Medium-Duty Challenges

Despite the wide variety of applications, certain key issues -- namely drivers and equipment -- impact all fleets.Don't let the numbers throw you. Despite annual sales that have hovered around the 125,000-unit mark for most of the decade, the medium market is brimming with activity.The market is really a series of markets in which the primary commonality is the type of equipment fleets operate: Class

Despite the wide variety of applications, certain key issues -- namely drivers and equipment -- impact all fleets.

Don't let the numbers throw you. Despite annual sales that have hovered around the 125,000-unit mark for most of the decade, the medium market is brimming with activity.

The market is really a series of markets in which the primary commonality is the type of equipment fleets operate: Class 6 (19,501-26,000 GVW) and Class 7 (26,001-33,000 lb. GVW). But all similarity ends there. Seemingly endless varieties of equipment configurations can be -- and are -- tailored to meet individual business needs.

Despite the lack of homogeneity, there are several trends and challenges that cut across the application-specific boundaries. Foremost among these is the relentless pressure to get the most out of the equipment for the lowest possible investment.

This drive for enhanced efficiency is evidenced by the effort to size the fleet to meet business needs. "We've come through the era of spare units," says Dave Johanneson, group vp for Navistar International Transportation Corp.'s truck business. "Companies have pretty dramatically rationalized their fleets so that all units are working every day."

In that environment, fleets look for equipment that is dependable, durable, and reliable. It's a market marked not so much by individualized component spec'ing, but by an application spec.

That has led to an acceleration in the trend towards automatic transmissions, which have shifted from an estimated 20% of the market at the beginning of the decade to more than 35% today, according to figures compiled by Navistar. Because these transmissions often help today's less experienced drivers feel more comfortable behind the wheel, fleets believe they're worth the higher price tag.

As acceptance of electronic powerplants continues to grow, fleets benefit from improved fuel economy, longer maintenance intervals, and access to more timely operational information.

Even though, as a rule, these vehicles aren't racking up tremendous amounts of highway mileage, fuel economy is a growing concern, maintains John Wayman, director of Business Class sales for Freightliner Corp. "What's hidden in there is idle time and duty factors," he says. "Anything we can do to cut their fuel costs helps improve their operation."

According to Frank Merz, vp-sales and marketing for Hino Diesel Trucks, new engine designs also boast more power, particularly as operating regions served by these types of trucks.

Drivers have also made their presence known inside the cab. New trucks are sporting more functional designs: easier entry and egress, better visibility, controls that take on an automotive look, and improved ergonomics.

Not only is today's equipment more efficient, manufacturers are backing it with improved parts and service support. Just like their counterparts in the heavy-duty market, most medium-duty operations are turning to outside sources for maintenance as they concentrate on their core businesses. From the dealer's perspective, that's welcome news because it allows them to schedule maintenance during non-peak hours.

The new equipment is also forcing many fleets to rethink their trade cycles. In general, turns are getting shorter as fleets realize the benefit of new technology, seek to get the most out of their trade-ins, and stay within warranty.

In the pages that follow, FLEET OWNER takes a look at these issues through the eyes of the fleets to better understand the challenges.

Bringing it home Not content with being the nation's largest self-storage company, Public Storage launched an aggressive expansion effort last September. If you can't come to the self-storage facilities, they will come to you.

In about 40 areas of the country, Public Storage Pickup & Delivery will now bring a wooden container measuring 5x7x8 ft. to homes and businesses. After the customer fills it, the container is picked up and stored in a central warehouse where it can be accessed with two hours' notice.

To make that happen, each of the 40 locations depends upon a fleet of three to five medium-duty vehicles. Today, there are nearly 175 units throughout the system, although that number could grow to nearly 1,000 in the next three years, assuming Bahman Abtahi, senior vice president of the Glendale, Calif.-based operation, hits his projections.

The leased fleet is almost equally divided between Kenworth T-300s and Freightliner F-70s and F-80s. After an initial run with 24 straight trucks, Abtahi shifted to the Class 7 tractors teamed with 34-ft. flatbeds. The combination offers improved maneuverability in the tight residential areas he often must service. Plus, the trailer offers room for an additional storage container. Weight is seldom a factor.

Both Kenworth and Freightliner vehicles are spec'd with automatic transmissions "for the convenience of drivers," Abtahi says. Air ride is standard on the flatbed trailers "to make sure the customers' goods don't get beat up."

In addition to dividing the equipment between two vendors, Abtahi splits the lease arrangements among Paccar Leasing Corp., Ryder Truck Leasing, and Penske Truck Leasing. "As a business, you always want to have a choice," he says. "Plus, as a nationwide company, it allows us to take advantage of the best company in a particular region." Maintenance on the units is handled by the leasing companies.

