Scheduled Asset Maintenance Could Be Costing Fleets A Lot Of Money
Asset maintenance costs have a significant bearing on operating margin. Optimizing asset visits to the yard will directly increase uptime and positively impact the bottomline.
Happy Thanksgiving and a hearty welcome to the 64th 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.
It does not come as a surprise to know carrier firms historically have operated their trucking assets on thin margins, with a bulk of the operating costs channeled into driver wages, fuel, and truck maintenance. While the first two metrics are usually beyond the control of any individual trucking carrier, there are ways to alleviate the burden of truck maintenance by rethinking its workflow.
The Pareto principle comes to mind. It hypothesizes that for many outcomes, roughly 80% of consequences come from 20% of the causes — a statement that could be true for scheduled truck maintenance as well.
Scheduling exact time windows for truck maintenance is challenging as no two trucks are alike. Trucks need individual attention as within the same time period, they could run varying miles across contrasting conditions, have truckers with distinct driving styles behind the wheel, and carry dissimilar loads — aside from having different manufacturers, years of service, and nature of handling.
Scheduling exact time windows for truck maintenance is challenging as no two trucks are alike.
Thus, it's no wonder that certain trucks, even with consistent and frequent maintenance stops, still do not perform to their expected potential. Perhaps, these trucks suffer from issues that entirely escape maintenance checks — like low tire pressure, frequent idling events, or reckless driving episodes.
The devil lies in the details when it comes to optimizing maintenance schedules. Fleet companies often lack the means to collate detailed operational data on assets in service. Echoing the Pareto principle, this inability to capture data stymies the efforts to optimize maintenance needs, resulting in a tiny fraction of the actual maintenance efforts ending up fruitful.
"There's a lot of inefficiencies within trucking back offices, thanks to archaic systems they use till date," said Marc Meyer, the CCO of Transmetrics, a logistics planning and asset management platform. "We've seen clients still using pen and paper to pinpoint when an asset had to go in for maintenance. Optimizing maintenance expenses is vital as it eventually impacts the asset uptime, which determines the company's profitability."
Optimizing maintenance expenses is vital as it eventually impacts the asset uptime, which determines the company's profitability.
Over time, companies spend over 25% of their revenue on maintaining these assets. Meyer contended that this increases expectations to maximize fleet uptime. The idea is to ensure logistics assets stay at the maintenance yard for the least time possible, while ensuring the risks of unexpected breakdowns are next to zero. This is crucial, as aside from wreaking schedules, unexpected truck breakdowns will cost money, delay freight, and damage shipper-carrier relationships.
Archaic methods of logging data are not the only problem for the chaos surrounding asset maintenance in trucking firms. The problem is also with the various mediums where maintenance data logs are entered — for instance, on the cloud, Excel sheets, paper logs, and even just existing in memory.
Streamlining the trucking asset's operational data is critical to optimize maintenance schedules. "Unexpected breakdowns happen due to data opacity and blindspots in operations. There are instances where people are ignorant of the state of their asset's deterioration — especially when the asset hauls in a heavy-duty environment," said Meyer. "You could organize maintenance in case of an emergency, but you're never figuring out how to stop breakdowns before they happen."
“You could organize maintenance in case of an emergency, but you're never figuring out how to stop breakdowns before they happen.”
Measuring trucking activity in real-time via IoT solutions can help understand wear and tear more granularly, allowing fleet managers to ground assets based on customized needs. Streamlining this data would also help maintenance teams organize better, removing the need for emergency maintenance — "their jobs will finally stop revolving around putting out fires, and rather transition towards true predictive maintenance," pointed out Meyer.
Maintaining a dossier of every asset updated after each visit to the shed — statuses, parts replaced, and breakdown history — aside from documenting data received from IoT sensors, will help provide a real-time update on asset health. This would ensure maintenance visits remain dynamic and need-based, removing the need for strict schedules and improving overall asset uptime.
"There should also be some scrutiny into the maintenance that goes into individual assets. Replacements, like tire or brake changes, must be backed with reasons, and the timeline of recurrence must be noted," said Meyer. "This helps you build a baseline. A baseline could be a good rule of thumb to determine if some scheduled replacements might be a tad too frequent. Extending these timelines can save the company a lot of money."
With these checks and balances, asset-owning logistics companies can reduce maintenance costs by roughly 15% — which is quite considerable in a working environment with razor-thin margins. Meyer contended that equipment downtime can be reduced by as much as 80% with good scrutiny and visibility into asset wear and tear.
Equipment downtime can be reduced by as much as 80% with good scrutiny and visibility into asset wear and tear.
This is due to a couple of things — one, the managers clearly understand the parts to replace ahead of time, and so can ensure the maintenance shed has the necessary parts in stock. Two, companies can plan and push the assets in question on freight hauls that terminate close to their designated maintenance sheds — minimizing deadhead miles and downtime.
"Comprehensive planning can ensure fleets always have healthy assets to move scheduled loads, while increasing safety and lowering costs. This leads to more organized, calmer work days for planners, resulting in happier clients and better retention."
The Weekly Roundup
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The United States could be dodging a recessionary bullet in 2023 as a leveled labor market and post-pandemic equilibrium continue to buoy the national GDP. Goldman Sachs’ analysts expect real household income to rise 3% in the coming year. While the US isn’t entirely in the clear, the economist teams at Goldman Sachs are optimistic that the United States will come through relatively unscathed.
…said who?
“We’ve got to get that cargo back.”
- Gene Seroka, the executive director of the Port of Los Angeles, commenting on the fall of imports moving through the port over the second half of ‘22, as shippers diverted freight to the East Coast.
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