Aftermarket

Survey Shows Fleet Managers Face New Issues and Trends

June 11, 2007

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In an annual survey conducted by PHH FirstFleet, a national provider of asset management and operations services to private truck fleets, fleet managers identified new issues and industry trends.

Most notably, while fuel costs and safety risks are still top concerns for America's private truck fleets, the majority of owners and managers are putting off new 2007 engines purchases and looking to outside industry consultants to help drive down operational costs.
PHH FirstFleet's survey canvassed an array of topics relevant to the industry, including fuel economy and fleet management.
"The feedback from the survey provides insight into the key issues facing managers and will help PHH FirstFleet create practical solutions that reduce operating costs, optimize fleets and educate drivers," said Michael C. Lewis, president and general manager. "Many fleet managers are looking to telematics to better understand fuel consumption, the effects of new engine emissions standards, and driver behavior."
With the introduction of new 2007-year engine designs, 63 percent of fleet managers responding to the survey said they are putting off 2007 engine purchases. Forty-one percent said that they planned to postpone any new purchases until first quarter of 2007 as compared to 44 percent who said they planned to purchase in either the second or third quarter. Seventy-nine percent of those surveyed said they were contending with the 2007 change by stocking up on 2006 engines, which represents just over 50 percent of the planned orders for 2007, resulting in 7 percent of respondents adjusting preventive maintenance service levels to meet 2007 requirements.
In surveying fleet managers' 2006 orders for 2007 engines, the caution fleet managers exercised in the first quarter of 2007 was not as evident. While 62 percent of respondents ordered 2007 engines in the first quarter of 2006, only 52 percent ordered 2007 engines in the second quarter, which increased dramatically to 70 percent in the third quarter of 2006.
Confirming the average six-year replacement cycle, 51 percent of respondents said they replaced their fleet, indicating that 27 percent of their fleets were replaced in 2006 and only 7 percent in 2007. Respondents expect a replacement rate of 28 percent to continue through 2008.
When asked about the impact of the introduction of ULSD on the overall cost of fuel, respondents were equally divided. Thirty-four percent of respondents thought that ULSD had little to no impact on fuel costs, while 30 percent felt the ultra low sulfur diesel had at least somewhat of an impact.
In terms of what issues fleets are experiencing as a result of using ULSD fuel, 75 percent felt that it was too early to tell. Nearly 13 percent indicated lower fuel economy. Just over 7 percent cited fuel availability, while almost 4 percent felt their fleets experienced a loss in engine power.
Although most fleet managers think it's too early to tell what impact ULSD will have on fuel cost/economy, the general consensus, as seen in 1998 and 2002 emission requirements, is that ULSD will increase a fleet's cost per mile of operation approximately 2 percent.
When asked about what initiatives fleet managers are planning in order to gain back the fuel economy lost to ULSD regulations, nearly 24 percent confirmed the use of technology tools, such as telematics. This confirms PHH FirstFleet's 2006 Survey of Fleet Managers findings, which found that of the 60 percent of responding fleet managers who said they were adopting the devices, 83 percent were looking to telematics to help improve performance. At the time, 39 percent indicated that they wanted to optimize routes and fuel management.
One of the survey's most significant findings hinged on the introduction of both ULSD and 2007 model year engines, which led to a new requirement for API CJ-4 oil. While two-thirds (67 percent) will use the new oil on fleets with 2007 engines, the remaining third (33 percent) have no current plans to do so because they are not aware new regulations require it. When asked whether they will use the new oil on non-2007 engines, 38 percent said they would not, while almost 30 percent said they would. The remaining 32 percent of respondents said they were not sure if they would use the new oil to protect the non-2007 engines.
In addition to polling the respondents on their experience and insights regarding new 2007 engines, impact of ULSD, API CJ-4 oil and fuel efficiency initiatives, the survey asked them to focus on any other critical areas of concern to their companies. While driver availability and retention are still issues, driver incentive strategies such as increased pay, benefits and bonuses are apparently working to reduce this concern.
Beyond employing telematics, respondents indicated interest in driver incentive programs (21 percent), stretching out the lifecycle to maintain 2006 engines (19 percent), lighter specs (17 percent), and other fuel saving tactics, including aerodynamics, Auxiliary Power Units (APUs) as well as speed, RPM and idle reductions, 17 percent.
Eighty-five percent of fleet managers endorsed measuring driver habits and past performance. Survey respondents were overwhelmingly interested in employing an outside service to conduct an operation audit, with nearly 52 percent indicating they have considered outsourcing maintenance and safety compliance to an industry consultant.
Additional issues facing fleet management today include:
• Government compliance
• Emission controls and regulations
• 2007 engine performance
• Equipment and maintenance costs
• Escalating operating costs
• Service hours
PHH FirstFleet's National Survey of Fleet Managers reflects the thoughts of 67 senior fleet operations managers, industry experts and economic leaders. It was commissioned by PHH FirstFleet and conducted by Starmark | MARC USA Research.
For a full summary of the PHH FirstFleet National Survey of Fleet Managers, visit www.phhfirstfleet.com.

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