Improving Fleet Maintenance Is About Getting Your Hands Dirty
Fleet maintenance cannot remain a passive, scheduled exercise that companies throw money at and hope for minimal disruptions to daily operations
A hearty welcome to the 72nd edition of The Logistics Rundown, a weekly digest that aims to put some perspective on what’s brewing within the logistics industry. This is a space where we religiously dissect market trends, chat with industry thought leaders, highlight supply chain innovation, celebrate startups, and share news nuggets.
A few months ago, we did a story about how scheduled asset maintenance could be detrimental to trucking fleets. Carriers running more than a handful of trucks in their fleet may want to rethink equipment maintenance based on predefined time windows, as schedules drawn up at back offices do not do justice to the unique wear-and-tear signatures of trucking assets.
Nonetheless, there's no dearth of tech-forward maintenance solutions in the market. Over the last decade, the industry has witnessed the growth of third-party vendors that come up with great (plug-and-play?) solutions, boast of sky-high valuations, manage large marketing budgets, and field massive sales teams.
And yet, fleet operators continue to remain skeptical. Much of it concerns the lack of trust between carriers and third-party vendors. It isn't uncommon to see trucking management warding off discussions on improving maintenance by pointing to the large maintenance budget they've allocated for the year.
It isn't uncommon to see trucking management warding off discussions on improving maintenance by pointing to the large maintenance budget they've allocated for the year.
For the most part, carriers sincerely believe that throwing more money into maintenance will help maximize the time their equipment stays online. While tech-forward solutions can pinpoint financial excesses in maintenance, there is an inherent problem with convincing the carrier's maintenance team, as they'd have to answer retroactive questions from management over a historically-bloated maintenance budget.
"Maintenance is not a necessary evil," pointed out Jim Coffren, a seasoned asset maintenance consultant with three decades in the business. "Maintenance should be your competitive advantage in trucking. The best operators have a significant competitive edge derived from their maintenance practices."
Coffren contended that the maintenance segment faces challenges spilling over from tight route planning. "In planning, companies often don't optimize the length of hauls. This results in their inefficient freight moves — usually, tweener freight of 200-300 miles — having a hard time getting picked up by carriers," he said. "Tweener freight is the least profitable business they have. Putting a company truck with a company guy on such regional moves would help the management clean up obligations, but an objective independent operator would leave quickly."
To overcome this, the best operating units rely on sophisticated planning and routing tools to maximize network utilization. This technically results in operators having even less downtime to plan maintenance windows, and so holding onto outdated maintenance workflows will increase driver attrition rates.
But organizational inertia is telling. Many large trucking carriers continue clutching the idea of in-house maintenance, by putting several facilities across the country for equipment to pass by when they are in their prescribed maintenance window.
Many large trucking carriers continue holding onto the idea of in-house maintenance, by putting several facilities across the country for equipment to pass by when they are in their prescribed maintenance window.
"No matter how many terminals a company puts in its network, it will never capture enough internal maintenance capacity to get every truck through every maintenance window. That isn't possible," said Coffren.
Consider an enterprise over-the-road network. On average, such carrier firms have 20-30% of their truck capacity tied up in dedicated lanes. Let's say two trucks in a fleet running ten trucks are captive to dedicated routes that run far from any in-house maintenance yard or external maintenance yard partners spread across the country. What then happens to trucks hitting their maintenance windows in dedicated lanes?
"Companies can tow trucks in and out, and in some cases, even put an extra truck on each end of the network. This is a forcefully planned network," argued Coffren. "Building a hybrid network of internal maintenance capacity and a very selective, strategically-designed external vendor network is tedious and wasteful. Larger fleets can afford to put more terminals, but at the end of the day, there's always a percentage of the fleet that's not optimally aligned."
With maintenance, there's also the challenge of taking active equipment out of hauling operations. When the freight market was historically tight at the height of the pandemic, carriers pushed to keep all assets online as they made money hand over fist. Maintenance schedules were likely broken during the year, considering new equipment was also hard to come by. The perceived bottom line here is maintenance schedules will be broken if there's a real impetus to not have equipment downtime. In a low-margin, cyclical market like trucking, there could be a solid motivation to break schedules at every instance of high capacity demand.
