Fleets Moving to Smaller Trucks

[kscarbel]

Transport Topics / September 6, 2013

Companies looking to cut costs and more accurately spec equipment to meet specific needs are increasing investment in smaller, medium-duty vehicles, dealers and fleets said.

While some growth is due to carriers adding new medium-duty capacity, industry executives said there is a broader, emerging trend of carriers replacing capacity with smaller-class vehicles.

Schwan’s Home Service Inc., a subsidiary of The Schwan Food Co., Marshall, Minn., is reducing the size of its trucks to boost efficiency, said Roger Porter, the company’s director of fleet acquisitions. By redesigning its vehicles and lightening the body, Porter said, the food-service delivery company has been able to replace Class 5 and 6 chassis with Class 4 models.

“These trucks will give us fuel economy improvements of 37% along with lower acquisition costs,” he said. “The vehicles we are buying have plenty of power, which is great, as those engines tend to get better economy as they don’t struggle to haul the load.”

Porter said Schwan has purchased more than 1,500 Class 4 vehicles in place of Class 5s and 6s since 2009. This year, it re-engineered and lightened its pre-2009 bodies as part of its Project Re-Vision, which will allow it to use those bodies on Class 4 and 5 chassis instead of Class 5 and 6, respectively. To lighten the bodies, Schwan improved energy efficiency and reduced the amount of refrigeration equipment required to keep food frozen, switched to a stainless steel bumper and removed step rails that were no longer necessary when using a smaller chassis. With the refurbishments, Porter plans to purchase 110 Class 4s instead of Class 5s and 40 Class 5s instead of Class 6 vehicles.

Brian Tabel, director of marketing for Isuzu Commercial Truck of America, Anaheim, Calif., also sees customers investing in smaller classes. “With changing distribution patterns, they have smaller routes, and they are ‘right-sizing’ the trucks for the route,” he said, adding that the biggest change has been customers moving to a Class 5 truck from Class 6 or 7. “We have also seen customers moving down to the Class 2 or Class 2C from our Class 3 product.”

Richard Witcher, CEO of Minuteman Trucks Inc. in Walpole, Mass., and chairman of American Truck Dealers, said the cost savings for a carrier moving to a smaller-class truck, particularly from a Class 8, is significant. In addition to overall vehicle costs, Classes 7 and below are exempt from the federal excise tax that adds 12.5% to the cost of a Class 8, he said.

“In that aspect alone, there is a significant de­crease in the price of the vehicle. As the price has continued to escalate, business people are looking for ways to minimize expenses,” Witcher explained, adding that carriers are getting better at spec’ing for exactly what they need, which may allow them to purchase a smaller-class vehicle.

One way they are doing that is by spec’ing vehicles to haul a diminishing load versus a max load throughout the day, he said. By doing so, they can avoid using heavier, more expensive components because they don’t need the same amount of power as they would if they were pulling a full load all day.

“In the old days, you’d buy a vehicle that would be suitable for your maximum load throughout the course of the day, so you’d use heavier components. People are now specifying those vehicles for diminishing loads,” Witcher said. “You may max that truck out when it first leaves the lumber yard, but you minimize the load throughout the day because you’re dropping off parts of the load.”

Steve Tam, from market analysis firm ACT Research, Columbus, Ind., said there is a “subtle shift” toward lighter vehicles, particularly among regional, private and specialty carriers.

“Some Class 8 trucks are being replaced with Class 7, some Class 7 with Class 6, etc. Smaller vehicles, where they are still capable of doing the necessary work, are less expensive on every facet — initial purchase price, operating costs, maintenance costs, insurance, taxes and tolls,” Tam said.

James Fields, chief operating officer of Pitt Ohio, Pittsburgh, said smaller shipments from manufacturers to stores and from stores to the consumers are causing the carrier to increase the number of Class 6 trucks it purchases.

“The Class 6 vehicles are easier to drive, more fuel-efficient, easier to get into tight spaces where deliveries might take place and less expensive to purchase,” Fields said. However, he declined to comment on the number of Class 6 trucks the carrier has bought.

Tabel said one of Isuzu’s customers now runs trucks in Classes 4-7, depending on the route. “In the past, a guy would typically buy one truck, and that is the truck his guys run throughout the company. Now, getting the right truck for the right route is a definite play,” he said.

