KENT, Wash., June 16, 2014 -- With fuel being a top operating expense, it’s easy to understand why some fleet managers stay up at night trying to think of ways to improve mpg’s.
“When you’re talking millions of miles, it makes every tenth of a mile in fuel economy that much more important,” said Fred Olson, who serves as general manager for Kent, Wash.-based Holman Distribution. “When you’re able to spec a truck for optimum fuel economy, and have drivers dialed-in to operate the equipment correctly, it means extra dollars to the bottom line. Today, our trucks are running with fuel economy that has improved by 2 miles-per-gallon over the fleet we operated just two years ago. It’s been a transformation.”
The transformation came in part thanks to a fleet of 13 Peterbilt Model 579s, under a full-service lease with Western Pacific Leasing, the local PacLease franchise. The day cabs serve Holman’s 3PL business, which consists of a 1.1 million square foot warehouse that’s home to 100-plus customers who strategically store their goods for area deliveries.
The relationship began with PacLease after the term of the previous lease came due. But before awarding PacLease the business, Olson compared and contrasted truck models and their performance, as well as leasing companies. “On the equipment side, there were two things we considered as high priorities,” he said. “One was the reliability of the equipment and fuel economy. The second was driver acceptance of the truck – driver retention is critical to us and we know the trucks they drive make a difference in their loyalty.”
Olson said he did short-term rentals and put three brands of trucks through the paces when it came to fuel economy. “Nothing came close to the Peterbilt 579. The model was about a 1/2 mile per gallon better in fuel economy than what the competition offered,” he said. “What’s more, the other leasing companies had a set truck they wanted to lease us and they kept telling us that this spec -- or that spec -- in our operation wouldn’t make much of a difference. But, if you add 1/10th mile per gallon here, and another there; or save 300 pounds with aluminum versus steel wheels; pretty soon finite details add up to something bigger. The folks at PacLease understood that and worked with us to custom spec the Model 579 to maximize fuel economy. They understood what we were after – they knew trucks and they knew specs. So, based on that understanding, we knew we could even improve on that 1/2 mile per gallon advantage with the Peterbilt. And we ultimately did, adding another 1/2 mile per gallon improvement.”
While management became very comfortable with the Peterbilt Model 579, Olson said he had six of his senior drivers pore over each of the trucks under consideration, including doing test drives. “They provided great feedback,” he said. “The overwhelming choice was the Peterbilt 579. Drivers know trucks and they commented on the fit and finish of the Peterbilt, as compared to the other models. It’s a rock-solid piece of equipment and everything about the 579 exudes quality. They also liked the great visibility out of the truck and its quietness – just like driving a car. And in describing the new hydraulic clutch – they said it’s like a hot knife going through butter. It’s something perhaps small, but when a driver is constantly working the clutch, it makes a big difference in driver fatigue at the end of the day.”
For Olson, the last piece of the puzzle was the assurance of customer support to service the trucks. “Once the trucks were delivered, PacLease supported us with driver training,” Olson said. “The Model 579s are powered by PACCAR MX-13 engines rated at 485 hp with 1,650 ft-lbs of torque at 1,000 rpm and coupled with 10-speed Fuller transmissions. PacLease brought out a torque curve chart and we had discussions with drivers on proper operation. We hit the ground running when it came to proper driving to maximize fuel economy.”
While PacLease helped Holman Distribution gain half of the 2 mpg improvement it ultimately achieved over the past two years, the other half came due to hard work by Holman itself.
“Prior to leasing with PacLease, we had leased from another national leasing company,” recalled Olson. “We went with the newest technology, yet we kept coming back to a simple question: ‘why are our ‘new’ leased day cabs not getting better fuel economy than our old trucks?’
“ ‘Trucks get what they get,’ is what the folks at our prior leasing company told me when I expressed my concerns about fuel economy,” continued Olson. “They sort of dismissed the problem, and time started to pass.”
Seeking a better answer, Olson put together a “lean project” with internal team members. After several months of collecting data and researching the trucks and drivers, Olson’s team determined that the trucks were being driven like Holman’s old trucks.
“Drivers were shifting outside the optimum rpm range and lacked progressive shifting,” said Olson. “They didn’t understand the optimum operating parameters – no driver training was conducted at the outset, which was the key breakdown. We uncovered the problem.”
Olson and his team marched on with an extensive driver-training program. “After six weeks, we improved our fuel economy by nearly a mile per gallon,” said Olson. “That’s huge when you consider we run 1 million miles a year.
“Since we were so far into the lease, we estimated we lost close to $700,000 in fuel savings because of shifting. Shame on us, but shame on our leasing company; everyone knew the trucks and engines were different, but no one took the time to do any driver training with us.”
Olson said the hard lesson learned is paying dividends today. “Since moving to PacLease and putting into service Peterbilt 579s, we’re saving more than $200,000 a year in fuel costs from where we were just two years ago.”
The current climate of quality trucks with exceptional fuel economy is one that has Olson smiling. It allows Holman Distribution to run like a well-oiled machine.
“Our transportation service allows our customers to call us within a 24- to 48-hour window for JIT shipments,” said Olson. “We’ll transport their goods throughout western Washington, and as far south as southern Portland. We have a 99.3 percent on-time delivery rate, and service is our calling card – something we promote heavily. So we expect nothing less from PacLease -- reliable equipment is of the utmost importance to us. What’s more, as business ebbs and flows, we can work with PacLease to provide rental trucks if we’re called on for more deliveries than current capacity affords.”
When it comes to truck maintenance, Olson said the local PacLease franchise is excelling there as well. “PacLease/Western Peterbilt was able to offer us mobile service at our location, and that’s saving us time,” he said. “They’re keeping our trucks in top mechanical condition and that will in turn help us keep our on-time delivery rate to where we need it. We don’t have to worry about a thing.”
And not worrying is what Holman Distribution has built a business upon. “Our business model, and how we’ve been able to build our brand, is by providing unmatched service,” concluded Olson.
“Customers have confidence in us and we don’t let them down – it’s why we’ve won numerous awards over the years. We have a state-of-the-art warehouse and staffing we feel is second to none. And we proudly showcase our fleet of Peterbilts to our customers and prospects – they see the brand and a quality truck that mirrors our own company. It’s why when we proudly tell them our on-time delivery rate is 99.3 percent, they believe it.”
About PacLease and PACCAR
PACCAR Leasing Company (PacLease) is one of the fastest-growing commercial truck leasing companies in the transportation industry. PacLease has independent and company-owned full-service leasing locations throughout the United States, Canada, Mexico and Europe. PacLease provides customized full-service lease, rental and contract maintenance programs designed to meet the specific needs of customers. A combination of reliable, custom-built trucks and complete service offerings allows customers to maximize the value of their transportation resources.
PACCAR Leasing is a part of the financial services group of PACCAR Inc, a global technology leader in the design, manufacture and customer support of high-quality light-, medium- and heavy-duty trucks under the Kenworth, Peterbilt and DAF nameplates. PACCAR shares are traded on The NASDAQ Stock Market, symbol PCAR, and its homepage can be found at www.paccar.com.