Archive for category: Bob Rutherford

Navigating hidden fees in transportation fleet leasing agreements

Trucking Industry expert Bob Rutherford shares an article from Brian Antonellis on the financial side of the industry: “Navigating hidden fees in transportation fleet leasing agreements.”

Throughout 2024, one of the most discussed topics across industries has been “hidden fees.” Both consumers and businesses are increasingly frustrated with the lack of transparency in pricing, pushing companies in various sectors to reconsider their fee structures. While businesses like hotels and rental car companies, have begun disclosing add-on charges to be more transparent, the prices we see advertised often don’t reflect what we actually end up paying – a challenge that’s particularly significant for companies managing heavy-duty transportation fleets.

These hidden fees pose a major challenge for companies that operate heavy-duty transportation fleets and their leasing structures, especially those locked into a “Full-Service Lease”. As these fees continue to grow, companies are becoming more aware of their impact on financial stability, and they are seeking alternative leasing options that offer greater transparency and cost efficiency.

While some argue that fees are necessary to cover operational costs and clarify where money is spent, the reality is that hidden fees, often referred to as secondary fees, can significantly affect how much consumers and businesses ultimately pay. According to the Consumer Financial Protection Bureau (CFPB), these fees not only inflate costs, but also hinder the ability of businesses to make informed financial decisions.  CFPB data suggests that because these fees are hidden, companies often pay more than what would be expected if all costs were upfront and transparent.

The current white house administration has prioritized addressing hidden fees, commonly referred to as “junk fees”  estimating that Americans collectively pay over $90 billion annually in these charges. Legislative efforts are also gaining traction, with bills introduced to curtail excessive and unnecessary fees. States like New York, Illinois, and California have begun implementing regulations aimed at curbing these hidden fees across various industries, including restaurants and other service sectors.

The hidden cost of fees in fleet management.

Although hidden fees have recently gained widespread attention, the issue has been brewing for years, particularly since the pandemic. The need for flexibility and agility became paramount in fleet management, making it crucial for companies to scrutinize every detail of their fleet’s vehicle lease structure. This close examination became a deciding factor in whether businesses could maintain profitability amid changing economic conditions.

During the pandemic, the ability to scale fleet size in response to fluctuating demand was essential. This flexibility required lease agreements that could adapt to changing needs, such as a Sale-Leaseback option.

However, hidden fees within Full-Service Leases have only compounded these challenges, highlighting the importance of transparency in fleet leasing.

Understanding full-service leasing.

A Full-Service Lease is an agreement where the lessor bundles financing and various transportation services into a single monthly payment

While this might appear convenient it often results in a lack of flexibility for the lessee. These contracts typically lock businesses into long-term commitments with combined costs for maintenance, finance, and other administrative fees, making it difficult to adjust to changing operational needs.

The case for unbundled leasing

On the other hand, Unbundled Lease (UBL) agreements offer a more flexible alternative. These agreements break down costs individually, allowing companies to identify and control the lowest possible expenses associated with fleet management.

UBLs provide financing options based on actual costs, rather than estimates made at the beginning of the lease term. This approach also supports better vehicle life cycle management, optimizing both costs and performance.  With a UBL, companies gain the freedom to scale their fleet size and upgrade vehicles as needed, ensuring that they only pay for what they use. This flexibility often translates into significant cost savings when compared to the rigid structure of a Full-Service Lease.  

Calculating the savings with unbundled leasing.

After accounting for lease payments, maintenance fees and warranties, a company could save significantly with a UBL. For instance, a fleet of 100 trucks might save $1.04 million in the first year alone by opting for an unbundled lease structure, with monthly costs averaging $2,054.00 per truck compared to $2,921.00 under a Full-Service Lease.

Maintenance and repair costs based on lease structure.

