What are fleet managers worrying about?

May 23, 2016
Gauging the worries of truck fleet managers

In an earlier post, I talked some of the issues the trucking industry as a whole should be worrying about at the moment – with slumping freight volumes only the tip of the bad-news iceberg.

But what do fleet managers themselves believe are the major issues facing trucking right now? What’s the “view from the trenches” so to speak?

I talked to Sandeep Kar, global vice president-mobility research for the transportation practice within global consulting firm Frost & Sullivan, about this subject just last week as his team conducts an annual in-depth survey with 100-plus fleet managers at for-hire and private fleets across North America to unearth those concerns.

And here are their top seven concerns based on Frost & Sullivan’s poll:

“There’s much nervousness among fleet managers because margins are eroding; there’s also a lot of ‘interconnectedness’ among those issues as well,” Kar explained to me. “And when you look at declining equipment utilization, that is bad news for [truck] OEMs because that means fleets will probably delay more purchases of Class 8 trucks.”

He noted that while fleets have benefitted from the low price of diesel over the past year, there is rising uncertainty regarding the “longevity” of this low price environment.

[As an aside, sometimes cheap oil and the fuel prices it engenders don’t necessarily help fleets across the board as this story explains.]

Kar added that most of fleet managers in his firm’s poll believe diesel prices may increase unexpectedly causing severe operating cost increase in the short-to-medium term; a trend that’s started gaining strength in recent weeks.

He also pointed out that based on the durations of past business cycles it would be “unusual if we did not enter a recession sometime in the next few years.” Not exactly something to cheer about.

So how are all of those “worries” shaping – or perhaps “re-shaping” – the truck specification strategies of among fleet managers? More broadly, do they believe certain truck specs and technology selections can help mitigate the negative aspects of the above-mentioned concerns?

Here’s what Kar’s research team discerned:

  • While 55% of surveyed fleet managers reported engine displacement as an important “engine purchase decision influencer,” 34% said their preference now is for trucks in same weight class but with smaller sized engines; that spec will drive their purchases over next five years.
  • Semi-automatic and fully automatic transmissions are the fastest growing advanced powertrain technologies.
  • Nearly 50% of fleet managers reported preference for “OEM nameplate engines” while the remainder reported either a preference for third-party independent engine suppliers or using a mixed-sourcing approach. Interestingly, “convenience of servicing” emerged as the top reason for choosing OEM nameplate engines, Frost & Sullivan found.
  • Roughly 57% of the fleet managers polled said they are interested in hybrid powertrain systems if the upfront price premium can be recovered within three years or less from date of purchase.
  • There’s also a “noticeable increase” in the percentage of fleet managers likely to consider OEM nameplate transmissions as well, though 42% of them consider place OEM nameplate and third-party independent transmission suppliers on equal footing.
  • Nearly three in four surveyed fleet managers said natural gas as a truck fuel is “attractive” if – and this is a big “if” – the price difference between a gallon of diesel and a diesel-equivalent gallon (DGE) of natural gas is maintained at $1 or more and it “adequate” natural gas fueling infrastructure is established.
  • On top of that, an 11.6-liter displacement seems to be the most preferred natural gas engine of choice by the fleet managers in Frost & Sullivan’s poll.

On another front, the firm dug up some interesting safety insights – particularly in terms of how much fleet managers are willing to pay for technologies such as forward-collision warning and the like:

  • The increased ability to take preventive measures, tangible return on investment (ROI), reducing likelihood of accidents, and improved driver monitoring are the biggest reasons driving purchases of specific safety technology packages.
  • A separate Frost & Sullivan poll found that roughly 60% of fleets have experienced a rollaway/runaway crash over the past 24 months, with 18% of these incidents resulting in fatalities. That data in particular is driving Bendix to develop a new product called “E-Park” that it hopes to make commercially available in 2018. [Read more about that here.]
  • A price tag of $2,750 was found to be the “optimal” dollar amount for automatic collision mitigation systems, implying that if these systems are priced at this level, adoption rates could increase rapidly.

In particular, Kar told me that there are too many “disparate” safety systems available today and that fleet managers would prefer one system offering multiple capabilities – driver monitoring, video, automatic emergency braking, etc. – down the road to help them reduce their spend on such technologies.

Then we come to telematics in trucking; subject matter Kar is well-versed in but also one that fleet managers seem to view as a way to help solve their many myriad problems; from increasing asset utilization to reducing maintenance costs. Here’s a sampling of Frost & Sullivan’s findings:

  • Separate research by Frost & Sullivan indicates trucks are traveling empty 30% of the time.
  • About 55% of fleets with more than 500 vehicles use a telematics-based transportation management system (TMS) of some sort, the firm noted, which drops to 32% or fleets operating between 50 and 500 trucks and declines to just 4% for fleets running 50 or fewer vehicles.
  • Some 48% of the fleet managers polled by the firm showed interest in smartphone based freight brokering, also colloquially known as “Uber for trucks.”
  • While most fleet managers continue showing preference for in-vehicle installed telematics hardware device, share of portable /handheld devices is growing.
  • Third party telematics providers continue to lead in-vehicle telematics hardware device enabled telematics services market; however, the share of truck OEM-provided systems is now at 41% among surveyed fleets.
  • Monitoring of drivers and vehicle (both mobile resources) now rank as most important and influential factors for fleets when purchasing telematics services and associated hardware.
  • Critical event alert/safety system intervention alert is the most preferred telematics service among surveyed fleet managers, with $5 to $10 per month being incremental service fee range for this feature. Optimal price for this technology was found to be $5.50 per month per truck, based on the firm’s “price sensitivity” measurement analysis.
  • Some 65% of surveyed fleet managers showed interest in a remote calibration and maintenance system – a trend that is more pronounced among medium sized fleets - while 48% them would prefer to pay for such services upfront at time of vehicle purchase rather than as an ongoing monthly fee.
  • Of all the telematics services offer, prognostics is estimated to grow fastest among the fleet managers polled by Frost & Sullivan as rising equipment complexity, the growing technician shortage, and need for downtime reduction are behind the rising interest in prognostics.
  • Some 92% of safety managers and 78% of maintenance managers showed interest in remote diagnostics/prognostics data integration to their organization’s maintenance management systems.
  • Yet what are fleets willing to pay for such telematics-driven services? According to the firm’s poll, $26 per month per truck is the highest monthly subscription fee fleets are willing to pay to adopt telematics “en masse.” For prognostics, the highest fee that fleet managers were willing to pay was $12 per truck per month.
  • However, Frost & Sullivan found that $4 per month per truck is the “optimal price point” for prognostics.

Those are definitely a wide range of interesting trends for fleets to ponder as we ride out the (hopefully) short term speed bumps now occurring in the freight world.

About the Author

Sean Kilcarr 1 | Senior Editor

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