Beverage fleet managers really do have their work cut out for them. On the one hand they are tasked with managing one of the most vital parts of a beverage company’s operations. That alone is a huge responsibility. And to make matters even more challenging, a fleet manager must constantly juggle a host of concerns that can change from year to year, month to month, even day to day. Our fleet report over the following pages presents a vivid picture of all of this. It also reflects a broader array of technologies available to fleet managers than possibly ever before, from a portfolio of more environmentally friendly products, to onboard technologies. Indeed, a fleet manager today has to be one part scientist, one part IT director and one part trucker to make it in this business.
For this year’s report, the majority of respondents, 82.1 percent, identified as beverage distributors/wholesalers/warehouse (no production); 15.4 percent as beverage producers/manufacturers/bottlers, with the rest split between beverage franchise companies/importers/brand owners (no production) and full-line supermarket/convenience store distributors, 0.9 percent.
As for the kinds of beverages respondents distribute, 69.2 percent distribute beer, 60.7 percent water, 52.1 percent New Age beverages, 47.9 percent soft drinks and 40.2 percent wine & spirits.
As far as the size of the companies is concerned, most of respondents, 42 percent, said they did $50 million or more in sales, with 39 percent between $10 million and $49.9 million, and about 20 percent under $10 million.
The respondents were also fairly evenly split across the United States. Most were located in the South (29 percent), followed by Central (24 percent), the Northeast (22 percent) and the west (20 percent). About 5 percent came from outside the U.S. The majority of respondents, 51.3 percent, said they have just one distribution location, with 48.7 percent saying they had two or more.
Breaking with how we’ve done the survey in the past, this year’s surveyed only those operating fleets of 10 or more vehicles. For distributors, the fleet size was almost evenly split amongst survey participants between those above 100 vehicles and those below. For producers, some 72.2 percent of respondents had fleets with less than 100 vehicles and 11.1 percent have fleets with 1,000 or more vehicles, while only 2.1 percent of distributor respondents did.
The survey was conducted over January and February 2013.
Types of Vehicles
The vehicle of choice for the beverage companies participating in our survey, especially beverage distributors, is the commonly used full-size van. The versatility of these smaller vehicles and the ability of them to easily maneuver in more urbanized settings makes them the natural choice for many beverage distributors looking to move product out the door and into the store fast. These vans are apparently the workhorse of many beverage fleets today. A whopping 85.4 percent of distributors rely on these vans everyday to deliver their product. Also very popular are pick up trucks: 72.9% of beverage distributors say they use them and 77.9 percent of producers (it was the most commonly used vehicle among the producers in our survey.) Distributors in our survey also still heavily rely on the side-load bay beverage bodies or trailers.
While there was no clear standout in vehicle-body configuration among beverage distributors and producers surveyed, slightly over half of the respondents say they employed conventional trucks with a side-load body followed by 46 percent saying they employ a tractor with a 48-foot dry van trailer. Those figures are expected to remain relatively the same for the following year as 8 percent of respondents say in the next 12 months they plan on adding a trucks with a side-load body. However, nearly 10 percent of respondents plan to opt for a tractor with a 40-foot dry van trailer.
As distributors and producers continue to carry and produce a varied cross section of beverages, the equipment they need also must vary. Operations with over $50 million in volume sales, for example, are equipped with more refrigerated vehicles than those operations with under $50 million in volume sales, which would indicate they are carrying specialty product such as craft beers, wines or dairy-based drinks that would require a temperature-controlled environment.
Always on the lookout for ways to cut costs and boost the efficiencies of their fleets, respondents across the board—both distributors and producers—report they will be looking to replace older “less efficient” vehicles over the next 12 months. A number of producers also expressed an interest over the next 12 months in adopting some kind of fuel management system or software. Notably, beverage distributors seemed interested in giving natural gas vehicles a try over the next 12 months, with the number using this technology almost doubling—albeit from a small start—over this period.
