By Joseph Evangelist
Executive Vice President, Transervice
As originally appeared in FleetOwner Magazine’s IdeaXchange
I’ve been thinking about private fleets a lot lately. Maybe it’s because May 1 was National Decision Day for high school seniors, the day they make their final choice on where they plan to attend college in the fall. Similarly, I think it is decision time for private fleets as well.
With all the technological advancements, environmental regulatory changes that have occurred over the last five to 10 years, coupled with the driver and technician shortages, I wonder how private fleets are able to keep up with their transportation needs while at the same time focusing on their primary businesses.
For one thing, all of these changes — especially the government mandated ones — have substantially increased not only the cost of purchasing a new vehicle but also the cost of owning, operating and maintaining one. And that does not even take into consideration the increased cost of recruiting and training technicians and the rising medical and insurance costs or the expense of retooling shops to add the laptops and other electronic diagnostic equipment that are now essential.
Most companies do not have an unending pot of capital. They have to make hard decisions about where to spend the money they do have. This means businesses have to decide between making investments in their primary business —let’s say a new commercial oven for their bakery — and an update to their fleet of delivery vehicles. Deciding where the money will be spent can be a tough decision.
Layered over that is the fact that for private fleets, transportation maintenance and logistics is not usually part of their core competency and keeping up with changing technologies in the transportation sector of their businesses could take away from their ability to keep up with changes in their primary business.
Now seems like a good time for these private fleets to at least explore other options when it comes to handling some, or all, of their transportation needs given that they have to prioritize their financial and human capital.
Leasing is one option that might make sense, or at least getting out of the maintenance business and turning that over to the professionals for whom maintenance and repair are a core competency.
I recommend that private fleets start looking at things like leasing, contract maintenance and dedicated contract carriage to determine what makes sense for them on the outsourcing continuum given that it is a sure bet that we are not going to see vehicles get less complex nor cost less, and the fact that the driver and technician shortages are predicted to be with us for some time to come. It is time that serious consideration be given to resource allocation.