Contract maintenance is certainly nothing new in trucking. Back in 1938—a mere five years after its birth—Ryder System sealed a five-year, five-truck lease deal with Champagne Velvet Beer, a deal that largely hinged on contract maintenance services.
Since then, plenty of wrinkles have come to the contract maintenance game. These include such innovations as parts inventory management for a customer’s shop and staffing fleet shops with technicians contracted from dealerships and third-party providers. In some cases, fleets are even foregoing the shop entirely to rely on mobile maintenance delivered right to their vehicles by truck-based techs.
“The concept of contract maintenance is changing dramatically, and I expect even more change in 2014,” explains Michael Riemer, vice president of products and channel marketing for fleet software provider Decisiv. “Mobile repair is definitely becoming more popular and not just for roadside assistance, but for on-site service and maintenance. This is especially important for LTL and other trucking operations where the assets—trucks and trailers—come home on a regular basis and service events can be scheduled and completed when the trucks are not in operation, resulting in zero effective downtime.”
Riemer also notes that more fleets are actually looking at outsourcing their internal shops, but not in the traditional manner.
“It is [getting] harder and harder to find qualified technicians, and trucking companies realize that maintenance and repair is not a core competency. So, they are hiring third parties to basically come in and run their internal shops—[using] the brick and mortar owned by the fleet—with everything else outsourced,” he points out.
“It is just more difficult and costly to own and operate your own shop today,” notes Jeff Spence, vice president-national accounts for NationaLease. “Electronic diagnostic tools, especially, are quite costly, and you need an extensive inventory of tools and the training to go along with it.”
He adds that as trucks come to rely more heavily on technology to operate, maintenance costs are going to grow as well. That is particularly true on the private fleet side of the ledger.
“The prime opportunity for contract maintenance will still be the private fleet side of the market,” Spence notes. “That is still a huge market. We think more private fleets are going to make that change to contract maintenance in the future simply so they can focus more resources on their primary job—transporting goods.”
OEMs are also seeing the growing trend towards mobile maintenance. “Is there more demand for contract mobile maintenance versus five years ago? Absolutely,” contends David Pardue, vice president-aftermarket business development for Mack Trucks. “We are seeing fleet customers looking to contract with us for mobile maintenance services and on-site repair at their facilities when it makes sense.”
Some of the growth of mobile maintenance can be attributed to the on-site access and authority a fleet is willing to provide an outside technician. Weather and hours-of-service regulations affect vehicle availability as well, he says.
“We also see a benefit of increased…labor and parts revenue [for dealerships and leasing companies] without expanding the square footage of the shop,” he adds. “Without a doubt, fleets that once operated their own shops with their own technicians [are] finding it hard to attract and maintain properly trained technicians to support the changing truck technology.”
Thus, some of the solutions to such problems include providing labor and parts support in a customer’s captive shop, stresses Pardue. “This can range from simply supplying technician labor on a scheduled basis to completely managing the captive repair facility on all levels,” he explains. “This on-site service is growing in popularity, but a majority of the work is still scheduled and completed at our dealership and leasing locations. Our full-line facilities are still the best place to provide our truck customers with OEM-trained labor and parts support.”
Room at the table
Yet the demand for more and more varied types of contract maintenance keeps growing, says Mike Besson, vice president of dealer operations and customer care for Rush Truck Centers (RTC), a division of Rush Enterprises. He says RTC experienced a big uptick in requests to take over varying levels of fleet maintenance business in 2013, most of it to handle preventive maintenance (PM) and parts-related issues.
“It’s not just about performing maintenance, mind you, but tracking it, scheduling it for the customer, and determining data such as cost per mile for each truck,” he notes.
In particular, Besson says that fleets are focusing more on parts tracking and inventory handling needs. “There are shops where we don’t handle maintenance for the customer, yet they want us to manage their parts inventory for them—tracking minimums and maximums and sending refill orders to the dealer,” he points out.
Besson emphasizes that companies like RTC no longer have a problem doing just a small piece of contract maintenance, such as handling parts inventory or taking over the entire operation. “It’s becoming a very customized business,” he explains. “And contract maintenance is really evolving now, particularly where natural gas is concerned. Those engines are [even more] complicated than a new [post-2010] diesel engine, and that’s before you add in a complex fueling system as well.”
That puts a premium on finding top-quality technicians, notes Besson, especially as Rush adapts to the growing trend of more customers asking for its techs to work in their shops.
“The techs we assign to work in customer shops need to be high level, sufficiently skilled and self-funding in a way,” he stresses. “They act like their own boss, a leader versus a follower, but they report to that shop’s supervisor, who helps prioritize their day. These are our top guys.”
Dennis Cooke, president of fleet management solutions for Ryder System, echoes that sentiment, adding that he’s seeing an increase in interest from fleets providing contract maintenance at the fleet owner’s site.
“The fleet owner will either ask us to actually run their existing shop for them, or they will ask us to set up a modular shop on their site,” Cooke explains. “The increase in demand for this type of on-site service is being driven by the new hours-of-service requirements and fuel expense reduction. We have over 200 sites where we provide on-site maintenance, and we anticipate that this will continue to grow over the coming years.”
