Trucks at Work Blog

“If you don’t market yourself, you don’t have a job. And in this economy, that comes home to you in spades.” –Rick Galliher, 1-800-Got-Junk franchise owner, Chantilly, VA

This is as tough a time as any for small companies to get through, much less ones that rely heavily on trucks to get their respective jobs done. Though my last post reported that confidence is running higher than many thought among small businesses about their prospects this year, no one expects success – much less survival – to come easy.

For small businesses using trucks to make a living, it’s even harder, for as we all know truck-based companies are capital intensive. You’ve got monthly payments to make (whether you buy or lease your equipment), you’ve got maintenance to manage, detailed safety regulations to follow, breakdowns to fret over, and of course fuel costs – they can give you migraines. All that before you even get to marketing your services to customers.

Rick Galliher is a guy that knows plenty about all of the above – and then some. After working for 20 years in road construction in the North Virginia area – mostly for Driggs, a big general contractor – he went out on his own in August 2003, buying a 1-800-Got-Junk franchise to haul away unwanted and unsalvageable goods from mostly residential customers.

“We essentially sell labor and a big truck,” he told me. While the company’s Vancouver, British Columbia-based headquarters helped Galliher obtain a vehicle with the right specs for the junk-disposal business, everything else is on his shoulders – building up a customer base, hiring personnel, and maintaining his fleet of six medium-duty GM/Isuzu brand trucks equipped with specialized dump bodies.

Doing all of that during an economic recession like this one can be tough – even brutal. His overall tonnage dropped by 25% in 2008 versus 2007, with some months posting well over a 30% fall off in demand versus the prior year. As a result, Galliher cut back on his own pay to keep his business going, but he’s also constantly looking for new angles of approach in the junk hauling business.

“I look at it this way – would I rather be a mortgage broker right now? Or a realtor? One thing about this business I’m in – there’s always junk that’s got to be removed,” he told me. “The trick is adapting to the market and finding opportunities. So, since the residential market is crashing, I’m looking more at commercial business now. We’re also looking at servicing the foreclosure market in more focused way, as that will be booming for a while.”

[Below, Galliher explains the advantages and the new angles of approach he’ll use to try and build up business for his company this year.]

That also means finding new ways to raise his profile in what’s becoming an ever more crowded marketplace. Five years ago, for example, just he and one other company served the specialized junk hauling niche in Northern Virginia – now he competes with TEN other firms.

As a result, he’s getting his truck crews more involved with customer outreach – getting them to drop off flyers, toy trucks, $100 coupons and other sales materials at businesses along the routes they run every day. “For example, I can’t visit 200 realtors in a day,” Galliher told me. “But with my crews spread out all over, we can. It’s about getting everyone involved.”

It helps that he’s keeping his experienced hands on board, too – a result of the economic downturn – as that experience in managing jobs and making decisions helps keep his business more nimble than some competitors. “When I am on the truck with them, it’s one thing,” Galliher explained. “When I am here in the office, there’s only so much I can do. Often times, when they first arrive at a job, it looks too huge, but when it’s done, it wasn’t nearly as bad as they feared. They get more experienced about the work involved the more they do it.”

For a small truck fleet exposed to harsh conditions – all the trucks visit landfills every day; not exactly equipment-friendly environments – it also pays to build good relationships on the maintenance side of the ledger. Galliher works exclusively with a local garage, G & C Express, rather than a national chain simply because it gives him more flexibility in making maintenance decisions – doing what needs to be done today and maybe delaying other items for tomorrow.

“The fleet maintenance vendor we could use would require me to pay $300 a month per truck and take them out of service according to the shop’s schedule, not when it is best for me,” he explained to me. “I also have to get everything done when they say it’s got to be done, regardless of the vehicle downtime. With G & C, I get much more flexibility.”

[Galliher goes into more detail on the maintenance strategy for his fleet below.]

Yet even though it’s tough out there, Galliher doesn’t regret going out on his own. “I still enjoy being on the trucks – I like being my own boss, though working in the office is a headache,” he told me. “Sure, I might have been more financially stable had I stayed at my old job with a paycheck. But there it was working on computers all day in an office. It wasn’t what I liked to do. And besides, look at everyone else in the job market – every profession is hurting out there. I’d rather be doing this.”

Got a chance to spend some time with Eric Smith this week: Eaton Corp.‘s chief engineer for special projects and hybrid-electric systems. Right now, he‘s working on the second generation of Eaton‘s parallel hybrid system, used on medium-duty commercial trucks right now usually in conjunction with diesel engines.

“What we‘re trying to do now is expand hybrid technology into other trucking applications,” he told me. “That means we‘re not only refining the technological package as a whole to lower its cost and produce better fuel economy, but also make it a more ‘multi-purpose‘ system, so we can use the hybrid‘s batteries for tasks other than just propulsion.”

Smith pointed to Eaton‘s involvement with the HTUF hybrid truck project back in 2004 as an example of that expansion. That effort resulting in a utility bucket truck that could tap into the hybrid system‘s battery to run the boom lift at a work site, allowing for “engine off” operation for up to two hours at a time before the diesel motor had to fire up for five to 10 minutes to recharge the batteries.

“The biggest challenge we have with hybrids is ROI [return on investment] for fleets,” Smith told me. “It‘s all about how we justify the extra cost of a hybrid to them. One part is fuel economy: fleets are feeling the pain of diesel fuel prices up over $3 a gallon. The other is capability; that helps expand the ROI. We‘re looking at putting a 110-volt generator on the truck, tapped into the hybrid batteries, providing power for a contractor‘s tools. Another thing we‘re looking it is powering refrigeration systems, to give refrigerated carriers ‘engine off‘ capability when making deliveries.”