Some of them might be influenced by the advantages of natural gas: for instance, it is sourced mostly from domestic supplies and therefore its price is more stable, and it also is a clean-burning fuel with vastly reduced emissions. However, since the technology is still young the infrastructure is first being built out in many locations around the U.S. For instance, Scott Perry, vice president of supply management for Ryder, says his company began deploying natural gas vehicles in early 2011. It started with 200 tractors in service in southern California, a state that already had a more mature fueling infrastructure in place. “I would expect we’ll have over 400, maybe even 450 vehicles in service by the end of the year,” Perry says
And that expands out of California to Arizona, Michigan, Louisiana, and Texas. “We have probably 30 other markets that we’re currently reviewing in support of customer demand and the role we want to play in providing maintenance support and leasing and rental opportunities around this technology,” Perry says.
According to Perry, “the economics are very compelling,” when comparing diesel and natural gas “and it is a very environmentally sensitive product compared to even the cleanest clean diesel that’s on the roads today. And then there’s the fact that it’s a domestic fuel source.”
Among the most commonly used on-board technologies today are remote vehicle location/tracking systems which enable fleet supervisors to get a bird’s eye view of where they’re vehicles are at any given time. More than 42 percent of the fleets in our survey report they are using this technology, though almost 15 percent more distributors utilize it than producers. As for producers, their most commonly used technology is wireless voice/data communication, with 70 percent of producer fleets in the survey reporting these are currently in use. Producers also seemed more willing to spend the money to prevent back-up/blind spot accidents, with 47 percent of them purchasing avoidance-related technology versus just 24 percent of distributors.
Ranking among the top concerns for our respondents this year is vehicle safety, with upwards of 85 percent across the board citing this problem. Close behind for distributors was fuel price volatility. For producers, fuel price volatility tied with vehicle lifecycle cost as their third greatest concern. Second highest for producers was insurance costs.
Buying and Leasing
With rising fuel costs and an increasing focus on being green, it’s understandable why 50 percent of respondents plan on purchasing or leasing alternative fuel vehicles over the next year. Second to that are passenger cars with just over 46 percent of respondents. Some beverage distributors are moving to smaller vehicles, in some cases using passenger vehicles in place of larger SUVs or vans when possible to help employees get from point A to point B while carrying cargo.
More than half of respondents say that they do not lease vehicles. Those stats are just about split between beverage producers and beverage distributors: 44.4 percent of producers lease compared with 41.7 percent of distributors. On the other hand, more beverage distributors don’t lease vehicles compared with producers: 58.3 percent vs. 55.6 percent.
It also seems that larger operations, those recording annual sales volume of $50 million or more, lease more vehicles—57.1 percent of respondents say they have leased vehicles in their operations compared with 42.9 percent who do not.
Of those that do lease vehicles, 71.4 percent are engaged in full-service vehicle lease agreement while 28.6 percent are not. But not all vehicles are a part of the full-service lease agreement according to the survey stats. Nearly 26 percent of respondents said that only 20 to 49 percent of the total leased fleet is under a full-service lease agreement.
When respondents answered the question: “What is the average lifecycle (including overhauls) of your company’s route delivery vehicles?” the most popular answer was between five and nine years.
Factors such as where in the country a vehicle is being driven could have a big impact on how long that vehicle will last. Weather, terrain and street conditions all can have an effect on the wear and tear of a vehicle. For those vehicles with a lifecycle of five to nine years it seems that companies located in the central region of the country saw the most success with more than 54 percent of vehicles operating in that time period. However, those companies in the Northeast saw more life out of their vehicles operating for 11 years of more.
A majority of the vehicles are clocking in 30,000 to just under 40,000 miles a year and 10,000 to just under 15,000 miles a year. Operations in the Northeast in particular are doing a majority of the traveling with 30.4 percent of the vehicles driving 30,000 to 40,000 miles a year.
It’s no surprise that respondents indicated that tires, brakes and engines are the three leading areas for maintenance costs. With the number of miles these vehicles see in a year there is going to be guaranteed maintenance work on the most used parts of the vehicle.
Unscheduled repairs also can contribute to a jump in cost. Respondents indicate that more than 50 percent of unscheduled repairs were in the area of starting and charting (including alternator and battery starter)—57 percent—as well as engine repairs—53.6 percent. Third on the list was collision damage at 46.4 percent, followed by drivetrain at 36 percent and brakes at 32 percent. Preventive maintenance, however, remains a big function performed by operators with more than 95 percent saying that preventive measures are taken in-house to ensure minimal damage to vehicles.