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Commentary: Controlling the impact of technicians on the total cost of ownership

Photo credit: Jim Allen/FreightWaves

FreightWaves features Market Voices – a forum for those with unique knowledge of numerous transportation/logistics/supply chain sectors, as well as other critical expertise.

Technicians who work on trucks tie back to a hard cost and even tie back to driver retention. There has been a great deal of discussion about the “driver shortage” and its effects on trucking. Obviously, without a driver, a truck can’t move. What about technicians? Without technicians to work on the equipment, there are longer wait times, more out of service units, higher labor rates and companies must pay more to recruit technicians with the needed skill sets. Retention programs and enhanced pay for technicians employed at a company as well as those lured from a competitor’s shop lead to higher overall costs for technicians. These factors directly affect the running cost per mile (CPM) and the total cost of ownership (TCO) of a company’s equipment.

In a parallel to the driver shortage, technician shortage issues are not new and have been building as more technicians leave the industry than the number of new technicians entering the industry. The declining support of technical programs in our high schools, as well as the rising costs of tooling and education coupled with low prestige and low pay, have attributed to the issues. The Bureau of Labor Statistics occupational outlook handbook shows that in 2018 the median pay for a diesel technician at $22.76 per hour. A quick search for diesel technician opportunities within a 75-mile radius of Chattanooga, Tennessee on a popular job site yielded 130 opportunities.

Because of the shortage of technicians, companies are being forced to pay more for an entry-level technician. Truck dealership “door rates” also have climbed. Door rates at dealerships range from $145.00 per hour on the East Coast to as much as $166.00 per hour on the West Coast, with rates from $153.00 to $165.00 in the center of the country. This doesn’t include the average delay time of at least two hours in almost all cases. Couple these per hour costs with an average cost of $450.00 with a 2.5-hour average service call event and you have a higher cost per mile directly increasing the TCO for equipment. One thing is for sure, higher utilization results in more miles, thus lowering CPM and improving TCO.

Even if a company has enough technicians, do they possess the skills that are dictated by the mix of trucks and equipment in the fleet? Lowering costs requires company-wide involvement. Units that can run over scheduled intervals increase the likelihood of costly breakdowns. If pre- and post-trip inspections are not mandated, the possibility of having an unscheduled repair increase. Retaining and hiring quality technicians also requires investment in time, money and resources. Providing time for training and incentives for industry-recognized certifications is a must. Having the latest diagnostic technologies and tooling is critical as is a clean, safe work environment. Taking the time to create an appreciated professional maintenance environment will build technicians’ pride in what they do. This will translate into more precise repair and preventative maintenance each time they touch a piece of equipment, thereby keeping costs at bay.

Photo credit: Jim Allen/FreightWaves

Just as a company must work to keep its fleet utilization rate high, the technicians’ direct labor must be utilized to its utmost to achieve optimal results. Labor time can be divided into three primary areas. The first is direct labor, which is time on-task, or any time spent doing a specific task or repair to a revenue-producing piece of equipment. The work order is open, and as soon as a technician clocks in to perform preventive maintenance (PM), for example, that counts as direct labor. The technician gets the work order, picks up the vehicle and services it. The second is indirect labor, which includes time spent in meetings, training programs, safety programs or shop clean-up and maintenance. Lastly, there is idle time and that would include any time a technician is not clocked into an indirect or direct job and was scheduled to be at work. Idle time must include sick and vacation time, as total technician hours must be accounted for in order to properly staff the shop to keep higher labor costs under control.

Focusing on uptime versus downtime is an area that can play a crucial role in keeping costs at bay. The more money and time technicians spend on a preventative maintenance program, the less a company will pay out on the road. If preventative maintenance is done correctly, trucks will be available more times than not. When it comes to keeping technicians’ impacts on CPM and TCO minimal, a company must have a process and data that that identifies just how good the maintenance program is. It is just as important to identify the root cause of each failure in order to eliminate them from causing future cost increases.