Fleet Downtime: The Real Revenue Killer
Maintenance and repairs are costly, but downtime is the real revenue killer.
The Forgotten Expense
Most Maintenance & Repairs (M&R) budgets today are hemorrhaging dollars as they seek new and creative ways to manage operating a emission compliant fleet. It is true that modern, emission compliant trucks require more repairs, at greater cost, than the industry has ever experienced. Gone are the days of just having to budget for oil changes and new tires. In many cases, managing M&R expenses are becoming a bigger investment than fuel costs, due to the unpredictability of the maintenance required for emission compliant engines
Related to M&R, but not usually explicitly accounted for, is the cost of downtime. The cost of downtime is rarely tracked since it usually does not have its own itemized column on the books.. Instead, the cost of downtime is hidden within shrinking profit margins and revenue benchmarks that come up short.
Understanding the cost of downtime, and how to manage it, is one of the best ways to improve your bottom line.
What is the True Cost of Fleet Downtime?
Obviously, the cost of downtime is going to be different for every fleet. Essentially, if the truck is not working, it is not earning. And if that truck is missing work days because of unscheduled M&R, not only does the fleet have the expense of the actual repair item, but the fleet also loses the expected revenue that the truck should have been earning had it been working.
Simplified, the cost of downtime is the average daily revenue a truck earns for a fleet, multiplied by the amount of days the truck is unable to work because of M&R.
The unfortunate truth about emission compliant engines is that the frequency of component failure is enough to sink a fleet. While M&R is an expense, the cost of downtime provides a macro view of the full financial loss due to M&R, and emphasizes the importance and value of reducing downtime as much as possible.
For a simple example, let’s examine an unscheduled DPF cleaning:
So, while your expense report will only show the $300 repair bill, your revenue column will be short $2,250, especially if this was an unscheduled DPF cleaning.
But Wait, There’s More
The simple DPF cleaning example should have your attention, especially if you are not already considering the true cost of downtime. The bad news is that as the M&R item gets more complicated, the true cost of downtime gets exponentially larger. Again, the true cost of downtime factors in more than just the ticket item you are paying for. Other cost factors to consider, in addition to “days down”, may include:
- Tow service
- Labor for Drop off/Pick up
- Transportation cost for Drop off/Pick up
- Cost for lost payload (i.e. perishable goods unable to be delivered on time)
- Extended project completion time
- Excessive/Extra Driver pay (i.e. truck failure at remote location)
- Potential lost contract for delivery failure/delay
- Rental replacement
- Opportunity Cost (i.e. resources diverted towards repair)
While a failed turbo, or face-plugged DOC (Diesel Oxidation Catalysts) may be expensive in and of itself, when you consider the true cost of downtime the negative financial impact is higher. It is clear to see how managing and navigating the constant failure of an emission compliant fleet can be crippling to your company’s bottom line.
A Simple Resolution to a Complicated Problem
The reasons behind constant emission control failures are many. They can range from inadequate maintenance practices to disingenuous dealership practices, However, as we discussed in a previous post, a calibration update will not fix your aftertreatment issues
Fleet managers and diesel mechanics everywhere are really in a tough spot. How do they comply with the emission control features yet keep M&R costs in-line? And how do they manage repairs when they can’t find technicians with the know-how to fix their complex emission control related problems and aftertreatment issues? We tasked our top master mechanics with one mission: find a resolution that is legal, make sure it solves the problems once and for all and make it is affordable for our clients. Not only did our mechanics figure it out, we were surprised to learn the answer was always right under everyone’s nose and came with some impressive results. What we learned is that diesel engines weren’t optimized for duty-cycles properly or never at all. It’s a combination of knowing what to fix and how to fix it, then using training and state-of-the-art technology to prevent it from happening again in the future.
Emission control problems and aftertreatment issues can be a thing of the past
The days of struggling with aftertreatment issues are over. Every new challenge has a solution it just takes time and knowledge to figure it out. We’ve published this information to let trucking companies understand that emission control features on diesel engines do not have to be a revenue killer, the solution is inexpensive, legal and rather simple and the results are great: hundreds of thousands saved, along with an added 1-2 mpg per truck. Contact us when you’re ready to put aftertreatment issues behind you and keep your trucks on the road.