Low inventories and high costs: a one-two punch for private fleets
December 15, 2022
Low availability of new equipment as well as the parts needed to keep existing equipment in operation is one of the biggest struggles facing private fleets today.
“Whether a guy is broken down on the road and he needs a subunit, or we just need a rental for a week, the supply of those vehicles seems to have disappeared,” says Brian Piraino, Senior Transportation Manager with dairy company HP Hood.
When fleet managers do gain access to the equipment they need, prices are sky high thanks to inflation and high demand. Piriano estimates that cost of tires has gone up by 30% or more for HP Hood’s fleet.
“The cost of a new trailer went up 66%,” says HP Hood Fleet Manager Dennis Wilson. “When we order bundles of trailers, it hurts.”
How much have operations costs risen on average for private fleets in the last year? Find out in the latest episode of the Stay In Your Lane Podcast.
Adding insult to injury, the high premium paid for new trailers does nothing to guarantee availability. Wilson says that the trailers his company orders today won’t arrive until the second or third quarter of 2023. By then, the actual price may be even higher, as suppliers won’t lock in a rate until 14 weeks prior to delivery.
By the time a trailer is delivered and equipped with all necessary equipment, HP Hood is paying as much as $140,000 per unit. This makes purchasing new trailers in the necessary quantities almost impossible. As a result, Wilson and his team do their best to maintain and repair existing equipment.
“Unfortunately, with lead times to keep the equipment rolling, we’ve had to take good money and put it into bad,” he says. “We’re putting money into equipment that we essentially don’t want to fix.”
Even if the choice is made to repair a piece of subpar equipment, executing the desired repairs can be another lengthy and expensive process. Repair shops are working through extended wait times with so many companies turning to increased maintenance.
“We’re making appointments now at refurb/repair places, when before we could just get that trailer in and out,” says Piraino. “Not only have costs gone up, but the downtime on that asset is quite considerable.”
Is there any relief in sight for sky-high equipment costs? Learn more in the latest episode of the Stay In Your Lane Podcast.
Normally, rentals would provide some relief when trailer inventory is low. With trailers in such high demand, HP Hood is holding onto any trailers they can acquire from rental houses on a long-term basis. This means paying rental fees for units even when they are not in use for fear that they won’t be available again. In light of the one-two punch of low inventory and high equipment costs, fleet managers are forced to make difficult compromises to keep their trucks moving.
All of these increased expenses translate to higher operating costs for private fleets. Between parts, labor, repairs, and other expenses, Piraino estimates that the cost of maintaining HP Hood’s fleet has risen by 30% or more in recent years. These struggles are far from unique. HP Hood is a textbook example of the struggles that fleets across the nation must endure.
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