As more and more of our governing parties regulate us rapidly into a zero-emission school bus future, we will be faced with new equipment options that will significantly change the way we purchase and utilize our fleet. Equipment, vehicle and infrastructure support that will meet the future regulatory requirements will be very expensive and complex.
The somewhat emotional and rapid transition toward electric school buses has necessitated a strategic realignment of business models for school bus manufacturers and operators.To capitalize on evolving OEM market dynamics, operators must prepare a comprehensive roadmap that maximizes all the available procurement opportunities, which includes the pursuit of grants to help balance high acquisition capital cost with present operational plans and costs. This becomes crucial as more and more states mandate zero-emission school buses, prompting school bus industry operators to focus on cost-effective vehicle operating strategies including, leasing vs. procurement, fleet utilization planning, and extending the safe useful life of its legacy fleet.
An important component of this roadmap should include a comprehensive review of parts and component purchasing practices that will help maintain their continued share of school system transportation operating budgets.
Your first step in preparing for these challenges should be to look at your fleet utilization and replacement strategy:
• Define your current fleet replacement strategy and what influences it: Age, condition, technology, zero emissions, or life cycle economics?
• What is the fleet’s average age by school and non-school vehicle type: Type A,B,C,D, motorcoach, cars, and vans?
• What is the current vehicle utilization rate? How is it measured?
• Are your district a.m. and p.m. routes conducive to maximum fleet utilization?
One reason that fleet utilization is such an important aspect of school bus fleet management is that our “gut feel” and the fact that we “really need more vehicles to do our job” aren’t good enough to make decisions that may have an impact of hundreds of thousands or millions of dollars to a fleet. You need real measurements, (key metrics), of vehicle use that you can use to manage your fleet and justify vehicle acquisition or downsizing. School bus fleet utilization studies are something that should be done continuously because fleet needs and conditions change frequently, as well as route capacities change. Change is inevitable.
Common reasons utilization often gets out of control in a fleet, and the reasons utilization should be revisited frequently, include:
• Insufficient data to understand basic bus fleet demographics and using multiple management systems.
• Lack of bus fleet operational technology to easily measure and understand utilization
• Lack of formal policies for acquisition, use, transfer and disposal of vehicles and equipment • Failure to adjust the size and composition of the fleet as district needs change• A desire to keep old vehicles “in reserve” rather than dispose of them.
• A tendency to manage the bus fleet size based on historical budgets.
• Reluctance to change, “Because that’s how we’ve always done it.”
Utilization of zero-emission buses will have to include range capability and charging time, plus the impact of repair cost associated with increased longevity of legacy school bus vehicles will pose a unique set of challenges to fleet utilization dynamics.
Repair Parts Cost: Keep the Aging Fleet Going Safely.
Over the past couple of decades, our industry has been subjected to many regulatory mandates relative to emissions and safety. Some operators prolonged the inevitable by pre-buying before the mandate deadline and extending the life of the school bus fleet, which today stands at a usable life of 12 to 15 years depending on geographic and other operating practices. In extending useful life safely, the one constant is the ever challenging area of parts and supply cost and its impact on budgeting and procurement.
The last maintenance benchmarking survey conducted by STN in 2016 showed an average maintenance expense of $3,975 per bus per year. When adjusted for inflation, conservatively by 3 percent per year the figure becomes $4,750/bus/year. This does not include a huge variable for labor cost. Using a conservative fleet estimate for the industry’s 480,000 buses, the total market for maintenance and supply items spent annually on items including oil, tires, bus body and chassis parts, etc. is approximately $2.3 billion.
To further put this in perspective, the total school bus industry expenditure for new buses each year is approximately $4.8 billion. Our industry is supported by hundreds of product suppliers necessary to keep our school buses safe, both OEM and aftermarket. By anyone’s standard, this is a huge industry served by many OEM’s and aftermarket suppliers.There is no “better” level of quality when it comes to OEM or aftermarket parts. OEM replacement parts are made by the manufacturer of a vehicle or for the manufacturer according to the manufacturer’s specifications. Aftermarket parts can be made to similar specifications or in some cases may exceed OEM specifications, and sometimes there is no OEM equivalent to an aftermarket part.
To help guide you in gaining a perspective on the availability of procurement programs and to better manage quality, selection, purchasing and inventory, I suggest you contact your regional, state, and national school bus trade association. All can be found in the STN buyers guide or through your state transportation department. These associations have been working hard to get value for their members and in many cases offer training and have developed procurement benefit plans exclusive to its members, lowering cost based on the combined purchasing power of its membership. Additionally make an attempt to attend at least one of the national school bus trade show events held each year. The benefit you will gain in becoming an educated consumer by interacting with your peers and with all the school bus industry OEM and aftermarket suppliers, will be invaluable.
Editor’s Note: As reprinted in the July 2023 issue of School Transportation News.
Related: The Sum of Its Parts: Inventory Management Systems Increase Garage Efficiencies
Related: (STN Podcast E150) Making Informed Decisions: Clean Bus Evaluations, Fleet Maintenance Assistance
Related: School Bus Evolution: Fleet for the Future
Related: Make the Repairs Fit the Numbers