Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
Can you answer these questions: Exactly how much do you spend on your lift truck fleet each year? How much do you spend on each truck? In an eight-hour shift, how much time does each truck actually spend moving product? Are trucks sitting idle in your facilities "just in case"?
If you can't come up with the answers, you're not alone. Specialists in lift truck fleet management report that a surprising number of DC managers are unable to provide a detailed accounting of their fleet costs and usage patterns. Yet knowing the answers to those questions is especially important these days, and for a very simple reason: Managers are under intense pressure to control their industrial truck fleet expenses. But in order to manage these costs, they first have to know what they're spending.
It comes as no surprise, then, that customers are turning to providers of fleet management services to help them make the most of their assets. Sales of new trucks may be down, but vendors say they're seeing an upswing in demand for systems and services that collect and analyze lift truck data.
"We know that buyers are not buying, but that doesn't mean purchasing [executives] and CFOs aren't looking at what they're spending," observes Michael McKean, manager of fleet marketing and sales for lift truck maker Toyota Material Handling USA.
This pressure from the top has led companies that previously resisted investing in fleet management tools to reconsider, says Scot Aitcheson, director of fleet management for Yale Materials Handling, which manufactures a broad line of industrial trucks. "I can tell you that consistently, customers ... want to be engaged, and they want visibility. They need to have data. They are really making what they do more scientific."
These days, more and more DC and fleet managers are feeling the heat, vendors say. "With the economy the way it is, a lot of warehouses and DCs, especially in the home improvement and retail sectors, have felt a lot of pressure to cut down on overhead, reduce maintenance costs, and reduce fleet costs overall," says Joe LaFergola, manager of business and information solutions for lift truck manufacturer Raymond Corp.
Shock and audit
The first step in any cost-cutting initiative is to gather detailed data across all facets of the operation. There are two ways to approach this task. One option is to bring in fleet management specialists, either independent consultants or experts affiliated with industrial truck dealers. The other is for DCs to take on the task themselves, using vehicle management systems that collect and analyze operating data. These systems typically include a device installed on each truck that captures information and transmits it to fleet management software, which then produces a variety of reports. (For more on these systems, see "remote control," September 2008.)
Typically, data analysis begins with on-site audits that track truck operations over 30 to 90 days—long enough to provide an accurate picture of how individual trucks are being used and how the fleet as a whole is performing. The object is to create a baseline against which specific savings can be measured.
With accurate data in hand, managers can identify areas that are ripe for improvement. They can determine which trucks have the highest maintenance costs, figure out if the fleet is correctly sized and if the equipment is appropriate for the job, measure drivers' productivity, and track causes of avoidable maintenance and additional costs (like damage caused by operators to product, racks, and the trucks themselves).
The results of these audits sometimes come as a shock to managers, vendors say. In a white paper titled 5 Ways to Reduce Costs of Your Industrial Vehicle Fleet, I.D. Systems, a developer of vehicle management systems, cites data showing that in an eight-hour shift, a truck typically is in motion for just two hours and is moving a load for only one.
And that's just the tip of the iceberg. Aitcheson says—and other fleet specialists agree—that it's not uncommon for these audits to show that a given fleet is 20 percent (or more) larger than necessary. Nor is it unusual to find short-term rental vehicles on the floor for months at a time. Aitcheson even tells of one customer that spent $27,000 in a single year on maintenance for a seven-year-old truck.
Such ignorance is certainly not bliss. In fact, it's downright expensive, says Stan Garrison, manager of fleet sales for Hyster Co. "There's no point in hanging onto a truck past its useful economic life," he says. "That drives up ownership costs and productivity costs because of downtime."
One step at a time
Collecting the information needed to analyze fleet costs is one thing. Using the data to make changes in fleet operations and driver behavior is quite another. Despite the obvious benefits, it's not always easy to get everyone on board. McKean says that when it comes to "selling" a fleet downsizing program to operations managers, the key is having accurate performance data in hand. "If we can prove utilization is high and the fleet is up and running every day, then perhaps some trucks can go away," he says.
An effective cost-cutting program does not necessarily require jumping in with both feet. There's nothing wrong with taking it one step at a time, says Aitcheson. "For a company that wants to pursue [a fleet cost-reduction program] but does not want to commit to all the processes and procedures, it could be as simple as a national preventive maintenance program," he says.
Garrison is of the same mind. He notes that getting rid of older trucks in stages can help overcome managers' fears that a downsizing program will disrupt day-to-day operations. "One of the most difficult things we [deal with] is to get a buy-in from operations," he says. "The floor managers' job is to get stuff out the door, and it takes a little bit of time to earn their trust and let them know we're not just going to leave them hanging out there."
Editor's note: For more information on conducting a lift truck fleet audit, see "lean fleets," February 2009.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.