Stephen Latin-Kasper, director of market data and research for NTEA — The Association for the Work Truck Industry, Farmington Hills, Mich., said scaling down is driven by fuel and operating costs. He said he is seeing Class 5 sales taking share away from Class 6.

“If you look at the 2012 data by class, you find that Class 5 outpaced the rest of the industry,” Latin-Kasper said, adding that while Class 5 sales are growing,

Class 6 sales are also increasing.

“From our own data, we could not make the case that [Class] 6 was taking share away from [Classes] 7 or 8, but there is anecdotal evidence that it is happening,” Latin-Kasper said.

Steven Saltzgiver, vice president of fleet operations for Coca-Cola Refreshments, Atlanta, said that year-over-year, the company is adding and disposing of more than 250 diesel trucks. As part of that trend, Coca-Cola is investing in alternative-fuel and hybrid vehicles, but the company also is evaluating a possible move to smaller-class vehicles.

Changes in distribution patterns nationwide are allowing some carriers to use medium-duty vehicles.

“The distribution model is shifting from long-range driving to shorter-range, spoke-and-hub operations,” said Kyle Treadway, president of Kenworth Sales Co., West Valley City, Utah, which operates 18 dealerships in seven states.

Witcher said that helps reduce the trucks’ gross vehicle weight. He added that the expansion of the Panama Canal, which is scheduled to be completed in 2015, will send more cargo to the East Coast. “The need will diminish for people to do cross-country runs with sleepers, and that is when I see additional conversion from large over-the-road trucks to lighter Class 7 and Class 6,” he said.

Tim Kraus, president of the Heavy Duty Manufacturers Association, Triangle Park, N.C., said some carriers are becoming more specialized, which changes the vehicle they specify. “There are more and more people who are rather than using Class 8 tractors for city trucks, they’re specializing, and when they replace a Class 8, they’re replacing it with a lower-class truck that is more efficient and has less expensive parts,” Kraus said. However, he said it is too early to call the shift a trend.

But dealers are seeing the growth. Treadway said he sees an increase in medium-duty vehicles — particularly Class 6 truck sales — in the furniture, bulk hauling, beverage and pickup-and-delivery applications.

“One of the most critical factors affecting this trend is the driver shortage,” Treadway said, adding that because Class 6 doesn’t require a commercial driver license, “the driver pool to draw from is much larger.”

Tam expects the aging of the driver population and retiring baby boomers will continue to change the driver pool and may make the need for smaller-class vehicles even more compelling.

The CDL requirement triggers other compliance issues, including drug testing, logbooks and CSA, Treadway said. “The regulatory world of commercial truck drivers is getting more complex, hence the shrinking number of people willing to enter the industry,” he added.

Kari Rihm, president of Rihm Kenworth in St. Paul, Minn., said some companies choose medium-duty vehicles with automatic transmissions, which can appeal to drivers. Rihm has seen significant growth in Classes 6 and 7 sales. “In 2009, we retailed only 83,” she said. “In 2012, we sold 308 Class 6 and 7, and we’re on a trajectory to beat that this year.”

Dean Dills, a truck sales representative at Rihm Kenworth, said some of that growth is from sales that once would have gone to Sterling and General Motors. Daimler Trucks North America abandoned its Sterling brand in 2009. That same year, GM shuttered its medium-duty truck division, which limited its lineup to Class 3 and below. In addition, Kenworth recently reintroduced a cabover unit that is gaining popularity with in-town delivery companies because it is a shorter truck, Dills said. “They can get it in tighter areas, and there is better maneuverability.”

Ford Motor Co., Dearborn, Mich., has seen an increase in Class 6 sales because of increased recreational-vehicle chassis and strip chassis production. “The economy is getting better. Even though it is growing slower than we’d like, we have many businesses experiencing growth, so they’re adding to their fleets in addition to replacing equipment,” said Len Deluca, director of Ford’s commercial truck division.

Deluca said demand for the commercial strip chassis has more than doubled since it was introduced in 2009. However, he said he doesn’t believe enough fleets are switching classes to affect growth. “One thing we’re getting is looks from customers who didn’t consider us before due to some competitors who are dead, out of the market or aren’t providing the products they once did,” he said.

