When the economy began heading south last year, Gary Simmons knew his company needed to start investigating cost-savings initiatives — and fast.
For Simmons, vice president of fleet management at Casella Waste Systems, Rutland, Vt., everything was on the table: Casella's truck specifications, routes, even the "green" initiatives pursued by the company. Simmons was interested in anything that would control or reduce costs.
For example, the firm is planning to replace its end-dump transfer trailers with tipper trailers. "The increased load capacity will mean 250,000 fewer over-the-road miles, along with the resulting cost and environmental savings of such a reduction," Simmons says.
Casella also is in the process of re-routing much of its collection fleet, from which Simmons expects to achieve a 5 percent cost savings. Furthermore, the company is focusing on improving fuel economy. Casella operates approximately 1,250 vehicles, including front loaders, rear loaders, side loaders, recycling trucks, support vehicles, tractor-trailers and roll-off trucks. Thus, fuel economy is a significant operating metric, both for financial and environmental reasons, Simmons points out.
"We've instituted a very stringent anti-idle policy and track fuel usage daily, route-by-route, by both miles and hours," he says. "We've focused on making it part of our culture to eliminate excessive idling, which often occurs out of bad habits or due to outdated assumptions that engines must idle longer than three minutes to function properly. This is an important part of our effort to achieve that significant milestone to reduce our greenhouse gas emissions, but also to save fuel and money."
Douglas Weichman, director of the fleet management division for Palm Beach County, Fla., notes that in times like these, managers in both the private and public sectors need to look at their entire fleet — including vehicles, facilities and staff — in order to find cost savings.
"Take tires as an example," Weichman says. "We're starting to spec low-rolling resistance tires on all of our equipment as these are the ones best suited to improve fuel economy. Will they improve vehicle fuel economy across the board? Not for everything we manage. But if we even get some savings then it's worth it."
Expanding the use of retreads represents another opportunity for cost savings. "For years as a public entity we got good pricing on new tires, so we didn't have to look at retreads," Weichman says. "Now we're firing up a retread program, as it'll help cut our tire costs by almost two-thirds. We're looking at going from spending $400 on a new truck tire to $120 for a good quality retread."
Palm Beach County also is limiting vehicle idling, going so far as to require automatic engine shutdown for vehicles idling more than 10 seconds.
"We're also monitoring vehicle usage more," Weichman says. "We're looking at the mileage/hours vehicles compile over a year to see if we can eliminate some without compromising our service." As a result, Weichman's been able to reduce his total fleet from 4,800 units down to just fewer than 4,500.
He claims this saves the county money in two ways. "For starters, taking the asset off the books saves a lot of capital," he says. "But then you have the ripple effect — fewer parts to stock to keep that vehicle running. Reducing that parts inventory saves you carrying costs going forward."
It also can reduce the maintenance burden on the fleet, which can translate into staff reductions, though Weichman urges caution. "On paper, fewer fleet units translate directly to fewer MRUs [maintenance repair units] and thus a lower amount of work for the maintenance staff," he says. "But it's not always a one-to-one equation. It can also mean freeing up staff to take on other work within the organization, rather than reducing head count."
Weichman warns that extending vehicle ownership cycles — say from seven years for a standard refuse truck out to at least 10 years — may not be a wise cost-saving move when you look at the big picture. Any money saved by avoiding the purchase of new vehicles will be spent on the higher maintenance needs of older equipment, he says, adding that Palm Beach County is sticking with its vehicle replacement cycle, regardless of how the economy is doing.
Simmons notes that Casella has numerous cross-functional work teams charged with finding operating efficiencies and reducing costs in very specific areas such as maintenance, operations and back office. These work teams are structured to draw on the input and creative thinking of the whole organization.
"We've taken steps to improve arrival and departure logistics to identify fleet units that fail to meet our minimum utilization goals," Simmons says. The steps include maximizing legal payloads, utilizing four-day workweeks, maximizing route density, changing start times and upsizing containers.
One cost-saving tactic being employed by refuse fleets large and small is closer management of maintenance expenses, especially for those that outsource all of their maintenance.
"We're increasingly deferring maintenance where we can," says Rick Galliher, owner of a 1-800-Got-Junk franchise in Chantilly, Va. Operating a fleet of six medium-duty trucks with specialized dump bodies, Galliher closely works with his local vendor, G & C Express, to perform maintenance only on an as-needed basis.
"We review everything when the truck is in the shop," Galliher says. "Can I make the tires last another 2,000 miles? Can we push a radiator fluids change another [maintenance] interval? It gives me the flexibility to do only the work I can easily pay for now. We track closely what's suggested we do at each interval, and then make adjustments. With a national fleet maintenance provider, I wouldn't have that level of flexibility."
It also is a matter of convenience. In Galliher's case, his local maintenance provider is 10 minutes down the road, whereas the national fleet maintenance chain is two towns over. "I can drive a truck over for work [at G & C] and they can drop me back at the office," he says. "To use the maintenance provider two towns over, I'd have to send two guys in two trucks, taking two trucks and two drivers out of service. That adds $100 to the cost of routine maintenance service."
Of Green and Greenbacks
Even "green" initiatives are being turned into cost-saving strategies by refuse fleets. Houston-based Waste Management, for example, is putting 106 compressed natural gas (CNG) trucks into service in its Seattle territory, with plans to convert its entire Seattle fleet of 180 collection trucks to CNG within five years. That changeover, though initially expensive due to the higher cost of the CNG-powered trucks and a CNG refueling station, should significantly cut long-term fuel costs for the fleet, says Susan Robinson, director of public sector services for Waste Management-Northwest.
The truck investment alone totals $29 million for the new CNG vehicles, with an additional $7.5 million to build the CNG refueling station, Robinson says. However, the new trucks are six times cleaner than diesel engines manufactured in 2007 and already meet the U.S. Environmental Protection Agency's 2010 emission standards for oxides of nitrogen (NOx), producing almost no particulate emissions.
Robinson cites U.S. Department of Energy data that shows, based on gasoline gallon equivalents, CNG fuel prices as of October 2008 were $2.01 per gallon, or 54.5 percent of the cost of B20 (a blend of 20 percent biodiesel and 80 percent regular diesel fuel) at that time. As Waste Management-Northwest currently relies on B20 for its fleet, switching to CNG should yield savings fairly rapidly.
"The gap will probably narrow as fuel prices go lower but we expect that there will always be a significant price difference between diesel and CNG," Robinson says.
On another green front, Casella deployed its first hybrid collection vehicle in 2008. The company expects the vehicle, a medium-duty DuraStar hybrid diesel/electric truck built by Navistar International of Warrenville, Ill., to reduce fuel consumption by nearly 40 percent and reduce greenhouse gas emissions by 65 percent, Simmons says.
"Servicing our customers with this hybrid truck is an important step forward in our commitment to resource sustainability and pledge to reduce greenhouse gas emissions while lowering our operating costs," he says. "We expect to reduce greenhouse gas emissions by an estimated 8 to 11 metric tons of CO2 [carbon dioxide] equivalents annually with this single hybrid vehicle through reduced vehicle emissions."
In 2009, Simmons says, the company also plans to use a hybrid diesel/hydraulic-driven truck in an effort to reduce greenhouse gas emissions, improve customer service and generate cost savings. "Sustainable cuts in operating costs come from human creativity and hard work," he says. "We have an important responsibility to make serious efforts to improve the way we manage the resources we are entrusted with, as well as find ways to save ourselves money."
Sean Kilcarr is a senior editor of Fleet Owner, a sister publication of Waste Age.