One of the key differences between a UBL and FSL is how maintenance and repair (M&R) costs are calculated. Full-Service Leases often “front-load” these costs, meaning companies pay more upfront regardless of actual usage. In contrast, unbundled agreements allow companies to manage these costs more effectively, typically resulting in lower expenses over time.  

For example, under a Full-Service Lease, a company might pay a fixed fee plus mileage charges from the start and in the early usage of the asset, without benefiting from manufacturer warranties or cost reductions over time. However, with a UBL, maintenance costs can be significantly lower, with companies only paying for the services they actually need. This can lead to additional savings, particularly in areas like tire replacement, where costs can add up quickly.

Beyond maintenance, other aspects of fleet management are also affected by hidden fees. 

Original equipment costs under Full-Service Leases are often higher, and additional administrative fees can vary based on location. Fuel costs can also become less transparent, with bundled services making it difficult to track true expenses.

For companies operating large transportation fleets, understanding and mitigating these hidden fees is crucial for maintaining a healthy bottom line. As the industry continues to evolve, organizations with transportation fleets must stay vigilant in managing their Total Cost of Ownership to ensure they are operating as efficiently as possible.

Brian Antonellis, CTP, is Senior Vice President of Fleet Operations at Fleet Advantage, a leading innovator in truck fleet business analytics, equipment financing and life cycle cost management. For more information visit www.FleetAdvantage.com. 

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Bob on Sales

Bob Rutherford returns for his weekly blog post with “Bob on Sales.” It may be a self-explanatory title, but readers don’t want to miss out on the rich information here.

I have a problem. Over the years I have not kept my work very well organized and just can’t push a button and find something, even with all the search functions. However, this is what I am going to use as my introduction to the Learning Without Scars followers.

Are you born to be a salesperson? Do you need to have the gift of gab? Can you be trained to be a professional salesperson? How’s your sense of humor? Can you tell a good joke without screwing it up? Can you really succeed in sales without really trying? Please share your answers in the comments section.

 #LearningWithoutScars

Let’s Start with Sales. Selling.

I grew up in the trucking industry, the machine shop industry, and the “Hell No we Won’t Go” anti-war industry, and discovered there really is a Military-industrial Complex. Just the other day I was explaining to a business associate why military equipment cost so much. I used my real-life example as a young man who had a draft card in his wallet that listed me as 1-A and 2-S most of the time.

I attended college during the day and worked swing shift at a defense plant making aircraft fasteners. We made exploding bolts among other things. These were used to literally blow the canopy of a jet fighter when pilots decide to eject.

I was an exploding bolt inspector some of the time. Here’s what I remember to the best of my ability. We would build exploding bolts in batches of 300. For 150 bolts to pass inspection, we would blow up 150 bolts. That right there, doubles the price, right? IF ONE BOLT fails, we blow up the other 150 bolts. As far as I remember, on my watch, never ever did a bolt in the second round of testing fail. It could take manufacturing 600 bolts to get 150 good ones. What’s that cost? So, assuming pilots’ lives are worth saving and we don’t want fighter jets falling out of the sky, things can get expensive fast.

This introduction brings us to the subjects of the day and what I have been told is my unique perspective on business, selling in business, education, and the politics of logistics.

I saw a recent survey on LinkedIn that asked the questions:

“Did You Intend on Being in Sales?” or “Did You Just Fall into Sales?” I got into sales because the old axiom is true, “Nothing happens until someone sells something.” I was an Industrial Engineer and had to “sell” an appropriations committee on purchasing a package of equipment. I had heard through the grapevine that the committee thought it was their duty to shred young engineers into tiny bits and try to make them cry. So, I prepared. I insisted that I attend a trade show so I could meet potential vendors one on one. Buying and selling are different sides of the same coin. I took copious notes.

I found two kinds of salespeople at that show. Those that tried to sell me, like I was the actual buyer, and the ones I ended up doing business with, the ones that asked me the probing questions and found out that I was going to be their stand-in salesperson. I was going to sell the committee that that they would never get to address in person. The smart salespeople taught me about their product and how to sell it. Smartest tip from that tradeshow: Deal with objects in your presentation, never as an objection.