Ford is seeing customers change to a gasoline-powered truck from a diesel-powered unit. “I think now there are some customers realizing they don’t need a diesel, and now we can provide them with the powertrain they really need,” Deluca said. Diesel engines provide more torque than their gasoline counterparts, but they typically have a higher initial cost.

Bill Moad, director of fleet operations for J.R. Simplot, a Boise, Idaho-based agricultural business that produces frozen potatoes, vegetables, fertilizers, seeds and cattle, has downsized the size of the pickup trucks it buys. “In the field areas where we’re making sales calls, we went to the Ford F-150. We’re looking for better fuel economy, so we went down from the 1-ton pickup,” he said.

Kenneth Calhoun, vice president of customer relations for Truck Centers of Arkansas in Little Rock, said that although everyone is trying to be lighter and more fuel-efficient, fleets shouldn’t drop to a smaller class simply to cut costs.

“If you have a particular job to do, you have to look at it at a component level and not just if you can do this with a smaller truck. The payback isn’t there if you drop too far. You tend to get better service life and less maintenance expense from having something that is spec’d properly,” Calhoun said.

Elissa Koc Maurer, manager of communications for Navistar International Corp., Lisle, Ill., said there is no irrefutable evidence to indicate that fleets are shifting class sizes. She said sales continue to be “choppy” and that “vehicle class sales are cyclical by nature.”

In fact, Dills said, medium-duty customers often take the dealer’s advice on which vehicles to spec.

“The medium-duty customer quite frequently is a company that isn’t a trucking company,” Dills said. “They produce something, and they need the truck to deliver it.”

[james j neiweem]

Gee. Looks like mack will miss this trend altogether with v@#$% at the helm.

[Bigdogtrucker]

Gee. Looks like mack will miss this trend altogether with v@#$% at the helm.

What about the Granite "medium duty"?

[kscarbel]

What about the Granite "medium duty"?

The Granite-based MHD (medium heavy duty) is a pathetic attempt by Volvo North America to compete with the Freightliner Business Class M2 106/112 and the International WorkStar.

The Granite MHD is simply a decontented Granite that pleases no one, and the abysmal sales are proof.

If you want to compete in the municipal segment with a low-priced heavy truck, you need a purpose-designed medium heavy-duty product like the Freightliner Business Class M2 106/112 and the International WorkStar (I'm not a big fan of either product but the cities like them).

By taking the Granite and installing a Cummins ISL, a competitive product for this segment has not been realized.

And of course, assuming Volvo had wanted to play off the former Mack Trucks' legendary reputation in the vocational sector, putting any powerplant other than a Mack-branded product in this truck is nothing less than shooting yourself in the foot.

[RFCDrum]

Volvo should of just brought one of their medium trucks here instead of making that mutt Granite with the Cummins in her.

Rob

[Red Horse]

Transport Topics / September 6, 2013

Ford Motor Co., Dearborn, Mich., has seen an increase in Class 6 sales because of increased recreational-vehicle chassis and strip chassis production. “The economy is getting better. Even though it is growing slower than we’d like, we have many businesses experiencing growth, so they’re adding to their fleets in addition to replacing equipment,” said Len Deluca, director of Ford’s commercial truck division.

Deluca said demand for the commercial strip chassis has more than doubled since it was introduced in 2009. However, he said he doesn’t believe enough fleets are switching classes to affect growth. “One thing we’re getting is looks from customers who didn’t consider us before due to some competitors who are dead, out of the market or aren’t providing the products they once did,” he said.

Ford is seeing customers change to a gasoline-powered truck from a diesel-powered unit. “I think now there are some customers realizing they don’t need a diesel, and now we can provide them with the powertrain they really need,” Deluca said. Diesel engines provide more torque than their gasoline

Brian Tabel, director of marketing for Isuzu Commercial Truck of America, Anaheim, Calif., also sees customers investing in smaller classes. “With changing distribution patterns, they have smaller routes, and they are ‘right-sizing’ the trucks for the route,” he said, adding that the biggest change has been customers moving to a Class 5 truck from Class 6 or 7. “We have also seen customers moving down to the Class 2 or Class 2C from our Class 3 product.”

