One Fleet Talks About How it's Dealing with Higher Prices for 2010 Engines

Now that official prices are coming out for engines that will meet 2010 federal emissions standards, fleets are seriously looking at how they're going to deal with that additional $6,000 to $10,000 penalty.

Many fleets that have been on a three- or four-year trade cycle are now looking at keeping their trucks longer. One of them is Bison Transport, one of Canada's largest truckload operations and a company oft-recognized for innovations in safety and equipment.

"When we compared our cost of ownership of the current truck that is due to retire, to the new trucks we got quotes on, the hair on the back of our necks stood up," says Itamar Levine, director of fleet assets.

64 months

Bison has a number of trucks that were scheduled to be replaced next year on the company's 48-month trade cycle. Since those trucks were bought in 2006, it means new trucks bought next year will not only have the additional cost of the 2010 technology, but also the additional cost of the 2007 technology (which was about $7,000 to $8,000 as well), adding up to a "monumental difference" in the cost to replace those trucks. Higher interest rates in a market where credit is tight haven't helped.

"Even if we factor in and try to forecast the additional maintenance costs for stretching that four-year truck into year five, the maintenance costs nowhere nearly offset what the additional monthly cost of the new truck will be," Levine says. "It's not feasible for us to buy new trucks" next year to replace those four-year-old models.

So for a group of those trucks that were on the planned 48-month trade cycle, Bison has decided to keep them for an additional 18 months. They've purchased extended warranties from the manufacturer to help offset some of the risks of added maintenance and repair costs, but even with the extra costs of that warranty, the company's calculations show they should still come out ahead.

Testing, testing

Bison is buying some 2010 trucks, and in fact already has taken delivery of some, in order to test, evaluate, and understand the operational side of the engines. "We're not going to sit on the sidelines and let other fleets or let the OEs do that for us," Levine says.

Describing himself as "fairly cynical" when it comes to manufacturers' claims about the new engines, Levine said in previous emissions changeovers, "in most cases, we find that the claims of the OEs and what we actually find out when we operate the trucks are quite different. … We were told that 2007 emissions were going to be no problem as far as reliability an downtime, and it turned out to be a bloody nightmare. It was the same with cooled EGR in 2003; we were told it was going to cost more money to buy but not more to operate, but that certainly wasn't the case."

The colder climates that Bison operates in are part of the reason Levine says it's so important to validate the engines in their own operations. "In the '07 engines, we found a lot of the mechanical challenges we had were really due to the cold weather, and the regen process works quite different in cold weather."

Numbers
"Replacing a truck for us is always a financial decision," Levine explains. "We look at what the finance costs are (which are also up), what the maintenance costs are. When it starts to cost more money to maintain the truck than to buy a new one, we go buy a new one. In the past, that was around 48 months for us."
But no more.