Idaho Springs Water controls cost through leasing
Wholesaler able to reduce downtime through full-lease
As a small company growing at 20 percent a year in a narrowly specialized segment of the beverage distribution business, Nampa, Idaho-based Idaho Springs Water succeeds by controlling costs in every corner of its fleet operations, including vehicle acquisition and maintenance, routing optimization, and fuel costs.
Founded in 1993, Idaho Springs serves a geographic area covering eastern Oregon, as well as southwest and central Idaho. With an operating area that stretches throughout a 300-mile radius of Boise, Idaho, 90 percent of deliveries are made in the greater Boise area.
In order to efficiently cover its large service area, the company relies on a fleet of newer trucks. Additionally, to leverage such a large area, it uses award-winning fleet graphics to catch a vast audience of eyeballs while out on the road.
Bucking a major trend in the beverage distribution business, the small fleet at Idaho Springs is provided through a full-service leasing arrangement. Elsewhere in the industry, smaller fleets generally eschew leasing, while the larger fleets favor it.
As the larger fleets already have learned, Idaho Springs discovered that their total fleet operating costs are lower with full-service leasing. “The cost of the full-service lease when compared to the cost of owning has been an eye-opener for us,” Idaho Springs Owner Craig Bartschi says. “In the past, we have owned trucks, paid for repairs and endured costly downtime.
“I now have new trucks that really have a strong visual presence in our market, and we don’t struggle with downtime issues, all for about the same or less cost compared to ownership,” Bartschi continues. “It was a pretty easy decision for us.”
During the past four years, Idaho Springs has been leasing Kenworth T270s from Kenworth Sales Co., the local PacLease franchise in Boise. The Kenworths are spec’d with PACCAR PX-7 engines rated at
220 horsepower and Allison automatic transmissions. The trucks are equipped with 16-foot, six-bay Hackney side-load beverage bodies that can carry as many as 220 five-gallon water jugs. One bay is designated for bags of water softener salt, Keurig coffee systems and water coolers.
Although the Kenworth T270s make deliveries and help bring in new accounts as moving billboards, they’ve also been a mainstay in keeping drivers happy and on the payroll. “Our trucks are the envy in the business,” Bartschi says. “I’ve never lost a driver to one of our competitors, but we’ve had our competitors’ drivers come talk to us wanting to join our organization.”
Because maintenance and repairs often are the single biggest source of downtime for small fleets, the maintenance benefits of full-service leasing are perhaps more valuable to smaller fleets than to larger fleets. A spare truck likely is more prevalent in a fleet with 100 trucks than in a fleet with just a few trucks.
“PacLease has made it much easier to eliminate downtime by doing regularly scheduled maintenance onsite during weekends, saving us a tremendous amount of time by not having to shuttle trucks to their location for service,” Bartschi says.
Bartschi explains that leasing all boils down to the bottom line. “With PacLease, I’m getting new trucks and it’s costing me less,” he says. “What’s more, I don’t need to find a good mechanic or be put on a waiting list to get my truck repaired or serviced. The peace of mind that comes with the full-service lease saves me a lot of headaches and downtime. We rely on these trucks so heavily to operate our business and create our sales. We just can’t afford any downtime and can’t deal with an unreliable truck.”
Beyond the acquisition and maintenance of its trucks, another key area for cost control at Idaho Springs is its route-stop strategy for the highest concentration in the smallest geographic area.
“We constantly tweak routes to maximize route density, which increases sales and reduces costly transit time,” Bartschi explains. “We’ve just begun considering GPS tracking technology to improve routing. Affordable routing software to assist in this effort would be nice. We have looked at some programs in the past, but they were just too costly.”
Although diesel prices have been relatively low and stable for a while now, Idaho Springs’ fleet has grown to the point where controlling fuel costs is among its top concerns. “We just started a fleet fuel program with Shell,” Bartschi says. “We expect to utilize its fuel-tracking features to help manage fuel costs.” BI