Using business intelligence to lower total cost of ownership on Class 8 trucks

Using business intelligence to lower total cost of ownership on Class 8 trucks

Over the last several years, many in the fleet industry has begun to realize a shift in the way truck lifecycle and tractor longevity is viewed. Fewer fleets are purchasing trucks as assets and holding onto them for longer periods to squeeze every ounce of operation from the unit. This philosophy was believed to help organizations save money by extending the replacement cycle out several years. Today, this has changed.

With the advent of business intelligence and data analytics and the help of third-party data consultants, fleets began to scrutinize their truck’s performance and calculate all costs associated with this extended lifecycle. The data-driven analysis of this lifecycle comes in the form of a truck fleet modernization study, where fleet data specialists help fleets scrutinize a bevy of performance data and economic factors in order to determine when it makes the most financial sense to invest in a newer truck as opposed to continue operating and maintaining the older unit.

The benefits of shorter lifecycles

Fleets today are now paying closer attention to a truck’s individual “tipping point,” the point at which it costs more to operate a truck than it does to replace it with a newer model. Elements such as the cost of fuel, utilization, finance costs, maintenance and repair are all factored into arriving at each truck’s unique tipping point, giving fleet operations personnel and finance departments better insights based on data and analytics into determining and calculating the best time to replace an aging truck. This data illustrates a clear ROI and overall cost savings from utilizing a shorter lifecycle. 

What should be calculated in a fleet modernization study

A fleet study is conducted by extracting the fuel and mileage data directly from the tractor’s on-board computers (OBCs) or electronic logging devices (ELDs) through a proprietary interface. The fleet study includes depreciation and finance, maintenance and repair (M&R) and used truck values. For the best results, data should be aggregated by year, make, model, manufacturer, type and location.

The objective of each study is to optimize the entire fleet and to:

  • Identify potential lifecycle cost reductions  
  • identify dormant equity invested in assets that can be redeployed to grow the business
  • Identify opportunities to improve efficiency and productivity
  • Provide a roadmap for customized fleet modernization solution
  • Reduce downtime and eliminate spare trucks by providing new, more reliable equipment
  • Provide per-unit P&Ls that can identify cost-savings opportunities

Through a comprehensive fleet analysis, organizations can discover a multitude of data metrics to identify an optimum fleet lifecycle and utilization, operational cost savings strategy and procurement strategy based on the Total Cost of Ownership.

Key items to review in a fleet analysis:

  • Insights into fleet performance and variable and fixed ownership costs
    • Mileage utilization per vehicle and model year
    • Fuel economy overview and comparison
    • Performance overview
  • Lifecycle cost analysis
  • M&R cost analysis
  • Comparative cost analysis to determine the optimal time to upgrade equipment
  • CO2 and NOx emissions analysis
  • Lease vs. buy analysis
  • Sales tax analysis

Fleet modernization studies have proven to be effective in helping organizations save millions to their bottom line. Recently, one fleet undergoing a comprehensive study was able to generate substantial savings. The analysis uncovered that truck utilization was lower than initially contracted, the equipment was in excellent condition, and the resale market for the used equipment was weaker than expected.

This detailed visibility enabled outside consultants to recommend an extension of the lease agreement, which included a third-party maintenance contract with guaranteed costs for the extended period. As a result, the fleet organization postponed a $35 million CapEx expense, and by completing the transaction 12-24 months prior to contract expiration, it saved $4.5 million over the two-year period, according to a study performed by Fleet Advantage

With all of the business intelligence, data analytics and market knowledge available today, transportation fleets can make profit-saving decisions like never before and gain a competitive advantage.

This article was contributed by Katerina Jones, senior director of marketing and business development for Fleet Advantage.

You May Also Like

ACT Research data shows Class 8 order surge paused

At a seasonally adjusted 17,100 units, March marks the first month since May 2023 for seasonally adjusted activity below 20,000 units.


According to ACT Research, March preliminary North America Class 8 net orders came in at 17,300 units, down 10,400 units from February and down 8.7% from a year ago. The company adds that a very middling seasonal factor, 1.3%, reduces March’s intake to 17,100 units (206,000 SAAR), down 8.6% from February. March marks the first month since May 2023 for seasonally adjusted activity below 20,000 units.

Volvo Group to build new heavy-duty truck manufacturing plant in Mexico

Volvo expects the plant to be operational in 2026.

J&R Schugel wraps Kenworth T680s to support driver causes

After a driver beat breast cancer, the company wrapped her truck in pink and white to support her goal of raising awareness.

FTR: Class 8 orders down more than 30% month-over-month

Despite the substantial drop from February, FTR says the market is performing well, as March orders are on track with 2023.

A ‘Toward Zero’ emissions Q&A with Volvo Trucks’s Roger Alm

Talking through the challenges, the technological advances, and the strategies for a sustainable future.


Other Posts

Ceres: EPA Phase 3 ruling will ‘significantly reduce’ emissions

The new EPA standards will encourage an accelerated shift to cleaner vehicles.

Diesel powertrain technology that makes a decarbonization difference

Saving diesel can reduce CO2 emissions, but is it enough to make a difference? Volvo thinks so, and made these changes to boost efficiency.

FlowBelow introduces AeroFender device for drag reduction, fuel efficiency improvement

Independent testing found that FlowBelow’s new AeroFender saved 1.49 gallons of fuel for every 1,000 miles driven.

ACT Research trailer report finds carriers with ‘reduced willingness to invest in equipment’

ACT Research says limited capex and companies saving money to meet EPA regulations are currently weighing on trailer demand.