Despite a decade long push by industry experts to promote the benefits of preventive maintenance in the trucking industry, research shows that a majority of facilities still operate on a reactive or “run-to-failure” approach to maintenance (source). While this might seem like the cheapest and easiest way to keep your fleet rolling, broader perspectives and long-term views suggest otherwise.
Why should you choose preventive maintenance for your fleet? Any time a unit in your fleet has unexpected downtime for maintenance, there are costs associated. If you’re worried that replacing parts too early is the equivalent of throwing money away—you need to consider whether the additional cost of downtime and emergency repairs outweigh the savings of running it until it fails.
Even if you set aside the potential costs that are harder to project, such as lost revenues or a loss of customer confidence, there are plenty of concrete numbers that show how reactive maintenance costs more than it saves. Factors like towing, third-party labor, and mark-ups on replacement parts make repairs more expensive out on the road than they are in your shop.
Calculating the Costs of Reactive Maintenance
It’s one thing to say that a part that you have in your parts room will cost you between 10-30% more when a third-party shop sells it to you because one of your units broke down out on the highway. But to get a true sense of what running-to-failure is costing your fleet, you need to consider all of the concrete costs as well as those that are more intangible. Once you see maintenance from that perspective, it’s easy to appreciate how much preventive maintenance can do for your bottom line.
The costs of a roadside breakdown or emergency repair can add up quickly. If the unit has to be towed, that alone can set you back between several hundred and several thousand dollars. If it goes to a third-party garage, you’ll be paying more for parts and labor while your own maintenance crew sweeps the floors of the shop. Your administrative staff will have to find a replacement tractor and driver to get the load delivered or risk upsetting your client.
No matter how you slice it, breakdowns cost your business in direct dollars that you have to pay for repairs. At the same time, they cost you indirect dollars due to inefficiencies that you can’t address and correct without getting your maintenance routine on a more predictable plan.
Let’s take a closer look at where the money goes when breakdowns occur.
In some sectors of the industry, drivers get paid by the mile and in others, they get paid an hourly rate. When a breakdown occurs, everybody is losing money but somebody is taking the brunt of it. If you pay drivers an hourly wage, the way many trucking companies that work in the energy industry do, then you’re paying employees to sit and wait for a tow and repairs at the same time that you’re losing revenue. If you pay drivers on a per-mile basis, even if you offset wages lost due to breakdowns, you might have trouble attracting and keeping top drivers if breakdowns happen too often.
A tow for a commercial vehicle typically exceeds $500 before your vehicle moves an inch. Heavy-duty wrecker services charge by the hour and by the mile to get to your disabled vehicle. At between $3-11 per mile and $100-150 per hour, that adds up. The hook-up rate is typically somewhere in the neighborhood of $200. And then you’ve got to pay for mileage and hours that it takes to get your unit to the nearest repair shop or back to your yard.
Third-Party Repairs and Mark-Ups on Parts
Have you ever compared the hourly rate that you pay the technicians and managers in your maintenance shop with the hourly rate that you’re charged for labor that is performed by a third-party? It only gets worse if you do a line-item comparison of what they charge you for parts versus what those same parts cost you when you stock them in your parts room. Even if your company wasn’t losing revenue the whole time that one of your units is sitting in a third-party shop, you’d still be paying 5-10 times more for the same repairs that you could have done in-house if you’d caught them prior to the breakdown.
Loss of Revenues and Customer Confidence
In our industry, trucks make money when they’re making miles. If they’re sitting still for repairs, your business isn’t just paying for the repairs, it’s losing revenue the entire time. Most customers understand that breakdowns happen from time to time, so an occasional delay probably won’t cost you an account—but we learned a long time ago to never say never. You may not lose a customer, but your business will definitely start to suffer a hit to its reputation if breakdowns cause problems on a regular basis.
Inefficiencies in Scheduling, Purchasing, and Inventory Controls
The goal of a preventive maintenance program is to make it a more efficient process. That doesn’t just apply to reducing breakdowns and keeping customers happy. It goes beyond that to include factors like optimizing the manhours and scheduling of your maintenance staff, the organization and stocking of your parts room, and the projections that inform your purchasing agents’ decisions. Better information and a better plan mean that everyone can focus on keeping things running smoothly and efficiently instead of running around in chaos trying to put out fires.
How Does Preventive Maintenance Reduce the Costs of Managing Your Fleet?
The idea of implementing a preventive maintenance program can seem especially challenging for a small or mid-sized fleet. It takes software solutions to make managing a fleet’s preventive maintenance doable. That means that there is an upfront cost on an unfamiliar product on top of the run-of-the-mill resistance to change that we all experience. But the cheaper and easier solution reactive maintenance offers isn’t really cheaper or easier when you look at the bigger picture (source).
There are plenty of benefits that come from preventive maintenance. Over time they will help you reduce costs and increase efficiencies in ways that will pay for the initial investment many times over.
In our industry uptime is profitable time and downtime is not. When you schedule the units in your fleet for preventive maintenance you maximize the productive time you get out of drivers and maintenance technicians. You also help your schedulers and dispatchers make sure that they always have coverage and never have to borrow from Peter to pay Paul when it comes to finding a tractor to haul a load.
When you follow a preventive maintenance routine for the whole life of a unit, you will not only increase the efficiency of operating that unit but also retain more of that unit’s value for when it comes time to sell it. When you add up the savings over the life of a single unit, they are considerable. When you multiply lifetime savings by the number of units in your fleet, the difference preventive maintenance makes for your bottom line starts to come into focus.
In our discussion of reactive maintenance, we identified the costs of third-party labor and parts as well as the cost of towing as some of the biggest financial downsides of running-to-failure. When you combine those direct costs with the losses associated with the inefficiencies that reactive maintenance brings to your operation, it’s hard to deny the business-sense of preventive maintenance.
Improved Client Relationships
Happy customers who tell other people good things about our business are one of the cheapest and most effective forms of advertising you can get. You literally cannot put a price on the value of happy customers. Anything that you can do to protect your business from negative customer reviews or lost accounts is going to pay off in the long run. Preventive maintenance is cheaper than emergency repairs in the short-term and a lot less costly than lost business in the long-run.
There are some upfront costs to transitioning from a run-to-fail plan to a preventive maintenance program. But thanks to lots of great software solutions on the market, the right package for almost any business is going to be easy to find and relatively inexpensive compared to the ongoing costs of reactive maintenance.
It’s high time that small- and mid-sized fleets took advantage of the benefits that large, national and international carriers have been enjoying for more than a decade. Getting your fleet onto a preventive maintenance program now and working to make it better and more efficient over time is the best way to make sure that your bottom-line gets better and better. It doesn’t matter if you’re trying to grow your business or just keep more of what you earn with the fleet that you have—preventive maintenance is the easiest way to get it done.
FleetPal uses technology to bring the industry together. Our cloud- and web-based software solutions help to bring all of the business advantages that large fleets enjoy to small- and mid-sized fleets. We improve communications, record-keeping, and reporting with tools that make operations more efficient.