Al Barner, Senior Vice President of Strategic Fleet Solutions; tells us how at Fleet Advantage, they manage their almost two-billion dollars worth of transportation assets. He also shares the challenges they face and the importance of having strategic fleet solutions.
To Al, one of the main challenges is shortage. “We have a shortage of trucks replacement parts, and as you are very well aware, we have a shortage of drivers.” Also, he mentions that the supply chain issues that occurred over the last eighteen months have made it a challenge to get new equipment into service. This caused used truck value to sky-rocket.
On the other hand, the VP comments that another issue is that companies are starting to prolong the life-cycle of their equipment; and they are starting to see part shortages. “Now, we’ve known about the driver shortage for quite some time now, and obviously, that’s not getting any better.” Estimates from the American Trucking Association are that there’s 80 thousand driver shortage. They anticipate that in the next 5 to 10 years, that’s going to grow to 160 thousand drivers short.
Moreover, Al explains that in particular, the challenge with the oil & gas industry, getting the time you have at industrial gas or a hazmat type of application, you need to hire and retain experienced drivers; “so those folks are often trying to recruit and a lot of times they are doing that through advertising the quality of their equipment, the culture of their company.”
The VP thinks that a lot of leading fleets are leading with culture and “whether you are trying to hire a driver or someone else within the organization; good qualified people are attracted to good strong, corporate cultures. A lot of times we see that the most successful companies have a very good communication strategy for all levels of the organization.”
He emphasizes that one of the issues that they consistently see when they discuss with their clients’ driver turn-over the surveys they receive back is poor communication. “If you think about a driver, his world or her world is in the seat of that truck, and they wanna know that they’ve got good quality equipment that’s well maintained.”
He also added that drivers want to make sure that they have a proper compensation; if they’re having any type of issues with breakdown and things of that nature that oftentimes impacts them. “So, a lot of the better companies are leading with culture and then, they obviously focus on good newer equipment, that’s one of the recruiting tools and a lot of good companies use to bring qualified drivers in, or to keep them within their ranks.”
When Al starts talking about communication, he thinks everybody in the organization should have a good understanding of the life cycle that the company plans to engage. In most times, that’s very important to the driver; “share with them the total life cycle cost in regards to fuel economy, safety features, maintenance and repair cost and that you have a 36-month window that you plan to replace equipment.”
By this, the VP doesn’t mean that you have to replace equipment every 36 months but that when companies look at their replacement strategy, they should have at least a 36-month replacement plan. “And if the driver sees that he’s going to be consistently in new or well-maintained equipment, then, obviously, the opportunity to retain or hire those drivers improves with that.”
Al mentions that for leading fleets to create a culture that acknowledges safety and driver input, they should have a very aggressive trade cycle. The safety features have enhancement year over year, so they are improving each model year. Hence, a lot of the safety features that were an additional cost or option four or five years ago; are now all standard on the equipment.
“Not only do drivers want to make sure that they have good quality, well-maintained equipment but also want to have the latest safety features.” In particular, when talking about any type of hazmat environment, those safety features are very important; not only to the driver but also to the risk management team and the safety team. All way up through the organization.
Moreover, he explains that what we are seeing now is due to the supply chain issues; some companies are starting to extend out those life cycles. This means that they got to be very aggressive with their maintenance and repair programs. Have data analytics to show what the potential breakdowns may be as it hits certain mileage marks.
We also recommend: Forge Nano Technology Cleans Up EV Battery Production From the Atom Up
At Fleet Advantage, they provide their clients with a look at the total life cycle cost by monitoring the odometer reading, fuel consumption, and maintenance and repair cost down to the VRMS code. “Drivers want to drive, they want to be in good safe, well-maintained equipment and that could be put together in kind of a communication format for them as well so, that they see that the company is working hard to make sure that their career path and their opportunities are supported by this strategy.”
Al also states that one of the things that Fleet Advantage is very good at is understanding life cycle cost with the use of data analytics. “When we start to look at 18 billion miles with the data that we have in our system, and you start to see that, year over year, the fuel economy improvements, the maintenance repair costs within those warranty periods, and then the safety enhancements on a new model year equipment, you can start to home in on the most effective life cycle.”
Atlas is a sophisticated tool that they built. “We have a proprietary technology system; it is a club-based system, so we are aggravating data from multiple systems that are not currently connected.”
With Atlas, they have the ability to connect to their client’s shop management and computer system. They supplement maintenance, fuel, and odometer data with their own historical data such as the cost of funds, new truck OECs; as well as resell value. Once they start to put that all together, they can sit down with their clients and perform a quarterly business review that shows the benefit of taking advantage of those more aggressive trade cycles.
Al explains that they combine that with a flexible finance program; “so we may go out and originate, let’s say, a 5-year lease term. But if we have the data that shows our client that we should extend out of that equipment in year four, they have the ability to do that.”
He mentions that unfortunately, companies are forced to prolong that lease because “we can’t get new equipment and that’s why we advocate our clients that you go to new upfront; that you have the flexibility to either exchange that equipment early, or have the ability to extend that equipment at a reduced rate.”
COVID-19 challenges and lessons
The VP sees uncertainty as one of the main challenges that resulted from COVID-19. It had a very significant impact on the supply chain as well as other market dynamics; such as the war in Ukraine.
In addition, he mentions that when you have uncertainty, the best way to deal with it is to have a good robust plan. It should be of at least a 36-month window for replacement strategy; allying yourself with partners that provide you with the maximum flexibility.
“That’s one of the things that we really focus on at Fleet Advantage; making sure that when we engage our clients in any type of a lease opportunity, we structure properly from the start of the transaction, but also give them the ability to exit out at the appropriate time through our early exchange or our extension with the dropdown rate.” Moreover, he explains that all of that has a support by data analytics.
Watch the full interview: Interview with Al Barner
To Al, the lesson is to “have a good long-term game plan, and also you obviously need to be able to pivot and adjust those game plans.” In their particular example, life cycle strategies, based on what’s occurring in the market. He mentions that the best way to do that is to have proper communication within your company. “Have access to data and then with all the data available to us now, we got a lot of white noise, so to speak, in the background; so just adding more data into the pile just gets kind of overlooked having the ability to aggregate that into a useful format and then make business decisions from that.”
The other thing that he stresses is “let’s not forget that clean diesel technology is the most efficient form of transportation that we know of today and when there’s a lot of uncertainty in the market, you want to rely on proven technology that’s very good, and it is improving every year.” He thinks, sometimes we get distracted with what the future brings and it’s good to have the foresight to understand what those technologies will offer but “right now clean diesel technology is the best in the market.”