Richard Witcher, CEO of Minuteman Trucks Inc. in Walpole, Mass., and chairman of American Truck Dealers, said the cost savings for a carrier moving to a smaller-class truck, particularly from a Class 8, is significant. In addition to overall vehicle costs, Classes 7 and below are exempt from the federal excise tax that adds 12.5% to the cost of a Class 8, he said.

“In that aspect alone, there is a significant de­crease in the price of the vehicle. As the price has continued to escalate, business people are looking for ways to minimize expenses,” Witcher explained, adding that carriers are getting better at spec’ing for exactly what they need, which may allow them to purchase a smaller-class vehicle.

One way they are doing that is by spec’ing vehicles to haul a diminishing load versus a max load throughout the day, he said. By doing so, they can avoid using heavier, more expensive components because they don’t need the same amount of power as they would if they were pulling a full load all day.

“In the old days, you’d buy a vehicle that would be suitable for your maximum load throughout the course of the day, so you’d use heavier components. People are now specifying those vehicles for diminishing loads,” Witcher said. “You may max that truck out when it first leaves the lumber yard, but you minimize the load throughout the day because you’re dropping off parts of the load.”

Steve Tam, from market analysis firm ACT Research, Columbus, Ind., said there is a “subtle shift” toward lighter vehicles, particularly among regional, private and specialty carriers.

“Some Class 8 trucks are being replaced with Class 7, some Class 7 with Class 6, etc. Smaller vehicles, where they are still capable of doing the necessary work, are less expensive on every facet — initial purchase price, operating costs, maintenance costs, insurance, taxes and tolls,” Tam said.

James Fields, chief operating officer of Pitt Ohio, Pittsburgh, said smaller shipments from manufacturers to stores and from stores to the consumers are causing the carrier to increase the number of Class 6 trucks it purchases.

“The Class 6 vehicles are easier to drive, more fuel-efficient, easier to get into tight spaces where deliveries might take place and less expensive to purchase,” Fields said. However, he declined to comment on the number of Class 6 trucks the carrier has bought.

Tabel said one of Isuzu’s customers now runs trucks in Classes 4-7, depending on the route. “In the past, a guy would typically buy one truck, and that is the truck his guys run throughout the company. Now, getting the right truck for the right route is a definite play,” he said.

Stephen Latin-Kasper, director of market data and research for NTEA — The Association for the Work Truck Industry, Farmington Hills, Mich., said scaling down is driven by fuel and operating costs. He said he is seeing Class 5 sales taking share away from Class 6.

“If you look at the 2012 data by class, you find that Class 5 outpaced the rest of the industry,” Latin-Kasper said, adding that while Class 5 sales are growing,

Class 6 sales are also increasing.

“From our own data, we could not make the case that [Class] 6 was taking share away from [Classes] 7 or 8, but there is anecdotal evidence that it is happening,” Latin-Kasper said.

Steven Saltzgiver, vice president of fleet operations for Coca-Cola Refreshments, Atlanta, said that year-over-year, the company is adding and disposing of more than 250 diesel trucks. As part of that trend, Coca-Cola is investing in alternative-fuel and hybrid vehicles, but the company also is evaluating a possible move to smaller-class vehicles.

Changes in distribution patterns nationwide are allowing some carriers to use medium-duty vehicles.

“The distribution model is shifting from long-range driving to shorter-range, spoke-and-hub operations,” said Kyle Treadway, president of Kenworth Sales Co., West Valley City, Utah, which operates 18 dealerships in seven states.

Witcher said that helps reduce the trucks’ gross vehicle weight. He added that the expansion of the Panama Canal, which is scheduled to be completed in 2015, will send more cargo to the East Coast. “The need will diminish for people to do cross-country runs with sleepers, and that is when I see additional conversion from large over-the-road trucks to lighter Class 7 and Class 6,” he said.

Tim Kraus, president of the Heavy Duty Manufacturers Association, Triangle Park, N.C., said some carriers are becoming more specialized, which changes the vehicle they specify. “There are more and more people who are rather than using Class 8 tractors for city trucks, they’re specializing, and when they replace a Class 8, they’re replacing it with a lower-class truck that is more efficient and has less expensive parts,” Kraus said. However, he said it is too early to call the shift a trend.

