Up and running

You can’t avoid the expense of service and repair, but routine, comprehensive PM does wonders for your budget.

Third in a series that examines how you can cut costs in five essential areas.

Faced with more expensive low-emissions engines in 2007, nearly half the owner-operators surveyed by Overdrive plan to avoid buying new anytime soon. Some will buy used, others will rebuild their current engines, and many will just keep on running what they have.

Those strategies have something in common, says Chris Brady of Commercial Motor Vehicle Consulting, who compiled the 2006 Overdrive Owner-Operator Behavior Report: They all drive up maintenance expenses. The longer a truck stays in service, the more expensive it becomes to service – no matter how well-maintained it is.

From checking tires and changing oil to replacing an alternator and running the rig through a truck wash, maintenance is so routine it’s easy to take for granted -until the bills start piling up. The average client of American Truck Business Services in Denver, which handles the books for 30,000 owner-operators, spent $9,706 on maintenance and repairs in 2005, or 7 percent of gross revenue, which averaged $138,497.

Maintenance is costly, but skimping on it is more costly still. Smart business owners keep their trucks and their wallets running at the same time. Here are some of the ways they do it:

    If you’re tempted to complain about a $100 oil change, remember skipping that oil change may necessitate a major repair that will cost $100 for each hour of labor, not to mention the parts, says former owner-operator Russell Fullingim, now owner of Truckers Financial Services in Corning, Calif.

    According to some estimates, systematic PM can cut breakdown costs in half. A blown hose, tire or valve on the road can cost a lot more than a tow and a repair bill. Possible losses include income from that load and perhaps others you might have hauled if the rig weren’t in the shop.

    “Regular maintenance prevents something bigger in the long run,” says Howard Abrams, owner of PBS Tax and Bookkeeping Service in Tarzana, Calif.

    As a bonus, PM makes your engine last longer and burn less fuel. Recommended PM schedules are available from a host of sources, including truck, engine and component manufacturers, oil and lube companies, and the Technology and Maintenance Council of the American Trucking Associations, which publishes a Recommended Maintenance Practices Manual ($145 for owner-operator members, $195 for non-members).

    Plan your maintenance schedule as thoroughly as you plan this week’s haul, and stick to it just as strictly. Using a calendar, a notebook or a software program that will send you e-mail reminders, plot such tasks as oil changes, major inspections and tune-ups. This is especially helpful for keeping track of stuff in the PM manuals that wouldn’t naturally occur to you – for example, adjusting overheads, replacing injectors and running a dynamometer test once a year.

    If your schedule says it’s time for a tune-up, don’t put it off until that mystical eighth day of the week, “Oneday.” Losing a day to a scheduled service is better than losing 10 to an unscheduled breakdown, Abrams says.

    While you’re setting aside time to do maintenance, don’t forget to set aside money to pay for it. ATBS advises clients to create an escrow savings account for maintenance expenses and build it on a cents per mile basis:
    • 2 cents per mile for a new truck
    • 3 cents per mile for a year-old truck
    • 4 cents per mile for a 2-year-old truck
    • 5 cents per mile for a 3-year-old truck
    • 7 cents per mile for a 4-year-old truck
    • 10 cents per mile for a 5-year-old or older truck

    The financial consulting firm says this will help owner-operators avoid whipping out the plastic and incurring big finance charges just to pay for routine maintenance.

    After scheduling and budgeting, follow through by keeping scrupulous records of the date, location, nature, cost and mileage of all the work done on the truck, small jobs and large. This bolsters any warranty claims and improves the truck’s resale value, but most importantly, it tells you vital information about your business.

    “The more data owner-operators have, the better business decisions they can make,” Brady says. For example, such records will tell you how many miles you’re getting for each quart of oil and your maintenance costs per mile.

    Also keep track of any expenses associated with repair work, such as unexpected motel bills and meals on the road. Those can be part of any warranty claims.

    In the late 1960s, a friendly California truck inspector let Fullingim slide under the rig with him every six months and watch everything he did. “It was a good education,” says Fullingim, who still preaches the cost-saving virtues of do-it-yourself maintenance.

    Abrams hesitates to say that all owner-operators could profit from doing maintenance themselves, because a driver’s free time is valuable, too. The individual has to decide what he’s comfortable doing and how much his free time is worth, Abrams says.

    Overdrive research shows that regional and local haulers are more likely to be do-it-yourselfers, because they have more home time to spend beneath the truck, Brady says. Still, every job an owner-operator does himself is a task he doesn’t have to pay someone else for.

