When the going gets tough …
How is the road freight industry going to afford the latest driver wage increases? VIC OLIVER looks at ways drivers and transport managers can reduce operating costs and increase margins to soften the impact.
Fortunately, the ugly and costly drivers strike is over and stability has returned to the road freight and logistic industry. But how is the sector going to afford the agreed wage increases in the next three years, especially in a struggling world economy and a highly competitive and cut-throat local road freight market with very low profit margins.
There is a simple marketing law that says that if you want a wage increase you have to earn it by being more productive and lowering the costs. Therefore, in my opinion, truck drivers have to accept more responsibility for their vehicles and loads, and must learn to operate in a more professional and productive manner.
By becoming more professional, truck drivers can easily lower the variable operating costs of the vehicles they drive and add more revenue to the operation.
How truck drivers can reduce the variable operating costs of their vehicles:
• By driving within the economic engine torque of the engine – the Green Band;
• By constantly looking ahead for road hazards and taking early, appropriate action to avoid harsh braking;
• By accelerating slowly and adopting a smooth driving style;
• By avoiding fuel spillage;
• By keep their vehicles clean and in a safe condition;
• By doing their daily pre-trip inspections properly and making sure any pending fault or problem is attended to immediately; and
• By keeping the tyres of the vehicle and trailer at the right operating pressure.
How truck owners and transport managers can reduce vehicle operating costs:
• By controlling and analysing all vehicle operating costs monthly (costs must be measured against benchmark standards and immediate action and rectification must take place to fix any costs that are higher than the set standard);
• By paying special attention to all the variable-cost items such as fuel, tyres and maintenance, and ensuring that an escalation clause is in place to allow them to adjust their rates when the price of fuel fluctuates;
• By monitoring vehicle breakdowns, analysing the cause of each breakdown and taking steps to ensure that a solution is found to eliminate a repeat of the same type of breakdown;
• By keeping a good record of all breakdowns and using this record as a barometer to measure the effectiveness of maintenance (a good internal communication system must be in place to ensure that all parties involved in the process of attending to a breakdown know exactly what to do to get the vehicle back on the road with minimum delay);
• By buying the right vehicle for the job and examining the quality of all new vehicles and trailers purchased;
• By controlling and monitoring the quality of all outsourced work and ensuring that it is done in accordance with set standards;
• By carefully controlling company finances and ensuring that external suppliers are paid on time once the work has been done to their satisfaction;
• By motivating, controlling and managing all company drivers: showing recognition and reward for work well done; selecting drivers that meet the company’s driving standards and are continuously trained as professional drivers; and ensuring that drivers do not drive excessive hours;
• By checking all driving licences and professional driving permits once a month to ensure that they are valid and haven’t been endorsed or cancelled;
• By ensuring that driving licences and professional driving permits are renewed before the expiry date;
• By ensuring that all company vehicles are well maintained, roadworthy and safe to operate on the road;
• By ensuring that vehicles are serviced in accordance with the manufacturer’s timetable and standards;
• By making workshop production efficiency and effectiveness a high priority;
• By ensuring that vehicles are not overloaded, that the mass distribution is correct, that all loads are well secured and that vehicle routing is planned to optimise operational efficiency;
• By setting and maintaining a company vehicle policy and standards, and ensuring that all drivers adhere to the set standards;
• By having a company vehicle replacement policy that caters for vehicle replacement at the optimum time, thus assuring that the company gets the full expected economic life from the vehicle and is replaced before it incurs high maintenance costs that cannot later be recovered;
• By implementing and controlling the company’s transport budget and ensuring that all transport costs are kept within the budget limits; and
• By recording, controlling and measuring all incidents that take place, and taking any necessary action required to ensure that the incident is not repeated.
The demand for higher wages must be matched with added responsibility and productivity to ensure that companies remain profitable.
One of this country’s most respected commercial vehicle industry authorities, VIC OLIVER has been in this industry for 49 years. Before joining the FOCUS team, he spent 15 years with Nissan Diesel, 11 years with Busaf and seven years with International.