Mitigating the Risks of Extending Fleet Asset Life Cycles With Technology
Orders for new trucks and trailers are backlogged. High demand for capacity and a global shortage of microchips has created a bottleneck for vehicle manufacturers.
Faced with long lead times on equipment has many fleets making difficult, if not inevitable, decisions to extend the life cycles of tractors and trailers. This decision has risks. Unplanned maintenance events could steamroll their budgets and increase the potential for downtime.
One of the unknowns in the decision is the number of deferred maintenance costs, explains Jim Coffren, a data-driven fleet maintenance expert and president of JC Consulting. Deferred costs, he said, are those that were covered by a factory or extended warranty.
When warranties expire, typically after 36 to 48 months, fleet maintenance costs will certainly go up. Some repairs will be expected but others will not.
If a fleet decides to extend its trade cycles, such as running tractors for an additional 80,000 miles, Coffren advises fleets to pay close attention to the wear rates for tires and other components. Use this information to create a budget, he said, and avoid making costly mistakes such as installing a new set of tires right before a truck is to be traded or sold.
Fleets can use technology to mitigate the risks of extended trade cycles. Fleet maintenance management software can help with predicting replacement cycles for wear items and more significant repairs. With this information, fleets can fine-tune their preventive maintenance (PM) schedules and plan budgets that account for changes in vehicle operating costs.
Starting Off Right
One of the first items on the checklist for extending trade cycles is to bring vehicles in for a PM service before their factory or extended warranties expire. This extra PM service is the time to inspect major components like the engine, transmission, clutch and differentials for any signs of premature failure, said Dave Walters, senior solutions engineer, Trimble Transportation, who is a former director of maintenance.
Coffren adds another item to the checklist: evaluate the inventory of wear items, like tires and brakes, and their wear rates on the vehicles with extended trade cycles. Next, create a maintenance budget for vehicles during their remaining life.
When extending trade cycles, the scenarios to avoid are those where items like tires are replaced close to when the vehicle will be traded in or sold. In some cases, fleets will want to move higher-mileage equipment to freight lanes with lower utilization to save money on replacement items, he said.
Fleet maintenance software systems can keep a detailed repair history on different makes and models of equipment. This data can be augmented by real-time sensor data to accurately predict components failures.
The value of predictive maintenance increases for higher-mileage vehicles that have more probability of downtime, explains Renaldo Adler, head of software engineering, Connected Maintenance, for Trimble Transportation.
Fleets that use technology for predictive maintenance can schedule work pending items for vehicles to complete during the next PM service. In Trimble’s TMT Asset Maintenance software, this can be done using a Scheduler feature, Walters said.
Connecting All Repairs
A critical element in predictive fleet maintenance is to capture repair work that is performed on vehicles at both internal and external shop locations.
Historically, Cowan Systems, a Baltimore, MD-based fleet with more than 2,000 power units, has not had its own shops. The company--which has dedicated dry van, refrigerated truckload and intermodal operations--instead outsourced maintenance to its dealer network.
This model has changed due to a growing shortage of technicians, and trucks not being as reliable as they once were, said Dennis Morgan, president of Cowan.
“We had to get independent,” he said. “We can’t get trucks into bays at dealers.”
Morgan and other leaders at Cowan decided to keep shops open from two fleets it acquired during the last five years. Previously, Cowan had closed the shops of companies it acquired. Even with two shops, “we are still heavily dependent on outside maintenance,” Morgan said.
Cowan Systems uses the TMT Fleet Maintenance software. When work is performed by external shops, the full repair details are entered into its system “as if we were doing the work,” he said, to “know exactly what is being done to help find trends before they become problems.”
Motor carriers that use TMT asset maintenance software can schedule work with outside service providers using a connected network of partners. Trimble has an integration with TravelCenters of America, for instance, that enables fleets to schedule work in TMT Service Center and share visibility of service events with their dispatch systems, like TruckMate, Innovative and TMWSuite, explained Adler.
The Broader Effects
The order backlog on new equipment has not created a need for all companies to extend trade cycles, but it has impacted them in other ways.
Ohio-based AIM Transportation Solutions operates a full-service equipment leasing business, AIM NationaLease, with more than 12,000 power units leased to fleet customers.
AIM has seen business increase from customers needing rental units and an extension on their leases to close the gap until new equipment becomes available. The long lead times have also impacted AIM’s used truck business, said Eric Samp, the company’s director of used trucks.
A year ago, AIM had 125 to 150 used trucks for sale on any given day. At present, it has about 25 trucks in inventory. Used trucks are now selling in 17 days, on average. Historically, the company’s sales cycle was 50 days, he said.
The vast majority of used trucks that AIM sells come from within after leases expire, he said. With many customers extending their leases, AIM has had to purchase and recondition more used trucks from the market to sell.
Cowan Systems has not had to extend its trade cycles. The company has a trade cycle of 42 to 48 months, and all purchases for replacement vehicles in 2021 were ordered a year in advance.
One area where the company might be negatively impacted by long lead times is if a new business opportunity arises. If Cowan needed to buy more assets, “we would not have the ability to do that,” he said.
How Trimble Can Help You Extend Your Asset Life Cycles
Curious to see how technology can help improve the management of your asset life cycles and streamline your entire repair process?
Contact us today to learn more about Trimble’s maintenance-focused solutions and how we can help you implement technology to get a better handle on asset management across your business.