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From Steam to Schemes: The Whimsical March to Industry 5.0.

“From Steam to Schemes: The Whimsical March to Industry 5.0” is our first article from our new guest writer, Bob Rutherford. He is contributing as an Industry Expert from the Trucking Industry.

Bob Rutherford is a 50-year veteran of the trucking industry. Thirty of those years were as a member of the TMC where he earned both the Silver Spark Plug and Recognized Associate awards for his contributions to the industry. He is also an Ambassador for the EnergyandMobility.org Conference.

The powerful brand of CCJ reaches 96,500 subscribers within the freight transport business. Many of these are the fleet executives and managers that have the buying power to grow your business. This multi-channel brand allows for repeated impressions in effective formats.

As the echoes of hammers on steel beams fade into the sepulchral quiet of abandoned factories, and the whirr of assembly lines in distant lands hums with robotic efficiency, we find ourselves at the threshold of yet another revolution. The transition from Industry 4.0 to Industry 5.0 feels less like a leap into the future and more like an errant child wandering into a minefield, oblivious to the perils that lurk beneath.

Industry 4.0, for the uninitiated, is our current epoch—a grand circus of automation, data exchange, and cloud computing, where machines talk to each other, and algorithms plot the overthrow of their human overlords. It’s a world where factories have more sensors than the average conspiracy theorist’s bunker, and everything from your toaster to your toilet is smarter than the average politician.

But as we bask in the glow of our interconnected gizmos, a new dawn approaches. Industry 5.0 is rearing its handsome, silicon-sculpted head, promising to inject a dose of humanity back into the sterile, soulless realm of production. This isn’t just a pivot, folks; it’s a pirouette on the edge of a precipice.

Imagine a world where robots don’t just assemble your next smartphone but do so with a flourish, a nod, and perhaps a cheeky wink. Where AI isn’t just cold calculations but infused with empathy, designed to cater not only to your needs but to anticipate your whims. If Industry 4.0 is the meticulous accountant balancing the books, Industry 5.0 is the avant-garde artist, splattering the canvas of commerce with bold strokes of innovation.

This isn’t mere hyperbole. Industry 5.0 envisions a harmonious coexistence between human creativity and machine efficiency. It’s a delicate ballet where humans and robots hold hands and pirouette through the factory floor, each playing to their strengths. Think of it as Fred Astaire and Ginger Rogers if Ginger were a hydraulic press and Fred a coder in a hoodie.

The proponents of Industry 5.0 herald this as a new era of personalization and sustainability. Factories will no longer be the impersonal behemoths of old but tailored workshops churning out bespoke products with the finesse of a master craftsman. Your sneakers won’t just fit—they’ll caress your feet with the intimacy of a lover. Your car won’t just drive—it’ll whisper sweet nothings in your ear as it navigates the urban jungle.

But let’s not kid ourselves. This grand vision is built on the assumption that humans and robots will seamlessly integrate, that AI will evolve from its current role as an overzealous assistant to a benevolent co-creator. In reality, the road to Industry 5.0 is likely to be paved with the carcasses of failed startups and the tears of disillusioned technophiles.

We must ask ourselves: Are we ready for this brave new world? Can we, as a species, embrace this symbiotic relationship with our silicon counterparts without losing our essence? Or will we become so enamored with our digital doppelgangers that we forget what it means to be human?

The skeptics, those dour souls who see the glass as not just half-empty but contaminated, warn of the dangers. They envision a dystopian future where human workers are relegated to the sidelines, replaced by tireless automatons. They see a world where creativity is commoditized, and innovation stifled by the relentless march of machine logic.

But perhaps, in true O’Rourke fashion, we should approach this transition with a healthy dose of skepticism and a heaping spoonful of irreverence. After all, the future is a capricious beast, and our attempts to predict its course are as futile as trying to teach a cat to fetch.

