"A fleet manager's goal should be to run the fleet at lowest total cost and
highest productivity compared to the industry," says Art Andrew, Jr. of National
Services, Inc., a fleet management reporting service. His company maintains the world?s
largest database on maintenance costs after the sale on virtually every make and model of
lift truck, by industry type. "If a manager can know his costs and how they compare
to the industry on every one of his trucks he'll know whether or not he's losing money on
his fleet of trucks."
There are three things fleet managers should collect on a monthly basis on each truck
in their fleet: parts costs per truck, labor costs per truck and a meter reading. The sad
truth of the matter is, most fleet managers don't know if they're getting the most bang
from their lift truck buck because they're not tracking those three pieces of information.
And that means they're probably losing money. When you look at the data, just how much
money is lost each year can be staggering.
According to industry estimates, there are 1 million Class 1, 4 and 5 lift trucks in
North America. More than half of them have exceeded their economic life, which is the
point at which a truck reaches its lowest total cost of maintenance and ownership compared
to the entire industry.
"The average electric truck is being traded in at 26,000 hours. The average
internal combustion truck gets traded in at 22,500 hours," Andrew says. "Most
lift truck manufacturers have found that the best time to trade-in lift trucks is at
10,000 to 12,000 hours." In other words, on a truck that runs an average of 2,000
hours a year, it's being kept in a fleet for anywhere from five to six years beyond its
economic life.
"Ninety percent of lift truck users will tell you that they do not collect parts
costs, labor costs and meter readings," Andrew says. Out of the 500,000 trucks that
have exceeded their economic life, about $1 billion in excess maintenance costs have been
wasted because there's $25 billion in rolling assets in North America that have exceeded
their economic life. Since 90 percent of the companies don't collect parts and labor costs
and meter readings, they are unaware that they're losing so much money.
The numbers don't lie. Do you know how much time your trucks run per shift? Per day?
Per week, month, or quarter? If so, how do you know? Many managers assume that the trucks
in their fleet are operating at 70 to 80 percent utilization. For every 8-hour shift, they
believe their trucks run about six hours. "But the average utilization in North
America is only 25 percent," Andrew says.
"Most people are fooled because they don't keep accurate information. They assume
that their utilization is 70 percent to 80 percent. You can't get 70 percent utilization
out of a truck that's six years old or older." The way to get accurate information is
to take hour-meter readings, not by relying on what your operators or your instincts tell
you. Consider the example of a grocer with a fleet of 500 lift trucks. The grocer was
thinking about including 200 of his trucks on National Services monthly reporting service
to track parts and labor costs.
"I asked him why he didn't want to include the other 300 trucks," Andrew
says. "He told me that those were pallet jacks. They considered them throw-away
trucks." But when he investigated further, Andrew discovered that the company rarely,
if ever, discarded any of the old trucks. Some pallet jacks still in service dated back to
the 1960s. After checking the maintenance records on two of the trucks, the grocer
discovered that over the past 30 years, he had spent $265,000 in maintenance and repairs.
The cost to replace the trucks today would be about $7,500.
According to Andrew, companies who try to stretch too many hours out of their equipment
are the rule, not the exception. "In some cases, companies spend $5,000 to $10,000
every year to maintain a truck that would cost just $18,000 to replace." Managers who
don't track engine hours per year and keep records of how much it costs for maintenance
and repairs aren't aware of how much money they're wasting.
"The best fleet managers are the ones who know when to get rid of their trucks at
the lowest total cost or the economic break-even point," Andrew says. "If they
know that, they can run a fleet that's leaner, at lower cost and at higher utilization."
Determining the economic break-even point of a lift truck:
At some point in time, because of rising maintenance costs, it makes more sense to get rid
of an old lift truck than to continue to keep it running. That's called the economic
break-even point. In order to determine a truck's break-even point, you first must know
the truck's cost-per-hour. To determine a truck's cost-per-hour, add the total parts cost
to the total labor costs and divide by the number of hours of operation.
The break-even point signifies the lowest obtainable cost per hour that the truck can
achieve during its lifetime. Let's say that the break-even point on a truck is $2.50 per
hour. If you run the truck at $3.50 per-hour, you're spending $1 more every hour than you
should or could be spending. Depending upon how many hours you operate that truck, you can
calculate how much money you could save if you'd replace the truck.
"The most important thing for a fleet manager to know today is not the best price
to pay for a new truck," Andrew says. "The most important thing to know is when
it's time to get rid of that truck."
