Newsflash: Prices are going up and there’s nothing you can do about it. It’s just the way of the world. However, there is a lot you can do to keep yourself competitive, especially when it comes to your private fleet. Unless you’re Walmart or Microsoft, you’re probably not the biggest at anything. However, someone else is, and it’s their core competency. I would argue that in the land of private fleets, your main goal is to get better at what you do in distribution and reduce your cost to do it. That will make your customers happier: good service, on-time deliveries and at an acceptable price. The better you do in those areas, the more they’ll order and the more your company will grow.

So, how can you make this happen? First, is it possible to lower the cost of the equipment? This can be achieved by joining a buying group or cooperative, as they’re sometimes known. The idea of banding together to increase your purchasing power has been around for a long time. Large equipment leasing companies that order thousands of trucks each year will get better prices, and in many respects, are a cooperative of all their customers. If they have a strong reputation for maintenance, they can command a better price for their used equipment. Buy low; sell high. That keeps your fixed costs in line. To put that into a financial measurement system, let’s use basis points. For example, $10,000 saved between acquisition and disposal can mean 310 basis points saved in cost of funds over five years. For some, that’s free money!

Now we have to look at the variable expenses involved in a fleet, including the driver, fuel, maintenance, insurance, licensing and taxes. The cost of the driver is fairly market driven, but turnover can be very costly and affect customer service. Consequently, keeping drivers trained and operating newer equipment usually helps not only in terms of retention and customer service, but also in mitigating accidents, reducing breakdowns and ensuring greater fuel efficiency. Getting the lowest cost of fuel and attaining the best fuel economy depends greatly on driver behavior, the condition of the equipment, and both the frequency and quality of maintenance performed. Maintenance is especially critical at a time where experienced, top-quality technicians are a hot commodity. Not to mention all the tooling and diagnostic equipment they need. Today’s trucks are laden with sensors, and lines are long at the repair shop!

Another round of federally-mandated greenhouse gas emissions standards are coming in 2017 and again from 2020-2023. Prices will be going up, possibly with another pre-buy like we experienced in recent years. How much more complex the equipment gets is anyone’s guess, but we do know that the focus will continue to be on fuel efficiency, performance and aerodynamics.

Partnering with a company that has all these things covered can mean the difference between black or red ink on your financial statements. Cultures are starting to change at many companies. You really have to look in the mirror and ask yourself if the way you did things in the past will work best in the future.