November 17, 2008
Fuel prices hit record highs. The cost of financing a fleet doubles. Used-vehicle values plummet. Dealers are unable to sell the vehicles they have in inventory. Geopolitically, the U.S. is embroiled in war and the macro-economy teeters on recession. If you think I'm talking about 2008, think again. The year was 1973.
Posted @ Monday, November 17, 2008 11:04 AM | »
November 11, 2008
October was an extremely difficult month to remarket vehicles in the wholesale market as resale prices took a precipitous drop. Wholesale pricing, based on mixed mileage and seasonally adjusted, declined a record 6 percent in October. The lack of credit to both dealers and retail buyers has been the key catalyst contributing to the downturn in the wholesale market. The market forecast is gloomy until the credit gridlock is resolved.
Posted @ Tuesday, November 11, 2008 10:18 AM | »
November 4, 2008
The recent drop in fuel prices has been as breathtaking as the earlier run-up in prices. If sustained, these reduced fuel prices will begin to make a dent in overall fleet fuel expenditures. However, there is the risk that lower prices may bring about driver complacency. A large part of fleet fuel expense is controlled by drivers. Many of the hard-won increases in fleet mpg can be negated by drivers reverting to less fuel-efficient driving behaviors.
Posted @ Tuesday, November 4, 2008 11:09 AM | »
October 28, 2008
Do you know the location of your fleet vehicles during work hours? The most likely answer is no. In fact, nine out of 10 fleet managers have no idea where their fleet vehicles are at any given time. This assertion is based on a recent study that revealed 94 percent of those who operate corporate vehicles are completely unaware of their fleet’s location during work hours. However, this may soon change as a result of growth in the deployment of mobile resource management (MRM) systems.
Posted @ Tuesday, October 28, 2008 9:13 AM | »
October 24, 2008
Vehicle quality has improved dramatically with fleets experiencing a decline in the frequency of vehicle repairs. However, the average cost of repairs has been increasing. The forecast is for the cost of fleet maintenance to increase again in 2009. There are five factors exerting upward pressure on cost per repair.
Posted @ Friday, October 24, 2008 10:23 AM | »
October 21, 2008
Although gas prices started to decline in August, the year-to-date cost of fuel in 2008 has increased 30 percent compared to last year. The price for replacement tires rose 5-10 percent in 2008 due to higher oil prices and the shift by manufacturers to larger diameter tires. Also, fleet maintenance and repair costs increased across the board in 2008. The cost for non-warranty maintenance services was up 5 percent for fleets.
Posted @ Tuesday, October 21, 2008 8:32 AM | »
October 14, 2008
Replacement tires are the third-largest expense category for fleets. In the past three years, this expense category has grown as a result of multiple price increases from all major tire OEMs. In 2008, year-to-date tire replacement costs have increased 4-10 percent. This follows a 3-4 percent price increase in 2007 and an 8-10 percent price increase in 2006. The consensus is replacement tire prices will increase again in 2009.
Posted @ Tuesday, October 14, 2008 7:49 AM | »
October 10, 2008
The number one threat to fleets continues to be the price of fuel, despite the fact that fuel prices have been declining due to the global economic slowdown. Year-to-date, the cost of fuel has increased 30 percent in 2008 compared to 2007. The Energy Information Administration is projecting fuel to average $3.82 per gallon in calendar-year 2009. Fuel is the potential game changer of the fleet industry. Consider two recent examples as harbingers of things to come.
Posted @ Friday, October 10, 2008 9:06 AM | »
October 7, 2008
Today, Oct. 7, the Federal Reserve Board announced that it is invoking emergency powers to create a special fund to support the U.S. commercial paper market. The announcement by the Federal Reserve allows corporations to bypass the current credit gridlock gripping the nation’s economy. This has an impact on the fleet market since one source of financing for large fleets is the commercial paper market.
Posted @ Tuesday, October 7, 2008 9:10 AM | »
October 3, 2008
Reducing unnecessary idling is the simplest and easiest way for a fleet to reduce fuel costs. Besides wasting fuel, excess idling also causes unnecessary emissions, noise pollution, and needless engine wear-and-tear. The amount of unnecessary idling varies by fleet, but some fleets have recorded idling as much as 35 percent of the time.
Posted @ Friday, October 3, 2008 12:30 PM | »
September 29, 2008
The bread-and-butter customers of out-of-service fleet vehicles are buyers with C and D credit, namely subprime buyers. However, funders have tightened underwriting standards to manage these higher risk borrowers. Some lenders have caps on how low a FICO score they are willing to fund, which is often above the threshold of subprime borrowers. If this continues, it will have significant long-term implications for the sale of used fleet vehicles.
Posted @ Monday, September 29, 2008 12:25 PM | »
September 23, 2008
Due to staffing constraints, the Federal Motor Carrier Safety Administration (FMCSA ) can currently only audit about 2 percent of nation's truck fleets. In response to these resource constraints, FMCSA is developing a Comprehensive Safety Analysis (CSA) 2010 initiative to implement new ways to reduce truck-related accidents. CSA 2010 will measure a fleet's safety performance through data uploaded from fleet compliance activities and accident reports.
Posted @ Tuesday, September 23, 2008 2:14 PM | »
September 22, 2008
When a company decides to brand vehicles with either logos or full-vehicle advertising wraps, it may inadvertently create a situation that puts employees in conflict with homeowner association restrictions on the parking of commercial vehicles in common areas. Most homeowner associations allow commercial vehicles as long as they are garaged, but not all fleet vehicles can fit in a garage due to height or length. An estimated 50 million Americans live in homeowner association communities.