Expanding a hybrid‘s capabilities drives costs savings - and that‘s critical to getting fleets to buy more of them. For the higher the production volumes, the lower the manufacturing costs - and thus the lower the premium for a hybrid truck, said Smith.

Eaton is also looking at other vocations where hybrid systems could play a wide role. Delivery vans and utility trucks were an obvious - and ultimately successful - market to start in. Eaton formed its hybrid power systems business unit back in 2000 and quickly landed a contract from FedEx and public interest group Environmental Defense in 2002 to build 18 hybrid step vans. That contract has grown significantly, with FedEx subsequently ordering 75 more of the E-700e hybrid vans in 2005 that will start entering its fleet by the second quarter this year.

UPS and the Department of Energy quickly followed suit in 2004 with an 18-vehicle order of their own, and those demonstration units are still going strong, with the oldest truck - now four years old - still plying hilly routes in San Francisco. UPS is also moving to beef up its hybrid fleet, with 50 more of those vans on order.

Eaton partnered with China bus maker Foton in 2006 to built hybrid transit buses - rolling 30 of them out of the factory and onto the streets of Guangzhou at the end of last year - and has entered into deals with Peterbilt, Kenworth, International, and Freightliner to build more medium-duty hybrid trucks. It also has an exclusive deal with Paccar to build Class 8 hybrids as well.

Right now, fuel economy savings and a tax credit to offset the purchase price are what‘s attracting fleets. While the $12,000 tax credit is universal, the fuel savings differ by vehicle type and operation, Smith stressed. For example: a hybrid medium-duty utility truck can see a fuel savings of 60% and reduced idle time of 87%, while a city delivery van posts a fuel savings of 50% and a city bus gets a fuel savings of about 20% to 30%.

In the Class 8 world, the fuel savings are trickier to achieve because of its steady-state, highway-driving environment. But with the hybrid system aiding with acceleration and on hills, while reducing idling, a fleet could save up to $9,000 in operating costs per truck per year, according to Eaton‘s laboratory and road tests.

“The thing is, driver habits vary so widely in the real world,” he told me. “We use dyno testing in the lab to provide us consistent data in terms of what the potential fuel savings are. Then you perform field tests to see how the truck really gets used. For example, does the driver shut off the diesel engine when he or she stops to make a delivery? That really impacts the final fuel savings result you‘ll see.”

Despite those challenges, though, Smith is confident that hybrid commercial trucks will continue to come down in cost, while returning more savings to fleets. “We‘re improving cost efficiency, reliability, and durability with each successive generation of hybrid system,” he said. “We‘ll still have a lot of room to really ‘tune‘ hybrid trucks to their particular work environment so they save fleets as much as possible across the board.”

So Emanuel Groll and I are making our way around Daimler AG’s test track at its headquarters in Stuttgart, Germany, in the compnay’s new Mercedes Benz 7.5 ton Atego diesel-electric hybrid truck. Best thing is that Groll isn’t some test engineer plucked from the ranks to play test driver for the day — oh no. He’s the guy Daimler put in charge of making this truck become a reality — the chief engineer himself — and though it handles just like any other medium-duty you’ve ever operated, Groll told me making the Atego hybrid come to life was far from easy.

That’s because the parrallel hybrid Atego marries a chassis and diesel engine built by Daimler with a hybrid drive system produced by Mitsubishi Fuso — a well-known Japanese truck maker in which Daimler owns a controlling stake. Putting those pieces together proved hugely difficult, Groll conceded to me: for starters, the medium-duty hybrid used in Japan uses hyrdaulic brakes, whereas the European Atego has air brakes.

And the brakes are key to the fuel savings one gets from a hybrid, as the system is designed to ‘capture’ braking energy, then re-use it to ‘launch’ the vehicle. That’s but one reason why hybrids like the Atego can get between a 30% to 40% improvement in fuel economy. “The mechanic integration of all of this is not too hard — it’s putting together the electronics controlling everyhting that proved challenging,” Groll explained to me in flawless English. “It took us two years to get all of the components to ‘talk’ to each other correctly.”

DHL is going to get the first Atego hybrid prototypes in the spring of 2008 for some detailed real world tests — not only measuring fuel savings but maintenance savings, too, as the regenerative braking process should help extend brake pad life. “We haven’t had the chance to accumulate that data ourselves, so it will be interesting to see what DHL discovers,” Groll told me.

The Atego is but one of many alternative vehicles Daimler put on display for some 200 journalists visiting from 28 countries this week — garbage trucks running on natural gas, fuel cell powered city buses, diesel-electric hybrid buses, etc. Riding in them, you really don’t notice anything too different, though — less noise of coruse and none of that pungent diesel odor. But aside from that, the ride and handling is no different from their diesel-only counterparts.

Underneath the hood, though, it all gets complicated — and in terms of keeping them on the road, maintenance is going to be the real issue in the long run, I think. Fuel savings will be there, which should help offset the higher costs of hybrids, but if they prove too complicated or require more downtime for maintenance, money saved from lower fuel bills may go back out the window.

Yet this is all occuring at time when we are staring $100 per barrel oil in the face — with fears that it may go higher as 2008 dawns upon us. So, even with the complications, medium-duty hybrids like the Atego and others from International, Kenworth, and Peterbilt may end up being the best money-saving option for fleets down the road — and sooner than we think.