old vehicles from the road.”

Using a mapping and routing software program, the company also was able to complete more jobs using about 8% fewer vehicles.

“We now have a leaner and more productive fleet,” Vrenna said. “Now that we have completed fleet reductions to where we can operate more efficiently, it is easier to forecast the need for vehicles,” he said. 

Shifts in Sector Balances

Package and freight delivery firms continue to dominate LIGHT & MEDIUM TRUCK magazine’s Top 100 Commercial Fleet list with 28.1% of the 590,798 straight trucks, cargo vans and pickup trucks in use in 2010, according to L&MT’s survey.

Food and beverage fleets accounted for 16.3% of the truck total, and fleets operated by construction firms and building materials suppliers had the third-highest number of trucks, with 13.4% of the total. A year ago, construction and building material fleets had the second-highest total with 17.1% of trucks, followed by food and beverage with 12.9%.

Waste service companies control 57,752 vehicles, 9.8% of the total reported in the list and 19% more than in 2009.

Combined the four sectors account for two-thirds of the total vehicles reported.

By Daniel P. Bearth