The big trends driving contract maintenance growth boil down to three broad areas, he says: more stringent regulation, particularly where the Federal Motor Carrier Safety Administration’s Compliance, Safety, Accountability (CSA) program is concerned; complexity of new trucks; and technician shortage.
“Those are the three big trends that we see over the next five years that will drive demand for contract maintenance services,” Cooke says. He adds that the growing momentum with alternative fuel vehicles such as natural gas is adding additional maintenance challenges. The lack of technician experience with such vehicles and technology is pushing fleets to look for external subject matter expertise.
Maintenance requirements for commercial vehicles haven’t truly changed under CSA, Mack’s Pardue stresses; rather, it’s the management requirement and increased CSA inspections that are generating change. “That’s why keeping track of timely PM services and repairs will only assist with improved CSA scores and vehicle uptime,” he explains.
“CSA has put the spotlight on the entire maintenance process and extensive maintenance record-keeping,” echoes Monica Truelsch, director of marketing for TMW Systems. “Contract maintenance, mobile maintenance, and outsourced fleet management are all options that fleets are evaluating as a means to mitigate their inspection risks and potential safety citations under CSA.”
Equipment-related CSA violations will continue to dominate trucking’s maintenance and repair landscape, Decisiv’s Riemer says, in part because it’s an issue directly related to the continued use of paper-based inspections and manual data entry. Fleets are under the CSA microscope, and this will push more of them into contract maintenance agreements, he continues, particularly small- and mid-market companies.
“However, this will not happen unless electronic inspection and reporting systems are deployed broadly,” he explains. “In this way, there is a level of transparency and clear accountability for all service and repair events, [the elimination of] estimate and invoice mismatches, and real-time updates on status. Further, reporting would deliver on key performance indicators that demonstrate improved asset utilization, less downtime, fewer breakdowns, and improved cost per mile by ensuring higher levels of PM compliance.”
Keeping commercial trucks and trailers in good repair regardless of location—whether they are parked in a fleet’s operations yard, on the road, or even at a customer location—is becoming more and more attractive to motor carriers of all sizes.
“This is a direct driver of labor savings when mobile maintenance support can be worked out with customers and the maintenance service provider,” notes Mack’s Pardue.
“Mobile maintenance allows us to extend the reach of our shop network to provide convenient maintenance services for more customers, and it is the preferred maintenance delivery method for trailers,” says Ryder’s Cooke. “We are also finding that large fleets receiving maintenance services across North America are more focused than ever on getting consistently high quality repairs ensuring that their CSA scores improve.”
Those are also some of the reasons why GE Capital Fleet Services (GECFS) forged a partnership with contract vehicle maintenance provider Amerit Fleet Solutions in October of last year to provide a nationwide on-site and mobile maintenance offering through GE’s TruckVantage fleet management service.
“Mobile maintenance allows our clients to schedule repairs and preventive maintenance on-site at their facilities, eliminating the expense and downtime associated with transporting assets to other maintenance providers,” explains Brad Hoffelt, senior vice president and general manager of products and services at GECFS. “Through the Amerit on-site and mobile maintenance programs, customers can cut downtime, keep costs stable and predictable, and spend more time focusing on core operations.”
On-site and mobile services through GECFS’s new offering include maintenance and repairs for trucks, trailers and material handling equipment; parts inventory management; and DOT, OSHA and other environmental safety inspections.
Fred Scott, service manager for the Rush Truck Center facility outside San Antonio, TX, has watched demand for mobile service increase in his area for another even more basic reason—convenience. “Back in 2008-09, we started our mobile [service] operation with just 10 technicians. While business in the shop leveled off during the Great Recession, our mobile tech business just kept right on growing—with the number-one reason being convenience for the customer,” he explains. “It’s that convenience which keeps driving it, and it’s why we’ve expanded the mobile operation to 42 techs right now.”
The mobile fleet is able to provide a range of vehicle maintenance needs, from basic PMs such as changing engine oil to more complicated repairs.
RTC’s Besson emphasizes that mobile maintenance also helps reduce downtime for trucks and trailers. “That convenience factor is critical. Once you get a customer used to that, it’s difficult for them to change back,” he explains. “We [RTC] are going to have a dedicated mobile division sooner rather than later for that very reason. It’s all about creating fleet maintenance solutions for the customer, and mobile maintenance is definitely going to be a bigger part of that ‘solutions’ package.”
While mobile maintenance fits a certain segment of repair types and breakdowns, though, TMW’s Truelsch points out that it is unlikely to take on “major” efforts such as engine overhauls.
“Mobile service can become a viable part of a fleet’s maintenance management service mix to help get vehicles back in productive service more quickly when they are not convenient to shop locations, especially where fleets are involved in time-sensitive delivery work or scheduled service activities,” she says. “The range of repair capabilities that mobile maintenance can handle is expanding all the time, but there are always issues with having the right parts for the types of vehicles being covered.”
Truelsch issues one more caveat to consider for those thinking about contract maintenance. “It can be more effective when fleets are under long-term contract with mobile providers, with the planning and costs associated with appropriate repair and replacement components managed in advance.”
All experts agree, though, that there is a time and a place for fleets to seek contracted maintenance; for many, those opportunities are coming quickly.