Units rack up 35,000 miles annually, allowing Abtahi to set them up on seven-year turns, which means he'll be trading the equipment with time to spare on his 250,000-mile warranty.

Drivers spend 70% of their time behind the wheel and 30% with customers. This customer involvement explains why the 250 drivers are "the most important people in operation," according to Abtahi. "They are the link between the customer and us." Not only do drivers need a Class A endorsement on their CDL, they are also hired based on their ability to interact effectively with the customer.

Finding drivers conscientious enough to take care of the customers and their goods has been one of the biggest challenges Abtahi has faced in the start-up phase. That, and finding the buildings with enough headroom to stack the containers five high. "The equipment has been the easy part," says Abtahi.

A fresh look When it comes to premium meats, appearances matter. Not just the meat itself, but the way it is packaged and delivered.

"The last thing consumers want to see is meat coming off of a dirty truck," says Leo DiBenedetto in explaining Boar's Head Provisions' fastidiousness. It is this compulsion with image that drives the small fleet DiBenedetto oversees.

But this fleet doesn't actually deliver any meat. Instead, it exists as an in-house rental company for the distributors that are responsible for deliveries to grocery stores, delis, and restaurants throughout the New York City tri-state area.

When one of the distributors suffers a breakdown, DiBenedetto sends out a replacement unit from his fleet. Similarly, he provides a loaner when a distributor's meat wagon needs to spend some time at the Brooklyn, N.Y., distribution headquarters for one of its frequent paint jobs.

"The only reason our fleet exists is to help our distributors when they're down," says DiBenedetto. "Rental refrigerated trucks are almost impossible to come by in New York. Operating our own spare fleet gives our distributors the ability to run their business uninterrupted."

Plus, it preserves the Boar's Head quality image. "We don't want to pull our meat out of somebody else's wagon," he says.

This corporate ambulance service keeps DiBenedetto's fleet rolling. "Our warehouse can only accommodate three trucks, but we never have problems storing units not out in the field." The units rack up an average of 25,000 miles annually, allowing him to stretch trade intervals to seven years.

His fleet is evenly divided between Hino and GMC TopKicks. DiBenedetto keeps the spec simple: strength and reliability. "I don't want our distributors getting too comfortable in our trucks," he says. "Their people are not always fully experienced in driving a truck. So I need a truck that can take a beating." Plus, it always has to be ready to roll. "When I get a call for a spare truck is not the time to discover that there's a fluid leak," he says.

The fleet mix gives DiBenedetto an equal number of cabovers (easier to drive in the New York City metropolitan area) and conventionals (more comfortable for inexperienced drivers).

Outside of his small fleet, he does not control the spec for the distributors' fleets.

"The only thing we interfere with is appearance, corporate image, and fleet graphics," says DiBenedetto. He has the authority to pull any truck out of service for a paint job.

Global driver shortage Paul Helwagen has more in common with his colleagues in the heavy-duty side of the business than he would like. As vp of operations for Globe Business Resources, he is finding it tough to keep drivers in the seats of his equipment. Globe is the parent of Globe Furniture Rental, the nation's third-largest furniture rental and retailing company.

That's not the way it was supposed to work. After all, as a medium-duty fleet, Globe could sidestep thorny issues -- such as stricter licensing, long periods away from home, and poor pay -- that traditionally have plagued the longhaul, over-the-road fleets.

Because his 86 straight trucks weigh in at less than 26,000 lb., Helwagen does not require a commercial driver's license. Plus, his drivers stay within a 100-mile radius of Globe's 14 distribution centers sprinkled throughout the country, which all but eliminates time away from home and nagging log-keeping requirements.

On paper, that should add up to a deeper pool of qualified applicants from which to choose. Not so in the Globe world, where driver turnover runs at 30%. Although many over-the-road fleets would kill for that kind of turnover, it is historically high for Globe.

There are numerous reasons. First of all, the nation's unemployment continues to hover around 5%, for many years considered the threshold of full employment. "That means job opportunities are abundant," says Helwagen. "The grass is always greener on the other side, and we do lose some drivers to other companies."

At the same time, the need for drivers continues to increase in step with Globe's business. A recent expansion into the corporate relocation business is expected to pump up growth -- and fleet demand -- by nearly a third over the next three years.

Finally, the job is demanding and Globe sets high standards. Not only are drivers responsible for deliveries, they spend a lot of time in front of both residential and commercial customers.