In a low-margin, cyclical market like trucking, there could be a solid motivation to break schedules at every instance of high capacity demand.
The solution to this might be obvious — the management should look to convert non-value-added downtime to a value-added scenario. "If I have very little non-value added downtime, how and when do I service that equipment?" observed Coffren.
While the math will always favor having in-house maintenance against the possibility of external providers, adding operational context makes this a whole different ball game. "Consider you have a driver on an asset scheduled for maintenance hauling on a multi-stop, long-distance move. Now, one of the interim pickup loads got delayed by five hours, so linehaul miles and margins are going out of the window by the hour."
"You can either keep the asset idling for those five hours or be opportunistic and manage maintenance at the nearest yard in that interval," said Coffren. "The equation flips then. With operational context, it is easier to take a global decision to outsource maintenance."
In trucking, operational context means everything. And in a market swimming with tech-forward maintenance solutions, operational context is apparently hard to come by. Coffren recounted how he's seen tech entrepreneurs with no experience in trucking come up with maintenance solutions that look great on paper but could seldom see adoption on ground zero.
"I can give you a boatload of descriptive analytics around everything you want to understand. However, if there's no operational context to it, that analytics means nothing to you," said Coffren. "Then there's the issue with buying discrete software. Carriers will have to install it, license it, and you'd need to understand how to use it. And that isn't even the end goal — it's about how you take that technology and transform your business practices to positively impact your bottom line."
Solutions in the market claim to capture data over several metrics tracking fleet operations and cough up insights to improve fleet maintenance. However, these solutions do little to help companies translate those data insights into meaningful improvements in fleet operations. Coffren argued that it isn't about how many data points a maintenance software can capture; it's about what the company can do with all that captured data.
It isn't about how many data points a maintenance software can capture; it's about what the company can do with all that captured data.
"This is the biggest challenge today. The largest IoT companies track trucking activity without any relational context to what drives the business. They're producing terabytes of new data that a typical transport company with a typical tech stack cannot handle. Carriers want to buy answers to their problems, not work through tons of data they can hardly understand."
To this effect, the best way forward as a service provider is to get as close as possible to point out to a trucking company what they need to fix — with needed operational, social, and business context.
"As a carrier, I'm buying a maintenance solution to manage a specific competitive advantage or to resolve a specific competitive disadvantage. With that, I manage my business activity better. It allows me to execute my moves right," said Coffren. "With operational context, I can see what's coming and check on my equipment proactively. I can correlate the costs to my activity and calculate my profitability. A solution that can cater to these needs will see true adoption."
The Weekly Roundup
Negotiations between US West Coast ports and the labor unions are finding some common ground (at last). The Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) have reached some tentative agreements on certain key issues. Both parties said talks would continue until an agreement is reached.
Ocean freight capacity is about to boom in a big way. What’s being called the Sword of Damocles in terms of new shipbuilding orders will be hitting the water this year and will continue through 2025. These new orders represent 7.69 million TEUs, roughly 30% of the total currently active fleet, and are coming at a time when global demand is shrinking.
One of the most crucial of shipping documents, the Bill of Lading, is increasingly going digital. Nine major ocean carriers commit to introducing a fully electronic bill of lading by 2030, a move that is expected to save shareholders billions. The eBL is the first step towards a fully digital ocean freight system.
Shopify is stepping up its offerings. The ecommerce platform will be offering new logistics and fulfillment services to vendors. These new offerings include ocean freight tracking and inventory management systems. This falls in line with the two most recent acquisitions for the Canadian ecommerce company, having bought out warehousing automation firm 6 River Systems Inc. and shipping service provider Deliverr Inc.
…said who?
“It will probably be the most significant cost savings our company will experience this year over 2022.”
- Jon Cargill, CFO of Hobby Lobby Stores Inc., a large US importer, commenting on falling ocean freight rates
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