But dealers are seeing the growth. Treadway said he sees an increase in medium-duty vehicles — particularly Class 6 truck sales — in the furniture, bulk hauling, beverage and pickup-and-delivery applications.

“One of the most critical factors affecting this trend is the driver shortage,” Treadway said, adding that because Class 6 doesn’t require a commercial driver license, “the driver pool to draw from is much larger.”

Tam expects the aging of the driver population and retiring baby boomers will continue to change the driver pool and may make the need for smaller-class vehicles even more compelling.

The CDL requirement triggers other compliance issues, including drug testing, logbooks and CSA, Treadway said. “The regulatory world of commercial truck drivers is getting more complex, hence the shrinking number of people willing to enter the industry,” he added.

Kari Rihm, president of Rihm Kenworth in St. Paul, Minn., said some companies choose medium-duty vehicles with automatic transmissions, which can appeal to drivers. Rihm has seen significant growth in Classes 6 and 7 sales. “In 2009, we retailed only 83,” she said. “In 2012, we sold 308 Class 6 and 7, and we’re on a trajectory to beat that this year.”

Dean Dills, a truck sales representative at Rihm Kenworth, said some of that growth is from sales that once would have gone to Sterling and General Motors. Daimler Trucks North America abandoned its Sterling brand in 2009. That same year, GM shuttered its medium-duty truck division, which limited its lineup to Class 3 and below. In addition, Kenworth recently reintroduced a cabover unit that is gaining popularity with in-town delivery companies because it is a shorter truck, Dills said. “They can get it in tighter areas, and there is better maneuverability.”

Ford Motor Co., Dearborn, Mich., has seen an increase in Class 6 sales because of increased recreational-vehicle chassis and strip chassis production. “The economy is getting better. Even though it is growing slower than we’d like, we have many businesses experiencing growth, so they’re adding to their fleets in addition to replacing equipment,” said Len Deluca, director of Ford’s commercial truck division.

Deluca said demand for the commercial strip chassis has more than doubled since it was introduced in 2009. However, he said he doesn’t believe enough fleets are switching classes to affect growth. “One thing we’re getting is looks from customers who didn’t consider us before due to some competitors who are dead, out of the market or aren’t providing the products they once did,” he said.

Ford is seeing customers change to a gasoline-powered truck from a diesel-powered unit. “I think now there are some customers realizing they don’t need a diesel, and now we can provide them with the powertrain they really need,” Deluca said. Diesel engines provide more torque than their gasoline counterparts, but they typically have a higher initial cost.

Bill Moad, director of fleet operations for J.R. Simplot, a Boise, Idaho-based agricultural business that produces frozen potatoes, vegetables, fertilizers, seeds and cattle, has downsized the size of the pickup trucks it buys. “In the field areas where we’re making sales calls, we went to the Ford F-150. We’re looking for better fuel economy, so we went down from the 1-ton pickup,” he said.

Kenneth Calhoun, vice president of customer relations for Truck Centers of Arkansas in Little Rock, said that although everyone is trying to be lighter and more fuel-efficient, fleets shouldn’t drop to a smaller class simply to cut costs.

“If you have a particular job to do, you have to look at it at a component level and not just if you can do this with a smaller truck. The payback isn’t there if you drop too far. You tend to get better service life and less maintenance expense from having something that is spec’d properly,” Calhoun said.

Elissa Koc Maurer, manager of communications for Navistar International Corp., Lisle, Ill., said there is no irrefutable evidence to indicate that fleets are shifting class sizes. She said sales continue to be “choppy” and that “vehicle class sales are cyclical by nature.”

In fact, Dills said, medium-duty customers often take the dealer’s advice on which vehicles to spec.

“The medium-duty customer quite frequently is a company that isn’t a trucking company,” Dills said. “They produce something, and they need the truck to deliver it.”

Can you believe the Ford guy's comment..."people are looking at us now because others have dropped out"-or words to that effect. Nothing like putting a positive spin on why people are buying your product- like maybe..We are the only class 6 gas option etc. I can't believe how inept these guys are.