"Drivers are the last representation of Globe the customer has, and it's important that it be a favorable one," explains Helwagen. Only one-third of the job is spent behind the wheel; the rest is in front of the customer. As a result, Globe puts drivers through a rigorous training regimen that not only upgrades driving skills, but enhances customer-service skills as well.

The driver's compensation package reflects this customer focus as well. The company's 100 drivers earn an hourly rate, plus a bonus that reflects productivity, safety, and service quality.

Helwagen also prides himself on running a lean operation. "Our fleet easily could be 15-20 units larger," he says. "But we've created in-house systems to make sure we are fully utilizing our equipment." These include computerized systems for improved loading and routing .

The need to keep its equipment seated is also reflected in Globe's specs. With an eye to his driver force, Helwagen is increasingly bumping up the creature comforts of his cab -- insisting on air conditioning, bins for maps, and cup holders. Still, "much of what is available on heavy-duty models is not available in the medium-duty trucks," he says.

The fact that he runs almost entirely Mack MS Mid-Liner cabovers with a 24-ft. box gives him the opportunity to work with the manufacturer to upgrade the standard offering. He keeps three Navistar 4900s, six Ford 7000s and two Mitsubishi's in the fleet to "keep Mack hungry and listening to our needs."

Maintenance is farmed out in each city, with a preferential nod to the local Mack dealer in that territory. Equipment is held for about eight years or 200,000 miles before being traded back to the dealer.

Where time is money Benny Gentry, a driver for Con-Way NOW, was on his way to Kalamazoo, Mich., with a load of automotive parts when his rig lost a fuel pump. Within minutes, Gentry had contacted the company's headquarters to advise them that his delivery time was in jeopardy.

NOW staff in Ann Arbor, Mich., dispatched a wrecker, put Gentry's rig on a hook, and delivered the load. All within NOW's promised 15-minute window.

That's the length some companies will go to for a piece of the highly competitive surface-expedited market. Con-Way NOW, a division of Con-Way Transportation Services, established last fall, is no exception.

"We're not selling a trucking service," says vp and general manager Doug Stotlar. "We're selling a solution to a problem." He likens his business to an ambulance service for freight. In today's world of lean inventory levels and thinning supply lines, such movements are taking on increasing importance. "About one in four manufacturers are running just-in-time inventory management," he adds. "That number is expected to grow by 50% by the year 2000."

Con-Way NOW says that the surface-expedited industry figures show an average weight per shipment of 2,281 lb., producing an average revenue per shipment of $651. That holds up nicely against the $110 a typical LTL brings in.

And NOW is doing it right. Not only does it pick up shipments within 90 minutes of receiving a phone call, it delivers within 15 minutes of the committed time. If a shipment is two hours late, the rates are reduced by half; four hours late and the shipment is free. In its first 10 months, NOW has delivered 99.8% of its shipments before the two-hour window closes. And all without a claim.

Con-Way is not the only company to have designs on this highly lucrative market. There are an estimated 10,000 carriers in the time-sensitive surface freight industry, mostly small mom-and-pop operations. The top five carriers control less than 4% of the market. Contrast that to the top five LTL carriers, which control around half of their market.

To be viable in the market niche, Stotlar, who wrote the business plan for the Con-Way NOW launch, determined that the company had to start with its own equipment, staff, and technology. After proving itself in a regional market, it could gradually expand to a nationwide carrier.

Con-Way's fleet started in the Midwest with five equipment configurations, including a cargo wagon, cargo vans, 12-ft. straight trucks, 20-ft. straight trucks, and tractor-trailer combinations. Already, he has doubled the NOW network by expanding into the South.

As the company's reputation for service grows, Stotlar is moving away from ownership of the asset base. The move to owner-operators is calculated to help insulate the fleet against the wide fluctuations in freight demand. "We're resetting the chessboard," he says.

Stotlar insists that the move will be transparent to customers. First of all, he views the owner-operators as part of the team, and has been up-front with his 280 company drivers that such a move was in the company's future. In fact, he is helping to make it as easy as possible to convert these drivers to independent contractors. Plus, the shift in driver status doesn't change the profile of small business owners he is looking for to slip behind the wheel.

Stotlar will also maintain some control over the asset base. Equipment configurations will remain the same, although it will be up to each owner-operator to spec it.

He also will require that contractors conduct the federal inspection on all equipment every six months, even though it is required once a year.

Plowing a new spec The push to reinvent government has reached down to the local level, where the government meets the road. The need to get more for less has forced changes in the way one town in the Upper Peninsula of Michigan takes care of its infrastructure. Chippewa County has more miles of pavement than any other county in Michigan. It's up to the Road Commission to take care of this investment. That means paving, repairing, and repaving. And with winters that often produce snowfalls of more than 120 inches, the commission is certainly put to the test.

