How many millions of hours are dedicated to truck and trailer service work?
Our comprehensive study of the medium and heavy duty truck and trailer service markets is complete and available for purchase. In 2015, the Service Labor Market is estimated at 627 million hours, up from 525 million hours. The total labor market includes service activities on over 650 truck and trailer components, including tires and diagnostics.
There have been notable service outsourcing shifts over the past four years as the end user’s in-house capabilities and outsourcing options have both changed. The outlook for 2020 service opportunities will be similar to those that we currently see as many operators indicate their future service plans will mirror their current practices.
Hours dedicated to preventive maintenance are greater in total than any other service labor activity.
Demand for service labor during the weekend hours is on the rise. Time lost to first year warranty work on a Class 8 vehicle totals 20 hours, the same as it was four years ago. Medium duty vehicles are losing more time to first year warranty, currently at 18 hours, up from 14.
The statistical evidence we just received for the fourth quarter of 2015 validated the anecdotal evidence we had seen earlier of a slowdown in Truckable Economic Activity [TEA] growth.
Total TEA rose a scant $7 billion during the fourth quarter, as a modest gain in Truckable Consumption together with a minimal rise in Truckable Investment, were almost completely offset by small declines in Truckable Exports, Truckable Imports and Truckable Government. As a result, the year-over-year pace of growth for Total TEA decelerated to 2.4%, its slowest rate of gain since the 1.8% pace posted in the second quarter of 2013.
The question has been raised as to whether this slowdown is anything more than a pause in growth, such as those seen in other long expansions, or the precursor of something more serious. We answer both of those questions in the March edition of the TEA newsletter, which will be in subscriber’s e-mail boxes by March 9th. If you would like to become a subscriber please Contact Us.
Truck Transportation Employment
The Bureau of Labor Statistics reported today (March 4, 2016) that the level of truck transportation employment was 1,465,700 in February. Although down slightly from the record high it set in January, the current level of employment reflects a complete recovery from the pause in hiring that took place between August and October. With the resolution of the several supply chain issues that hampered freight movement last year, trucking employment is expected to move forward at measured pace over the course of 2016.
Time Really is Money After All!
Approximately every four years since 1997, MacKay & Company has conducted a comprehensive analysis of the Truck and Trailer Service Market.
While the scope of this research has expanded rather considerably since the initial benchmark study, many of the service-related issues research in this initial effort have been regularly tracked. As a result, participants in the program have been able to measure shifts and changes for a variety of service practices, service sourcing preferences and other critical issues.
Outsourcing of maintenance and service work by truck owners currently performing most if not all of this work internally has been an high interest issue since the initial benchmark research was conducted. Truck owners have repeatedly told us they are interested in outsourcing – but only if a service supplier can effectively deal with their primary concerns about outsourcing.
For four consecutive service studies we have asked several thousand truck owners this question: “What are your top concerns about outsourcing power unit service work?” (We focused on power units since they represent the vast majority of the total service labor market). And the responses to this question for each of the first four surveys were completely consistent:
The top three concerns about service outsourcing were rated virtually identical in importance:
- Time lost/ downtime/ turnaround time
- Quality of Service Work
- Cost of Repairs
TOP CONCERNS ABOUT OUTSOURCING
Truck owners in 2015 – for the first time – have shifted the priority of their outsourcing concerns – and dramatically so! While Cost of Repairs and Quality of Service Work are still important – the issue of Time lost/ Downtime/ Turnaround Time is 50% more important than either of the other two issues! The biggest concern today is equipment availability – and the biggest obstacle that service providers must overcome.
The new business opportunity for service providers is huge. Just a two point shift to outside service providers is an opportunity worth $850 million. The challenge? Truck owners need to be convinced that they can get the work done with a minimum of lost time.
Time IS money – and $850 million could be just the first installment!
MacKay Webinar -- Save the Date
MacKay Webinar Friday April 29, 2016 for DataMac® subscribers.
Pinewood Big Rig Challenge
Data is not the only thing that rolls around MacKay & Company. For the past couple of years, our own Lynn Buck (analyst by day, woodworker by night) has built two different trucks to be entered into Pinewood Challenges. Our first truck debuted at HDAW 2015 and we had a very respectable showing (especially since ours was an entrant that actually looked like a truck!). This same truck was scheduled to run at TMC 2015, but the ice storm forced the truck to stay home. This year, Lynn built a new model and it raced at both HDAW and TMC, even winning a heat at HDAW. We are all anxiously awaiting model 2017!