Posted @ Monday, September 22, 2008 3:23 PM | »
September 19, 2008
The high cost of fuel is causing more employees to use fleet vehicles for personal use since many companies pays for gasoline. Although overall fleet mileage has increased, there has not been a corresponding increase in reported personal use miles. Companies that allow drivers to take vehicles home, but do not allow personal use, report a growing problem of policing unauthorized personal use by employees looking to reduce their "personal" fuel costs. This is a broad-based industry issue.
Posted @ Friday, September 19, 2008 9:37 AM | »
September 12, 2008
The 2008 model-year produced mixed results in order-to-delivery (OTD) perfromance. A protracted UAW strike and flooding in the Midwest delayed some models, while other models posted improved OTD due to reduced retail sales, which expedited fleet production. In addition, there was sufficient rail car availability due to soft retail sales and a decrease in quality holds.
Posted @ Friday, September 12, 2008 2:33 PM | »
September 9, 2008
When fuel prices crossed the $3.25 per gallon threshold, fleets began looking for ways to downsize vehicles or opt to four-cylinder engines.This trend is reinforced by corporate sustainability initiatives and/or fuel spend/GHG reduction programs. The shift to four-cylinder engines is broad-based and includes many of the nation’s largest fleets. One consequence to this increased demand for four-cylinder models is that fleets have increased their purchases of import-badged vehicles.
Posted @ Tuesday, September 9, 2008 11:19 AM | »
September 8, 2008
With a dramatic decrease in retail truck sales, some fleets are concerned that assembly plant closures and production slowdowns may delay truck deliveries and ship-thru upfits. In addition, there are further concerns about potential fleet allocation issues, availability of transportation, extended lead times caused by shift eliminations, and reduced special equipment runs. One challenge is moving completed upfit vehicles back into "traffic" when an assembly plant is shutdown.
Posted @ Monday, September 8, 2008 1:29 PM | »
September 5, 2008
On Aug. 27, the Securities and Exchange Commission raised the possibility that approximately 110 U.S. publicly traded companies will be able to use international accounting standards (IAS) next year and may require all U.S. companies to switch to IAS between 2014-2016. There is a 60-day comment period about the SEC proposal. Fleet leasing will be impacted by the adoption of IAS. It is probable that all fleet leases in the U.S. will need to be capitalized sometime in the 2011-2016 timeframe.
Posted @ Friday, September 5, 2008 10:33 AM | »
September 2, 2008
With fuel prices remaining elevated, many companies are wondering whether they are charging enough for personal use. At some companies, this discussion is long overdue. When re-evaluating personal use charges, a common mistake is to focus solely on the cost of fuel, which is understandable because, after all, fuel is the catalyst for these discussions. However, doing so ignores the other “hidden” costs of personal use, which have also risen.
Posted @ Tuesday, September 2, 2008 9:25 AM | »
August 28, 2008
Interdepartmental conflicts are common in the medical and IT industries, and at most companies between sales and operations. However, for many years, fleet existed as a realm of its own. Management in other departments often didn’t fully understand the nuances of fleet management other than they got a new vehicle every 36 months. Fleet managers of that era (not that long ago) were the “kings” and “queens” of their own realms. However, that reality is rapidly changing.
Posted @ Thursday, August 28, 2008 1:27 PM | »
August 25, 2008
The greatest challenge facing the future of fleet management is how we see ourselves as a profession. Are we administrators of a fleet or are we managers? Do we manage from a tactical level – putting out day-to-day fires – or from a strategic level focusing on specific long-term objectives using metrics to benchmark progress? In the future, you will need a strategic focus to succeed in fleet management; otherwise you run the risk of fading into irrelevancy.
Posted @ Monday, August 25, 2008 3:13 PM | »
August 22, 2008
The Health Insurance Portability and Accountability Act of 1996 (also known as HIPAA) makes it a criminal act to divulge medical information to a third-party without the employee’s permission. Many fleet managers believe HIPAA non-disclosure requirements are counter-productive to fleet safety. One fleet manager lamented to me that “HIPAA is the worst thing that has ever happened to fleet.”
Posted @ Friday, August 22, 2008 8:41 AM | »
August 18, 2008
In two decades of chronicling the history of fleet management, I have seen interest in fleet safety ebb and flow. In an annual survey I conduct of fleet managers, they rated fleet safety as their No. 2 concern, right behind the cost of fuel. Why the renewed interest in fleet safety? More and more fleet managers are reporting an uptick in preventable accidents. In addition, fleet managers are feeling pressure from other corporate departments to increase fleet driver safety.
Posted @ Monday, August 18, 2008 12:57 PM | »
August 14, 2008
The high cost of materials has caused price increases for truck bodies, trailers, van interiors, liftgates, and other upfit equipment. Prices have increased, on average, 3-8 percent. Upfitting prices have risen multiple times and some truck equipment manufacturers are guaranteeing current prices for only 90 days. Worldwide, prices have soared for commodities used in upfitting, such as steel and aluminum.
Posted @ Thursday, August 14, 2008 1:44 PM | »
August 12, 2008
Fleets are adopting compensatory strategies to offset high fuel costs. These include selector modification, revised vehicle specs, increased personal use charges, streamlined fleet operations, and modification of driver behavior.
Posted @ Tuesday, August 12, 2008 10:19 AM | »