These days, it’s all about pinching pennies and saving when and where you can.
For some fleets, that means devoting some extra attention to used trucks and remanufactured parts. A recent National Conference of State Fleet Administrators (NCSFA) survey of two dozen municipal fleet managers showed that only four budgets were unaffected by the recent economic downturn, with more than 70 percent of managers looking for any means necessary reduce their capital costs.
For Barry Mortensen, long-time owner of Roosevelt, UT-based Mortensen Trucking Inc., that means there are a lot more used truck options out there for his fleet. He says while his experience in the industry helps him separate the good deals from the bad, now it seems there are more bargains available out there than he needs.
“I just go looking and once in a while you run across an owner-operator who’s going out of business or he’s overspent what he can afford,” he says. “A guy called me yesterday with a 2002 Peterbilt 379; offered it to me for $22,000, with a 550 Cat’ and a 13-speed. If I was looking to expand, it would be a good time to jump on something that like.”
Mortensen is also cutting his costs by purchasing remanufactured parts; depending on the part, of course.
“Transmissions and rear ends, I get those, and obviously you use remanufactured brake shoes if you have any sense,” he says. “Clutches, you best go with new because they (can) hardly rebuild them for less than a brand new one. I don’t know if you’d want to mess with that, because if you make one tiny little screw-up…”
Mortensen says there seem to be more remanufactured parts out there today then ever before, and fleet managers are wise to check them out before spending big bucks on new parts. He says it is important to cut costs whenever possible during tough economic times in order to maintain even the slimmest profit margins.
“We see it in the grocery stores and everywhere else, and the whole nation is seeing it,” he says. “Some (fleets) go ahead and buy new (parts) all the time, but you can’t really keep it up. The ones that do don’t seem to stay in business much.”
For many fleets, a consistent source of affordable, quality used trucks is as good as gold, and companies like Ryder are there to happily fill the void. Ryder group director of asset management and vehicle sales Gregg Nierenberg says since the company has always needed to remarket its old vehicles, they are well-positioned to provide quality used trucks, particularly in the medium-duty market. Ryder currently has about 6,000 vehicles available at 50 centers around the U.S. and Canada, about half of which are Class 3-5.
“The end users that we target are small delivery companies, parcel companies, landscapers, people that have pool cleaning businesses, various small business owners that have a need to distribute their product, like small furniture companies or food delivery services,” he says. “We also target small and medium-sized transportation and freight companies.”
With more than 150,000 vehicles in its fleet, Ryder has plenty of variety, and they know exactly how those trucks have been performing, which is another advantage for fleet customer, Nierenberg says.
“Unlike a lot of our competition that goes out there to buy a vehicle to turn around and sell it, Ryder’s in the unique position where we know where our vehicle’s been,” he says. “We have an extremely loyal base of customers, and they come back to us because of the quality product we offer.”
Nierenberg says it is hard to tell for certain whether the near-recession is forcing more fleet folks to look at used trucks because of shifting inventories and expiring lease contracts. Still, he says the bottom line is that business is good these days.
“In the challenging marketplace environment we’re in, the used truck market in general is a nice place to be,” he says. “Clearly, used trucks are significantly less expensive than a new vehicle. Our units, being solely owned and maintained by Ryder, generally speaking, have a better reliability, and so you can get in for less than a new vehicle. I won’t say it’s like having a new vehicle, but they do run very well because of our rigorous maintenance standards.”
When searching for a quality source of used vehicles, Nierenberg says procurement and maintenance are critically important.
“We have a procurement group whose task is building, with the OEMs, a quality vehicle that is reliable, so that is step one,” he says. “Then, throughout the life cycle of the vehicle, it’s maintained by our 6,000-plus technicians, (using) all of the state-of-the-art diagnostic technologies. We follow a very key preventative maintenance program, and then when it’s time to sell the vehicle to re-market it, we include a copy of all of our maintenance records to our customers and because of those stringent standards, we feel we do deliver a high-quality vehicle, and it’s an excellent value to our customers.”
All Ryder used vehicles must pass a multi-point inspection before they are accepted into a retail center, and are backed by a 30-day guarantee, though Ryder also offers an extended warranty program for up to a year. Nierenberg says one reason the company is so confident in its used vehicles is the quality of their replacement parts.
“All used vehicles, throughout their lives, have had parts replaced as they wear out throughout their original lives,” he says. “We only use OEM-approved parts; we don’t use aftermarket parts, so it’s not only the quality of the engine, it’s the parts that are in it and the key components.”
Nierenberg says offering a reliable, affordable used truck is exactly what many fleets need right now, and Ryder is happy to provide whatever they ask for.
“Buying a used vehicle is significantly less expensive than buying a new vehicle, and in these challenging times, to be a little bit less risk averse, it might make sense to get in there with a used vehicle and spend a little bit less money,” he says. “You’re really able to get into a quality vehicle to run your business at a fair price.”
Eugene Clark, Eaton aftermarket product manager for medium and heavy-duty transmissions, says while he can’t point to specific data that shows the slow economy is driving more fleets to buy used trucks and remanufactured parts in the past few months, he says they might be holding some of their new trucks out of service because of the slow economy; focusing instead on maintaining what they have for as long as possible. He says demand for remanufactured parts reached a market high in 2006 and has remained there ever since.
Clark says the advantages of remanufactured parts for fleets are availability and cost. Eaton Fuller offers remanufactured heavy and medium duty transmissions, clutches and a range of electronic transmission control parts, available at any OEM dealership or OEM-sponsored distribution point.
“With factory original quality, assembly and parts, remanufactured components should work as well as the original equipment,” Clark says.
While it might be tempting to save a bit of money these days with “non-genuine” parts, Clark says that could just be adding to a bad situation. He says it’s best to get the parts you know will work.
“The risk with ‘non-genuine’ components is the variability of the workmanship from vendor to vendor,” he says. “Genuine products have the same assembly line process we use in the original equipment, and technicians will use the same skills for troubleshooting and maintenance as the new product.”
Got any idea when the economy or the trucking industry in general is going to bounce back? Grab a crystal ball and get in line. Until then, most fleet managers are taking a pragmatic approach and getting by as best they can until relief (hopefully) arrives.
Finding a consistent source of used trucks and remanufactured parts is one way to keep capital costs down while not overloading your technicians, and you might even end up shifting your business model if you find enough success.