Driver concerns drive equipment specs today, top fleet officials say

Updated Sep 1, 2015
The inaugural CCJ Market Movers seminar was held at the Great American Trucking Show on Thursday, Aug. 27.The inaugural CCJ Market Movers seminar was held at the Great American Trucking Show on Thursday, Aug. 27.

Leading fleet executives shared their insights in a wide-ranging discussion at the inaugural CCJ Market Movers conference, a new fast-paced conference at the Great American Trucking Show in Dallas, Texas, on Aug. 28.

Hosted by CNBC reporter Morgan Brennan and Avondale Partners’ Donald Broughton, the session featured David Parker, founder, chairman and chief executive officer of Covenant Transportation Group, Derek Leathers, president and chief executive officer of Werner Enterprises and Richard Stocking, chief operating officer of Swift Transportation, who all fielded a wide range of equipment and operational questions concerning the top challenges their fleets face today.

The opening question, posed by Brennan, targeted fuel economy. All three panelists noted that while fuel prices were low at the moment, non of them expected that trend to last forever and stressed that spec’ing for consistent fuel economy gains based on the latest technology was a core mission for their businesses.

“You have to be careful with new technology,” Leathers noted, “and make sure that it pencils out for your operation. Performance is always at the forefront of our specs. We like light trucks and fuel economy, but you need power and reliability to move freight. We start there and then look for ways to maximize fuel economy. But powertrain reliability is first and foremost: Drivers on the side of the road are quickly driving for somebody else.”

CCJ’s Market Movers was hosted by Donald Broughton of Avondale Partners (far right) and CNBC anchor Morgan Brennan (far left). Panelists included Werner’s Derek Leathers (second from left), David Parker of Covenant and Richard Stocking of Swift.CCJ’s Market Movers was hosted by Donald Broughton of Avondale Partners (far right) and CNBC anchor Morgan Brennan (far left). Panelists included Werner’s Derek Leathers (second from left), David Parker of Covenant and Richard Stocking of Swift.

Stocking said the price of diesel fuel doesn’t matter to Swift when it comes to vehicle specs. “We’re always going to spec for fuel economy regardless of fuel prices,” he explained. “We feel we owe it to both our company and our country to make sure we’re saving as much fuel as possible.”

Parker agreed, noting that in 2014, for the first time Covenant could say that increased truck prices due to technology were finally paying for themselves by saving fuel. About 75 percent of our fuel costs are covered by our surcharge,” he noted. “But we have to do everything in our power to minimize the cost of that remaining 25 percent.”

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With much of the new technology on trucks today driven by California Air Resource Board (CARB) mandates, Parker said that sometimes he feels the “tail is wagging the dog” when it comes to new regulations. “CARB dictates rules to the Federal government, and we have to abide,” he said. “And there are a lot of costs that go along with meeting those rules. On the other hand, there are 35 million people in California and it is the 7th largest economy in the world. So we do what they tell us to do. And besides that, we want to be a good citizen in our country.”

“We do great deal of business there and care about our customers there. And we’re going to continue to do business there,” Leathers said. “But CARB does mandate at the individual tech level, and I’d prefer it if they simply set the standards they’d like to reach and allowed fleets to come up with own solutions for meeting those requirements.”

“We really need one national standard we can all live by,” Stocking added. “With all these different state regulations, it drives up costs that have to be passed on to the consumer. One national standard would be much or effective and work much better on the fleet side of the equation.”

AMTs at the tipping point?

Broughton asked the three fleet executives how the advent of automated manual transmissions (AMTs) have affected their fleet operations. Parker, who admitted an “old school affinity” for manual gearboxes noted that market penetration for AMTs is now around 45 percent, but said Covenant currently has only 20 trucks fitted with the new transmissions. “They cost anywhere from $2,000 to $5,000 more than a manual transmission,” he noted. “On the other hand, most 18 year olds today have never driven anything but automatic transmissions. So I understand that eventually we’re going to have to start spec’ing them.”

Stocking said he’d recently driven new AMT-equipped tractors and was impressed. “It’s like driving a motor home,” he said. “It’s just so much easier. And I think it’s going to help us with driver recruitment, including getting more husband-and-wife teams and more women drivers behind the wheel.”

Leathers said he thinks the industry is already very close to the tipping point where AMTs will become the dominant spec for heavy duty trucks. “Projections for next year’s market penetration are already in the 65 percent range.”

Leathers said that in order to boost driver confidence in AMTs, Werner began offering senior drivers two-week test runs in AMT-equipped trucks. “The acceptance rate on that effort has been 95 percent,” he noted. “Once they get to know AMTs, drivers love them. Our founder,  C.L. Werner, still drives and delivers for us from time to time. And he recently requested an AMT for his new personal tractor. And he’s about as Old School as you can get. But he can’t stop talking about nice they are. And from my perspective, they’re just safer and give the drivers one less thing to worry about.”

Shorter trade cycles the norm now

Stocking noted that as the economy has picked up, Swift has shifted from a 5 to 3 year trade cycle for its trucks — a move driven by driver demand. “Really, the driver is the end user of a new truck,” he noted. “And we really have to take care of them. The best drivers want the latest and best trucks fitted with the latest technology. But in return, we’re getting good fuel economy, better uptime, and happier customers with more revenue. So there are a lot of positives with new trucks and technology if you leverage them properly.

“We went through a period of running new trucks that were less efficient,” Leathers said, referencing models built before the 2010 EPA emissions regulations came into effect. “But new trucks today operate as billed. They’re more efficient and more expensive. But they do the jobs they’re designed to do. And really, we’re in an arms race for every driver in America. So a good truck that performs well and gets that driver home at the end of their run is vital for us.”

Parker said Covenant has culled its trade cycle down form 24 months to 17 months, primarily driven by the demand for uptime. “We have few maintenance depots,” he noted. “And our business model means that we simply cannot be parked on the side of the road. So new trucks help us and are vital for us.”

Of course no fleet discussion today is complete without a look a autonomous trucks, and Brennan was keen to find out how this new technology will impact fleet operations in future.

“I think we’re a good ways out from fully automated trucks,” Leathers mused. “But I’m very excited about the way the OEMs are pushing boundaries today. It’s like when we went to the Moon — that effort pushed new technology into many aspects of our lives. And autonomous trucks are doing that today. The components that allow an autonomous truck to work are already finding their way onto new trucks. At the end of the day, you still need a driver to hit that dock. But autonomous trucks could definitely ease a driver’s workload.”

Stocking said he was very excited about autonomous trucks. “I recently rode in one and felt extremely safe,” he said. “Drivers will like the safety and reduced stress these trucks offer and I think they’ll bring added capacity to the industry. But I do think they’re still several years out.”