Armed with a fleet of 50 trucks, the commission is looking to upgrade its equipment spec to make the equipment more flexible -- all in the name of taxpayer justice. "The more you can do, the better the investment," says Tom Sibbald, shop foreman.

Earlier this year, the fleet took delivery of its first six Peterbilt 330 single-axle Class 7 tractors and 357 double-axle Class 7s. Another eight tandems are coming. The fleet also has seven Ford tandems and seven GMC tandems; the balance are International 4900s.

Sibbald took this opportunity to upgrade the specs to ensure that the new unit would stand up to the rigors of both winter and summer operations. "The first thing we needed to do was to address the differential," he said. "The housings were braking, and the differential as a whole was too weak." So he shifted to a driver-controlled locking differential, which "gives better control at low speed."

To help improve traction, Sibbald specs siping on tires. This design helps pull water from the tread, thus increasing the tire footprint. "There's not a driver here who would choose to go without it," he says.

Because of the heavier payloads he can now carry, Sibbald also had to beef up the suspension, adopting an air ride to help deflect the pounding the truck takes and help eliminate all the hydraulics and hoses running through it. "The air ride helps because the dump boxes are being shaken apart and hoses are being worn," he explains. "An added benefit is that the suspension helps compensate for the angled alignment of the snow scraper attached to the underbody. In the past, we could never go with an underbody scraper on our single-axle trucks." He also shifted away from the standard 5-speed transmission with a 2-speed rear-end to a 9-speed transmission.

With the bigger truck, Sibbald has upped his Cummins M-11 powerplant, moving from a 210-hp. engine on his single-axle units six years ago to a 275 now. Twin screws have seen power increase from 300 to 350 hp. He also went way up on gear ratio. "Previously, we were geared at 55 mph for maximum speed at the maximum rpm," he said. "But the new electronic package allows us to improve fuel mileage by gearing the truck to run 80 mph, but programming it to run 60 mph, well below the peak engine speed."

Sibbald also insisted the new trucks offer improved maneuverability. "I didn't want a setback front axle because I was running a 2,000-lb. snowplow on the front," he said. "So we opted for a setforward front axle. But we can still run circles inside our previous turning radius."

With the new trucks now in operation, Sibbald is hoping he can extend his previous 10-year equipment turns -- a feat entirely possible given the expertise in his shop. Chippewa County performs all its own maintenance and is authorized to do warranty work.

"Some people are shocked at the level at which we maintain our fleet," he says. "PM intervals are set for every 100 hours. We find that if we don't maintain them that frequently, the rest of the trucks won't get greased." In addition, Sibbald's garage uses waste-oil burners to help knock down heating bills. That allows him to recover some of the added expense of such a rigid PM program.

Drawing on the design of its popular MD World Transmission family, Allison Transmission is developing two new automatics for vehicles with GVWs under 30,000 lb. Intended to replace the company's current AT500 4-speed automatic and to extend its product reach into even lighter vehicles, the new 1000 and 2000 Series are electronically controlled 5-speed overdrive units featuring fully automatic planetary gear systems with helical gears, torque converters with integral lockup clutches, and torsional dampers.

Designed for GVWs between 19,850 and 30,000 lb., the 2000 Series closely duplicates the capacity of the AT500, handling up to 300 hp. and torque of up to 520 lb.-ft. Production is scheduled to begin in January 2000, according to Laurie Breisch Tuttle, program manager for the new automatics.

The 1000 Series represents a new market for Allison -- vehicles under 19,850 lb. GVW. In North America, it will compete with Ford, GM, and Chrysler 4-speed automatics in applications such as Class 3 and 4 dual-wheel pickups, step vans, shuttle buses, and motor homes, according to Tuttle. Allison also sees a growing market worldwide for automatics in light commercial vehicles, and expects the 1000 to compete against manual transmissions in Europe and Asia. Production is scheduled to begin in June 1999.

Features for the new transmissions include a programmable electronic control unit (ECU) that can be easily adapted for a variety of applications, such as safety interlocks and specialized PTO modes. According to Tuttle, the ECU uses closed-loop adaptive technology that constantly monitors vehicle performance and modifies shift patterns based on driving style, road conditions, load, and other factors. A 12V version of the ECU with J1850 diagnostic capabilities has been developed for North America, while Europe will get a 24V ECU with CAN diagnostics.

Other features for both the 1000 and 2000 Series include a park pawl for applications up to 25,000 lb. GVW; an optional input retarder that fits inside the basic transmission package; PTO access on both sides of the case; and an externally accessible spin-on oil filter. The new automatics are also expected to come with three-year, unlimited mileage warranties.

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