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The importance of creating a backup plan

March 25, 2021
By preparing properly, fleets can plan ahead for any unexpected event, and start thinking about the needs for next year.

Truck and trailer orders are rolling into manufacturers at a good clip and fleets are buying trucks as things begin to get back to normal — or closer to the normal we knew before the COVID-19 pandemic hit a year ago.

And while things seem rosy, there are a few concerning signs about potential supply chain issues. First, there is the bottleneck at the ports that is delaying the delivering of imports for as long as two to three weeks. If needed components don’t get to the production lines on schedule, manufacturers will not be able to produce vehicles at the pace required to keep up with the demand. We also are hearing concerns over raw material shortages — especially semi-conductors — that may impact manufacturers’ abilities to build all the vehicles that have been ordered.

Forecasts predict about 298,000 trucks to be built in 2021, but of course that will depend on manufacturers getting the raw materials they need.

What does this mean for fleets? First, if you absolutely need new trucks this year, you better get your orders in — now. It may even be too late to get a build slot this year. Second, you need to start contingency planning in the event material shortages worsen and/or port backlogs do not get resolved quickly and the trucks you ordered cannot be delivered when you need them.

Here are some things you might want to consider for your backup plan:

  • Evaluate existing assets to make sure they are on the right maintenance schedule. If you are going to have to keep assets longer than planned, you may need to change maintenance cycles to accommodate the additional life you will need to get out of those assets.
  • Speak with your lessor about extending the lease term for a few additional months so that you have enough assets on hand to meet your customers’ needs.
  • Add rental units to your fleet just until your new units are delivered.
  • Start exploring the used truck market. Begin researching used trucks to gain an understanding of what might be available on the secondary market in case you absolutely need to add assets for additional capacity.
  • Leverage your relationships with your vehicle manufacturer, dealer, leasing company, etc. to see if they can provide any assistance in getting you the vehicles you need.

Ideally you will not need to execute on your backup plan. But you don’t want to be scrambling to figure out what you can do in the event you learn that the asset you thought was going to be delivered in June is not going to get there until October. Every day that you delay will have an impact on your budgets in 2021. Now is the time to sit down and start addressing your 2022 business plan.

About the Author

Patrick Gaskins | Senior vice president, Fleet Solutions

Patrick Gaskins is a financial services professional serving the transportation industry for over 30 years. Gaskins earned his BBA in Finance from the University of Miami, FL in 1989, and received his CTP certification from the National Private Truck Council in 2002. He has held positions with GE Capital, TCF Equipment Finance, and various small independent lessors. 

He began his career with Corcentric in 2010 as Vice President of Financial Services, was promoted to Senior Vice President of Sales and Operations, and is now taking the role of Senior Vice President, Fleet Solutions.  In his new role he will lead Corcentric’s Captial Equipment Solutions, Fleet Procurement, Supply Management, and Remarketing teams. Gaskins will bring to the Fleet practice his expertise in developing data driven solutions to complex transportation transactions, driving efficiencies, and reducing expenses for Corcentric’s customers.

The Fleet Solutions practice leverages technology and the purchasing power of over 1,700 member fleets operating approximately 800,000 assets to provide its members with access to cost effective national account purchasing programs, fleet financing, asset management, and remarketing services.

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