As we stand on the precipice of Industry 5.0, let us embrace the chaos, the uncertainty, and the absurdity of it all. Let us march forward with a twinkle in our eye and a spring in our step, knowing full well that the journey will be as unpredictable as it is exhilarating. And if we stumble along the way, let us pick ourselves up, dust ourselves off, and laugh at the absurdity of it all. Because in the end, isn’t that what being human is all about?

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Are You Thinking About Clowning Around with Six Sigma?

Guest writer Bob Rutherford expands upon the writings he has shared on his LinkedIn as of late with “Are You Thinking About Clowning Around with Six Sigma?”

The other day, I had a Zoom meeting with a befuddled CEO in India who was interested in me giving him the lowdown on Six Sigma since I have been writing extensively about leadership and Doctor Deming on LinkedIn.

So, with a heavy heart and a light sense of irony, here’s the breakdown of this so-called revolutionary quality management system that I shared with him:

The Great Statisticians.

Ah, the legends of modern Quality, the statistical superheroes—Dr. Shewhart, Professor Deming, Professor Chambers, Dr. Taguchi, and Dr. Wheeler. They laid down the law of quality like bosses. Deming even came up with his “14 points for management,” a kind of list of quality commandments for bewildered executives. Who doesn’t love a good commandment from on high, especially when it’s dressed up in statistical jargon?

The Dropout Disaster. 

Enter stage left, an obscure dropout from Uni and a Motorola employee, Mr. Bill Smith. He took Deming’s pearls of wisdom and, like a toddler with Play-Doh, molded them into something unrecognizable. His little experiment resulted in a quality apocalypse, with a mean shift of 1.5 sigma. Bravo, Mr. Smith! Because nothing says “quality” like a dropout with a wild idea and a dab of statistical ignorance.

The High School Huckster. 

Then there’s Harry, Mr. Smith’s partner in statistical crime. A high school teacher with the ethics of a used car salesman, Harry smelled opportunity. He concocted a theory so convoluted that even Einstein would scratch his head. His stroke of genius? Turning Smith’s catastrophe into the cornerstone of Six Sigma, complete with colored belts and logic filters. A true visionary, or maybe just a master of bamboozlement, because what’s a good scam without a touch of intentional obfuscation and some colorful accessories?

The Gullible CEO. 

But wait, there’s more! None of this would’ve taken flight if it weren’t for Neutron Jack, the CEO with a penchant for blindly throwing money at anything that sounded vaguely smart. Despite not understanding a word Harry said, Jack coughed up a cool billion like it was pocket change. Ah, corporate brilliance at its finest. In other words, who needs comprehension when you’ve got deep pockets and a desire to appear cutting-edge?

The Consultant Crawl. 

And lo and behold, with the birth of Six Sigma came a swarm of consultants, emerging from their hiding places like rats in a cheese factory. Eager to sink their teeth into the juicy pie of corporate ignorance, they led countless companies down the garden path, promising miracles and delivering mediocrity because what’s a scam without an entourage of opportunistic consultants, right?

The Fallout. 

Unsurprisingly, the Six Sigma saga ended about as well as a Shakespearean tragedy. According to the gospel of Qualpro, a whopping 91% of Six Sigma companies ended up belly-up. And let’s not forget the shining examples of success—like Ford, proudly boasting a 1 in 5 defective parts average, or Boeing, cutting costs and casualties with equal fervor. Why settle for success when you can have mediocrity and tragedy wrapped in a shiny Six Sigma bow?

The Emperor’s New Clothes.

In conclusion, dear CEOs of the world, Six Sigma isn’t just a quality management system—it’s a masterpiece of deception, a comedy of errors, and a tragedy of epic proportions. So, let’s raise our colored belts to Mr. Smith, Harry, Neutron Jack, and the legion of consultants who turned a simple idea into a billion-dollar farce. 

Bravo, indeed.

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