John Flynn is CEO of Fleet Advantage. He gained initial experience in full-service truck leasing in 1972 with the Hertz Corporation, then turned entrepreneur. In 1981 he founded Chancellor Fleet Corp, and 1990 he founded First Fleet Corp., which he sold to PHH Arval in 2006. In 2008, he came together with a group of seasoned transportation professionals to create a company focused on using Big Data analytics to manage large private fleet costs. The result was Fleet Advantage.
A favorite quote highlighted on the company website is, "Vision without action is a daydream. Action without vision is a nightmare." We talked to Flynn to learn more about Fleet Advantage, Big Data, fuel economy specs and more.
HDT: In a nutshell, tell our readers what Fleet Advantage does.
Flynn: A lot of people see us as a leasing company, but we're really far more. We go in and do a fleet study, doing analytics on data such as age, maintenance costs, mpg and other components -- a pretty extensive study. We've developed software so we can plug in that information and it'll spit out the ideal lifecycle of the equipment from a cost standpoint. Invariably, that's shorter than the term they're currently running.
Then we provide a specification to improve fuel economy and reduce maintenance costs. We install an electronic online portal that monitors that equipment, maintenance repair costs, utilization, mpg, and so on, and do some comparative analysis to prior year and prior months. Our initial premise may say they should run it for three, four or five years, but the data analytics over time determines what the true economic tipping point is for that asset. And we do it truck by truck. Every truck has its own P&L statement.
For example if the truck's three years old and we have some trucks we put in only six months ago, we know the newest truck gets 7.2 mpg and the older truck gets 6.8 or whatever the case may be. We've designed a system that concludes what the annual growth is in maintenance, repair and fuel economy, and can do some predictive analytics that say, 'If you run this truck the next 12 months it will cost X, and if you get a new truck it will cost Y.'
With the low interest rate environment we're in and the ever-improving fuel economy in new engines and technologies, more likely than not in three to four years they can save money by putting a new vehicle in.
HDT: You have a 30-plus-year career in truck leasing. How has leasing changed?
Flynn: The biggest change has been in equipment and technology. Back in the early '90s, most private fleets ran trucks five to six years. We've had two economic crunches since then, and each time we have those recessions, companies tend to extend life cycle a little bit, and on top of that we went through that terrible period of time where we had all those engine emissions regulations. People get into irregular purchasing patterns, so they ended up having a hodgepodge of fleet dynamics. Then on top of it the onboard computers came into play … and getting that data … added a great deal to our offering because that gave us access to that information.
Really the old way of doing business was 'equipment obsolescence' -- run the truck till you can't run it any more, seven or eight years. We believe the proper formula is 'economic obsolescence.' Run it until a certain point in time, we call it the tipping point, where it actually saves you money to get a new piece of equipment.
HDT: What trends are affecting truck leasing and spec'ing now and in the future?
Flynn: I think the trend is going to be toward better management of costs and better asset management. People that are going to buy [or lease] new trucks, they've got to be prepared to manage the equipment lifecycle. When you can pick up technology [buying a new truck] that's going to give you [an extra] half a mile per gallon, even at $3.20 a gallon that's worth about $4,000 a year, so it doesn't take long to figure out if the lease costs you another $150, $200 a month, you're better off.
HDT: When it comes to fuel economy, what are the most common things fleets can do to improve?
Flynn: The first thing is automated transmissions. But people make the mistake of taking their old specifications and putting automated transmissions into it. You have to change axle ratios and other parts of the drivetrain [for these transmissions to be most effective].
There are aero deflectors, low rolling resistance tires, and so on, but …. at the end of the day it's the driver. We have one company, they've had some driver training issues and we designed a driver training truck and included it no extra charge, you can put four drivers in at a time, with seat belts for all.
"We're finding ways to save money everywhere we look, but you can't do it unless you can aggregate all this data."
HDT: In addition to fuel economy, other industry issues where you feel you have impact include sustainability and safety. So first of all, are trucks becoming more “sustainable”?
Flynn: Regardless of the operator’s size of fleet, more fuel-efficient equipment can have an impact on our carbon footprint in addition to operational costs. A recent survey we commissioned showed that there is still a lot of work to do in helping companies lower CO2 emissions, and their equipment is an important big place to start this movement. A more sustainable fleet isn’t necessarily the top priority for these fleet companies, but there is growing outside pressure to help them move in this direction.
HDT: How are you addressing safety?
Flynn: Safety is as important an initiative as any for us and our customers. Our EXchangeIT business model has allowed us to include state-of-the-art safety features such as collision avoidance and lane departure warning systems. Our driver training model that can seat up to four drivers at a time not only helps with training for better fuel mileage, but also allows drivers to be active participants in the training of these safety features.
HDT: Where do you see truck leasing going in the future?
Flynn: The future's all data analytics. We're finding ways to save money everywhere we look, but you can't do it unless you can aggregate all this data…. When we see one fleet that's made improvements, we apply it to the next fleet. If we see a fleet that's making a mistake, we say we know better because we've [seen] this before.
Research firm Frost & Sullivan in a recent report projected that leasing will capture more of the Class 8 truck market over the next six years, in part due to the flexibility of leasing.
This is the most enjoyable company I've ever had. We've kind of taken the antagonistic element of buying and turned it into a very collaborative effort.
HDT: So you say it's fun …tell us what you do there.
Flynn: I do a little bit of everything. My days are spent more now in reviewing the data to make sure we're reporting it properly and customers are happy. It's also looking to the future to what designs we need to incorporate in the future. We' re looking closely at a new safety program we're going to install this year, and two or three other initiatives. My job is to just keep an open mind and try to put as much vision as I can into the future and guide the company.