    “Fluid and filter changes do not require a large investment in tools nor a high level of mechanical sophistication,” Brady says. The same is true of changing tires.

    Other relatively simple components that many owner-operators maintain themselves include wipers, lights, belts and hoses, but others delve with enthusiasm into brakes, transmissions and engines. Get expert advice for any new project, be sure you aren’t violating any warranties, and if you’re not comfortable doing a job, don’t hesitate to call an expert.

    Only 15 percent of owner-operators cite price as their primary factor in deciding where to buy their oil, according to Overdrive research. They give more weight to whether other maintenance can be done at the same time and whether the vendor is conveniently located.

    “There is a price point, however, where the cost for convenience may become too expensive, and the owner-operator may select another vendor in spite of greater inconvenience,” Brady says.

    For oil and other products and services, do some price comparisons – especially if you haven’t done so in years – and make sure you couldn’t get a much better deal just by varying your routine a few miles.

    Also look into the benefits of a buying group: a carrier program, a truck-stop discount card, a warehouse chain such as Sam’s Club or Costco, or an organization such as the Owner-Operator Independent Drivers Association or the National Association of Independent Truckers.

    Do-it-yourselfers also should consider the cost benefits of buying in bulk. Nearly half of owner-operators, for example, buy oil in 55-gallon drums, most of them directly from oil distributors.

    Playing it safe on oil and fluid intervals is hard to dispute, but the extended-life coolants and extended-interval synthetic oils on the market today deserve consideration, if only for their potential savings in downtime.

    Surprisingly, only 39 percent of regular-oil users among owner-operators have considered using synthetics, Brady says. “The economics of the trade-off between the higher price for synthetic motor oil and extended oil changes can be calculated; however, owner-operators’ fears of extending oil changes cannot be calculated,” Brady says. Many owner-operators simply are not comfortable extending oil changes, he says.

    The 10 percent of owner-operators who do use synthetic oil to extend intervals tend to be in high-mileage applications, Brady says. “The higher price for synthetic motor oil is offset by a reduction in the number of oil changes, making synthetic motor oil cost competitive.” Oil analysis, if properly done, guarantees extended changes are safe for the engine.

    Even die-hards who swear by traditional oil can wean themselves from changing the oil every 12,000 miles, experts say. Cummins says that with normal use and manufacturer-recommended oil, today’s engines will run 20,000 miles to 25,000 miles between oil changes, and 15,000 miles even in severe service. Low-ash oil and low-sulfur fuel may extend the intervals of 2007 engines even longer.

    Using extended life coolant is another way of extending service intervals. Most ELCs are approved for 600,000 miles; Chevron just introduced one that’s good for 1 million miles. Two things are needed to make these work: Add only the correct ELC 50/50 antifreeze when coolant is lost (you should probably carry it with you), and add an inexpensive bottle of extender at the halfway point in the cycle.

    Owner-operators spend $2,321 a year on tires, an average of 2.2 cents per mile of total operating costs, according to Overdrive research. They replace two steer tires, four drive tires and four trailer tires per year, on average. The harsher an operating environment, of course, the more often tires need replacing.

    Keeping tires properly inflated is the most important factor in extending their life, yet only 7 percent of owner-operators drive trucks equipped with tire monitor/inflation systems, Brady says. Of those, 67 percent don’t know their annual savings from those systems. This is another area in which good record keeping would help control business costs, Brady says.

    “Retread tires are less expensive than replacement tires,” Brady says. Yet long-haul owner-operators, who stand to save the most money on their frequent tire changes, are actually less likely than regional operators to use retreads, even for drive tires and trailers.

    An owner-operator who has kept careful track of all maintenance costs will be better able to see when the cost of keeping an older truck running outweighs the benefits, no matter how much you may love Ol’ Rebel.

    To some, the tipping point is when maintenance costs reach 15 percent of gross revenue; to others, gaining 2 mpg would make a trade worthwhile. This is something to discuss with your business services provider, but your maintenance data will enable you to make a savvy decision and not a purely emotional one.

    It’s important to realize that even a well-maintained truck costs more per mile to run as each year goes by. Keeping those costs down is part of running not only a well maintained truck but a well maintained business.

    Billy Bigrigger keeps putting off his preventive maintenance, because he’s busy “running hard” and pocketing $1.10 a mile. One Friday, while he’s running fully loaded, his engine blows. Look at the costs he potentially faces, including the cost of being sidelined all next week:
    Repair $10,500
    Road service $550
    Lost revenue
    (current load) $1,100
    Lost revenue
    (next week’s loads) $2,750
    TOTAL LOSS $14,900