The most frequently asked question in a maintenance consulting practice is: "How do my maintenance costs compare to other similar transportation companies?" Benchmarking maintenance costs can be difficult considering all of the variables that exist within and between transportation companies such as:
- Average age of equipment
- Specifications of equipment
- Percent of work performed at company facilities versus outside vendors
- Specifications of tires installed on equipment
- Geographical area where the fleet operates
- Size of workforce and pay levels of mechanics
- Accounting practices for maintenance costs
There are two ways to accomplish benchmarking of costs that provide a reliable comparison for senior leaders to gauge their performance against other transportation companies in the industry.
First, compare against a large database of information. Original equipment manufacturers (OEMs) can provide this information, but it is specific to their type of equipment. KSM Transport Advisors, through its maintenance partner, has access to a proprietary database that contains the specific costs for over 20,000 power units and 60,000 trailer units. With this "density of data" a maintenance cost per mile (CPM) comparison will provide senior leaders a reasonable estimate of the potential maintenance cost performance for their fleet.
Secondly, research shows that the most important attribute to the validity of this comparison is the age of the equipment. OEM brands tend to have the same relative maintenance cost increases year after year. Age in the long run is more important than the make, model, engine, etc. for a competently specified fleet power unit or trailer. It is therefore critical that when comparing costs to any database that the comparison is made using same age band costs for:
- Tractor repairs
- Trailer repairs
- Tractor tires
- Trailer tires
In order to make a valid comparison, information about maintenance costs is essential. Several systems exist to completely manage the maintenance process and cost. One such system is TMT Fleet Maintenance software from TMW Systems, Inc. In the absence of such a system, the company should employ standard accounting practices that allow for segmentation between tractor, trailer and tire costs; these costs can be used along with the fleet breakdown by year to provide accurate benchmarking.
Once the tractor, trailer and tire costs are understood, a strategic plan can be crafted to reduce these costs to approach the benchmark. This plan needs to include specifics about preventive maintenance scheduling, driver comfort prioritization, repair stances, workforce size and pay structure, shop locations, inside/outside, allocations, etc. Like any good plan, data drives the plan and thereby the results.
About the Author
David Roush is president of KSM Transport Advisors, LLC, part of the Katz, Sapper & Miller Network. With 30-plus years of experience, David’s focus includes freight networks, financial management, operational metrics and optimization strategies. Connect with him on LinkedIn.
SEPARATE FACT FROM OPINION
At KSMTA, we can help you separate the franchise lanes from the toxic lanes.
Benchmark Data| Truck Maintenance | Trucking Profitability