Summary
According to a Frost & Sullivan survey taken 12/08-1/09, there has been a major change in trucking fleet priorities - and what they will pay for them. Also implied is that this is where most future profits exist for manufacturers and suppliers. While all of this is true, government “forced” rules compete with productivity-related products for priority, while trucking companies fight for basic profitability. Overall, this is a great survey to garner insight from.
Analysis
These-type surveys are very useful since they give insights into sentiment about the marketplace. “Smart Trucks” and “Smart Trailers” are definitely opportunities from a productivity standpoint, so we will offer some perspective on the issues of fuel efficiency, fuel programs, emissions systems, GPS, communication technologies and new truck purchases.
The top issue noted in the survey had to do with fuel efficiency with respect to the power-train. The industry has widely adopted operational approaches of reducing fuel use by lowering speeds and idling. Additionally, customers and industry suppliers have quickly moved to more aerodynamic trucks - e.g. Paccar’s Peterbilt division. Only a few percent utilize hybrids, which is not a surprise for a variety of reasons.
Navigation-based fuel optimization programs are gaining interest, since fuel price and quantity can be adjusted to minimize cost for the intended vehicle trip routing. There are many of these already offered within fuel programs such as by info services Ceridian Corporation’s Comdata subsidiary.
The Selective Catalyst Reduction (SCR) versus Exhaust Gas Recirculation (EGR) question came out favoring SCR. In the real world, most of this has been the result of successful marketing programs by those manufacturers utilizing SCR, along with expected fuel mileage improvements and reports from SCR use overseas. Survey numbers don’t preliminarily show any penalty for Navistar, as their 2009 market share today for Class 8 is around 28%, Class 7 is almost 40% and 43% for Class 6. Note: Class 8 makes up over half of units sold. It’s as much about past-current OEM / dealer relations as technologies anyway.
In looking at telematics, there are really several different issues. One is that for on-road productivity, which includes communication, location and routing issues. About half said they have some type of communication devices (including cell phones) with only 13% with location / tracking devices installed (e.g. Qualcomm). While some shippers require fleet tracking to haul their freight, almost half of the trucking companies say they also realize a return-on-investment. There are also many inexpensive products available today used by drivers such as those offered by cell companies, along with that from Garmin.
Another issue has to do with devices that communicate maintenance-type information, which is an area of growing interest. These include downloading engine / driver operating performance data for analysis-action. This likewise has a potential return-on-investment from fuel savings and unscheduled breakdowns, but the industry recognizes the coming requirements from both EPA and DOT with such. Tire pressure monitoring systems are also gaining popularity, as tire costs are the largest single maintenance item.
Safety-related systems such as collision avoidance, lane departure, roll-over, brake temperature, etc. are not well understood by fleets, especially from a cost-benefit standpoint. Our work therein has shown that it is imperative that the insurance industry lead with education to gain traction. Some are doing such and offering discounts on premiums for certain programs today.
Nothing was noted in the survey regarding technologies that make the process more paperless. The industry primarily focuses on the truck, but trailers are also important since that is where the money / freight (revenue) resides. Therein lays tremendous opportunity for the majority of the marketplace.
Finally regarding new truck purchases, 71% said they would buy new trucks within the next year. It was not noted at what level of replacement (percentage of fleet) it would be. Our surveys for the financing world indicate that it will be at reduced quantities (up to 30%) with fleets keeping trucks longer and mixing in some used trucks.
