Cargo Management Solutions

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Topics: Work Truck, Work Van, Used Vehicles

Opportunities to Limit Your Reliance on New Vehicles

Tim Caldwell
Posted by Tim Caldwell on May 5, 2023 11:39:53 AM

The following is a recap of John Ruppert’s talk at our Q1 2023 Customer Roundtable Alternatives to Vehicle Ownership (watch the full recording). John Ruppert is Director of New Business Development at Adrian Steel. 

The pain you're feeling thanks to the lack of work vans is real. Very real. To back this up, we can look at the North American seasonally adjusted annual rates (SAAR), a measurement of the pace of auto sales. 

North America SAAR

  • 2021 $15.1M
  • 2022 $13.9M (-8%)
  • 2023 $14.3M (forecasted) (+2.8%)

As you can see above, the North American SAAR dropped by 8 percent in 2022 compared to 2021. And, while the current forecast for 2023 is up, it is nowhere near pre-pandemic levels, which were at $17M. 

The drop in SAAR is directly impacted by the microchip shortage.

Lost Production Due to Microchips

  • 2021 $3.1M
  • 2022 $1.7M
  • 2023 $0.9M

The impact of the 3.1 million vehicles lost due to the lack of microchips was felt almost a year later when the SAAR went from $15.1 to $13.9. There wasn't an immediate impact because there was inventory to live off of for a period, but that eventually dried up. Towards the end of 2021 and into 2022, that inventory buffer started to wear thin. 

Dealer inventory numbers got as low as 700,000 at the end of 2022, a 75% reduction. 

The lack of available vehicles isn't the result of just microchips. It was across the supply chain. 

The following are just some of the largest issues Adrian Steel faced in the past several years (and is still combating) as an upfitter.

Steel & Aluminum Volatility

The pricing and availability of both steel and aluminum were both working against us. There have been significant swings in the cost of raw materials, and getting a consistent supply was difficult for most manufacturers. 

Plastics and Corrugated

Compared to the past 15 years, plastic costs are at historic highs. Some of Adrian Steel's products are reliant on plastics. And, while we don't use corrugated materials in our products, we do ship using corrugated containers. The shortage and pricing volatility of corrugated materials has made distribution more difficult. 

Electrical Components

Electrical component lead times remain at historic highs as well. This has not corrected itself quite as quickly as other aspects, primarily because electrical components are often internationally sourced. Much of the electrical components come from overseas. If you remember those pictures online of the 33 container ships sitting, waiting to get into port … Well, that's where a lot of the electrical components in there. 

Labor Availability

Last, but definitely not least, labor is still a challenge. The impact of limited labor needs to get more publicity. I know we're all dealing with it. The availability of labor post pandemic remains a huge problem, and, quite frankly, it's the hardest to solve as a business.

 

Opportunity to Limit New Vehicle Requirements

Labor inefficiencies limit the work a crew and vehicle can do in one day. But imagine if you're a fleet of 20 units and you can find 20% efficiency gains. You could argue that instead of 20 vans, you might only need 16.

As part of our innovation journey at Adrian Steel, we're looking for new ways to help our large fleets gain efficiencies by helping to answer, "How do you use our products?" With better cargo management systems and equipment, we can reduce the number of trips to and from a van and avoid a trip to the local hardware store. These efficiency gains can save crews hours. 

Extrapolate that savings across the entire fleet, and your company can likely support its existing workload with fewer vehicles and crews.