Over the past couple of years, budgets everywhere have been affected. In a multitude of industries, demand has been suppressed and companies have had to cut costs to survive and find ways of doing more with less. The transportation and logistics sector is no different. Even without Covid, it was already grappling with its own challenges of being part of a supply chain demanding quicker and more efficient workflow but, at the same time, keeping operational costs low. And doing all of this in an environmentally sustainable way. Despite that backdrop, the view from the experts at Valvoline’s round table was that now is definitely not the time to be thinking cheap – we should instead be thinking ‘valuable’.
This was the theme set to dominate an exclusive, live roundtable discussion, titled ‘Maximizing vehicle uptime with innovative lubricants and understanding the key dynamics transforming the Transport sector’, held at Valvoline Middle East & Africa headquarters, in Dubai, on October 5th. The session, moderated by Vishal Pandey, managing partner, Glasgow Consulting Group, brought together key players from the region to discuss why thinking long term while putting ‘quality first’ can reduce fleet costs.
By buying value, they can save time and money in the long run, emphasised Martin Roberts, director of Transportation at Momentum Logistics, when he remarked that the initial purchasing price is not the cost of the truck. If a company buys an older truck, they end up having to spend more on maintenance or having to get rid of it, shortly after.
“It is cheaper to operate a new truck than to purchase trucks eight years old with 900,000 km and then get rid of them,” said Roberts.
He added: “Remarkably, the time through the pandemic was actually our best couple of years. We were able to reduce costs because we did maintenance in-house. If you are offered a service package there are often extras that go with that.”
Subin Mohan, regional manager at Mercedes-Benz Commercial Vehicles, Middle East and North Africa (MENA), said that the truck itself will always be capital intensive and will not get cheaper. He questioned why some places still service trucks every 20,000km.
“Maybe it is because of experience in the past, or habit. They do not need to service until the truck says it needs to be serviced. There needs to be a comprehensive service package, so you know what your fixed costs are and so your costs are not changing,” he said.
“We need to focus on things like how your fleet is running and how your driver is performing. Less than 10% of operators in the region are managing their fleet professionally.”
Hans Wising, sales director, Scania Middle East, agreed, saying it was important that companies are prepared to spend where it matters. “People who want longevity in vehicles will spend but unfortunately others who are taking a short-term approach won’t.”
Some of the other distinguished guests at the table included Nicholas Brooks, co-founder of Zaeto; Mohammed Faisal, senior sale executive at Galadari Trucks and Heavy Equipment, Valvoline’s sales leader manager (MENAP), Karim Hashem and regional technical manager, Mahir Bousellham.
There was a consensus among them that companies should spend on good quality lubricants from day one to maximise vehicle uptime and reduce costs in the long run. It is difficult to extend the service interval, as suggested, if a poor-quality lubricant is being used from the very beginning. Again, they made a clear distinction between what is cheap and what is valuable. This was the general theme of the first part of the discussion: that companies need to spend on quality – on what’s valuable – whether it be on the truck itself, the tyres or on lubricant. Costs elsewhere can be kept at a minimum by focusing on how the fleet of trucks are being handled and maintained on a day-to-day basis.
Galadari Trucks and Heavy Equipment’s Faisal raised concerns that some key customers were not taking this approach and were using not only cheaper oils but spare parts from the local market too.
“Everyone out there is looking to cut costs,” added Roberts. “Sometimes you don’t realise something until you’ve done it. You can buy a cheaper lubricant but what’s it doing to the engine 20,000km down the line?”
Valvoline’s Bousellham said it was important to think about how new technologies – for example, EGR (Exhaust Gas Recirculation) – and good quality lubricants can reduce emissions. A good lubricant does not just mean that vehicles can stay on the road longer, but it can also play a part in building towards a more sustainable industry.
“We need lubricant that will be practical in reducing emissions too and we need a fuel type that is compatible with that,” he said. “Lubricants are about 2-3% of the budget. But out of that we can get good value. Low viscosity lubricants will help reduce fuel consumption. The less fuel that is consumed the less emissions there will be. We need to use high quality lubricants and services. We also [at Valvoline] get good data about contamination and condition of lubricants so it can be monitored this way.”
The leading industry experts then turned to consider the likelihood of fully electric and automated vehicles in the market; and the key challenges that the industry faces in terms of testing and regulations. Mohan predicted that electric trucks are, at minimum, five years away, and that they would, most likely, appear in Europe before the Middle East.
He added: “I see more of a push towards Hydrogen fuel technology. It looks more logical. The roadmap is different for commercial trucks versus commercial vehicles.”
Wising agreed saying: “Trucks need to be operated 24/7 unlike commercial vehicles. Commercial vehicles are not running all the time, so it is easier and less costly to make these fully electric. The business cause for trucks is not there. We need more stringent rules”
According to Roberts, electric trucks would not take over for at least another ten years. In the meantime, there needed to be better enforcement on weight restrictions and on the general condition of vehicles after they had passed a test.
“The drivers’ hours legislation needs to be implemented too,” he added. “We won’t let our drivers work more than 16 hours in a day. We have telematics to monitor it.”
One idea that was shared was to have an operator license for each company and to use a traffic light system to track companies after the test. So, each company would be red, amber or green. If they are green, it means they probably don’t need to be stopped as they are operating their trucks the right way but if they are amber or red it means they have violated the rules and need to be monitored more closely.
Another suggestion made was to have a code to check that tyres used in a test were the same tyres being used when the truck was back in operation. It was noted that this was not just about cost, but it was also an important safety consideration that such things be implemented. Going with what is valuable rather than what is cheap not only benefits the company financially long-term, but it also enhances truck safety and the safety of its drivers.
When looking at the cost of autonomous trucks versus labour costs, the group questioned the incentive for companies to go the autonomous route. Similarly, it was also agreed that there needs to be an incentive for electric trucks, especially in the Middle East, as fuel prices in the region are much lower than elsewhere.
Although most truck companies these days have an electric prototype, the live Valvoline discussion revealed that concerns remain about the cost of running commercial electric trucks as a significant proportion of a company’s fleet. There are still long-term challenges about how this can be done on a cost-effective basis, especially in the Middle East.
A final point, however, was made about remembering the social responsibility to do the right thing. Transportation was responsible for about 26% of CO2 emissions globally in 2018, according to the International Energy Agency. Although this dramatically reduced during the pandemic; as the volume of activity in the industry picks up again and as the world confronts the long-term sustainability goals set by the Paris Agreement, it must also be considered the impact the trucking industry can have by being at the forefront of this social change. Many companies may be tempted to spend less and buy cheap in order to maximise profit, even as operations increase. But, at what expense in the long term? After ninety minutes, the consensus was that shortcuts and short-term gains simply can’t be the truck & fleet sector’s legacy.
