Fleet Strategy for FedEx Routes
Buy New or Buy Old?
When purchasing or financing a vehicle for your P&D fleet, in most cases it is both financially and operationally better to buy a new vehicle. We have compelling data that shows new trucks are the superior option in most cases, especially for routes that are 150 miles per day or less. Why is this the case?
What you’ll find is that the savings you experience in your repair and maintenance expense will outweigh the monthly payment on the new vehicle. A brand new fleet can require as little as 3% - 4% of annual revenue on repair and maintenance. Most older fleets with an average mileage in the 150,000 to 200,000 range will cost you closer to 10% - 12% in repair and maintenance costs.
In addition to the monthly cash flow savings you’ll experience by purchasing new vehicles, there is also an operational component. Having new vehicles provides reliability, fuel efficiency, new technology, better safety, and all-around better quality of life for your drivers who are in those vehicles all day long.
Leasing Vehicles
If you have routes that do less than 35,000 miles per year, a long-term full-service lease may be the best option for you. Hello Truck Lease (HTL) is the premier full-service lease option for P&D vehicles. HTL was the first pioneer of a full-service lease program in the P&D space, and they continue to offer the best service and product available in the market.
If you’ve never heard of a full-service lease, it is a long-term lease option that is inclusive of all repair and maintenance expenses. This can be a major value add to your operation by turning a widely variable and unpredictable repair and maintenance expense into a fixed monthly payment that you can budget for and model around. Having a full-service lease also generally gives you peace of mind, improves job quality for drivers, and makes the entire operation run more smoothly.
If you’d like to learn more about full-service leases and how Hello Truck Lease can add value and scalability to your operation, we’d love to talk to you and get you in touch with the right people.
What About Linehaul?
The recommended fleet strategy for linehaul tractors is a full-service, long-term lease. Linehaul vehicles can cost upwards of $150,000 and most parts on those vehicles will cost at least $5,000 to repair if damaged. If your financial strategy and preference is to purchase your vehicles you certainly can, however in our years of experience and trials we’ve found that a long-term lease is the better decision both operationally and financially.
Unlike P&D where there are limited options for a full-service lease, these programs are much more prevalent in the linehaul space. Companies like Ryder, Penske, and Gatr all offer full-service lease options. Each of them have their own requirements and pricing, including minimum industry experience requirements. It’s important to do your own research and decide which one is best for you.
Purchasing Fluids in Bulk
Maintaining your fleet is crucial to the daily operations of your business. Failing to keep up to date with maintenance can result in breakdowns and operational delays.
One part of vehicle maintenance includes replacing the fluids in your trucks. However, not having a good strategy for buying fluids can increase your maintenance costs. For this reason, we recommend purchasing primary fluids in bulk. You can purchase the following fluids in 55-gallon barrels:
Oil
Anti-freeze
Diesel Exhaust Fluid (DEF)
Transmission Fluid
Windshield Washer Fluid
To store the barrels, you can utilize a truck, such as a P-700 that you are not using for your routes. Also, make sure to have pumps available for each barrel to make the fluids easily accessible. Note, some senior managers prefer that you do not store fluids onsite. In that case, finding a different location would be necessary to ensure that you have access to the fluids.
If your business is not buying fluids in bulk, and instead, purchasing a gallon or five gallons at a time, the costs compared to purchasing in bulk can be much higher. Proper expense planning can reduce repair and maintenance costs and increase profits.
Some contractors use a third-party vendor for preventative maintenance. If so, you could potentially negotiate with the vendor about storing the barrels at their location and have them use your fluids for maintenance on your trucks. With this approach, you would simply pay them for labor costs. Again, the prices you will pay with this strategy will save you money compared to buying in smaller quantities.
Companies such as Schaeffer’s have different oil options available for purchase based on how long you prefer the oil to last. In addition, you can line up your oils to mileage intervals, such as having the oil changed every 15,000 miles. While the higher mileage oil is more expensive, you do not have to change the oil as frequently. For linehaul, some oils can last up to 60,000 miles.
If you are not currently buying bulk fluids, it can be an immediate way to cut down operational costs within your organization.
Using Oil Analysis for Your Operation
Oil analysis plays a vital role in maintaining an operating fleet. Vendors like Schaeffer’s provide a test tube where you put a small amount of oil in the test tube during an oil change. The test tube is shipped to a lab with a prepaid label to be analyzed. There are three things the lab reviews: if there is water in the oil, fuel in the oil, and metal shavings.
For example, if there are metal shavings in the oil, you will have a clearer understanding of how quickly the truck’s engine is wearing out. When monitoring the levels of metal shavings during each oil change, you will begin to notice a drastic increase of metal contaminants in your oil. This increase can inform you that the engine is wearing down, leading to a risk of a costly engine blowout.
Using oil analysis provides you with an overall picture of the health of your trucks. It’s a simple method that can make a material impact on your fleet strategy. Implementing this strategy within your business can help prevent costly engine damage and help you better understand when the life of a vehicle is coming to an end long before you run into trouble.
If you’d like to learn more about the benefits of oil analysis, we’d love to talk to you about our real-world experiences.
When Should I Hire a Mechanic?
Mechanics can have a major impact on your profitability by saving you time and money. Plus, their role can be versatile within your day-to-day operations. You can utilize a mechanic for the following roles:
Complete Repair and Maintenance: The primary responsibilities of a mechanic include keeping the fleet running and handling the critical routine repair and maintenance items.
This includes anywhere from replacing windshield wiping fluid to tire rotations. Ultimately, having an on-site mechanic prevents you from sending trucks to dealerships or repair shops.
Operate as a Swing Driver: An employee not showing up for work is challenging, and having an available backup driver is not always guaranteed.
Having your mechanic as a swing driver for contingency plans can save you from service failures and ensure the completion of all scheduled packages. Also, your mechanic can operate as a backup driver for peak season.
Do Work for Other Contractors: Typically, a terminal will have 10 to 25 contractors. While your mechanic will primarily focus on your fleet, your mechanic can serve as an excellent opportunity to make additional revenue by working for other contractors in the building.
This means your mechanic can repair and maintain trucks for other contractors when not working on your fleet. Note: The mechanic is your employee so you have full control of their workload to ensure your fleet remains their key responsibility. While this strategy can make you additional income, it also allows you to create rapport among contractors in your terminal.
An incentive strategy that we have found that works is providing the mechanic with an opportunity to earn their tools. Many mechanics do not have their own personal tools, especially enterprise-level equipment. When hiring a mechanic, have them make a list of tools they want to earn.
Once you have the list of tools, you can set up a plan. Keep in mind, your mechanic will need the tools upfront to work on the vehicles, but you can create a plan stating that they can earn the tools to keep for themselves.
Get the Most Out of Your Operation
Route Consultant is the premiere consultant and educator in the last-mile delivery and logistics space. Want to get the most out of your investment? Looking to optimize your operation and maximize profits? Need to teach someone how to successfully manage a delivery operation? Our suite of educational courses capitalize on decades of operational experience to bring you battle-tested strategies and best practices to find success in your business.
