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June 01, 2006  |   Comments (0)   |   Post a comment

Q&A: Rising Fuel, Bus Prices are Key Challenges

International's Michael Cancelliere says school bus operators need to examine idling practices and routing efficiency to minimize the impact of high fuel prices. Meanwhile, he predicts a 5 to 8 percent increase in volume of bus sales this year.

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After almost two years at the helm, Michael Cancelliere, vice president and general manager of International Truck and Engine Corp.’s Bus Vehicle Center, maintains a strongly positive take on school transportation.

A former vice president of North American truck sales at International, Cancelliere has embraced the school transportation community and taken a leadership role in facilitating bimonthly meetings among the presidents of the industry’s three major associations.

But he sees a steady stream of challenges facing the industry: the rising price of fuel and school bus construction materials, the need for continuing education of technicians in advanced technology and a lack of state and federal funding.

SBF Editor Steve Hirano recently sat with Cancelliere at his office at International’s headquarters in Warrenville, Ill., to discuss a broad range of school transportation issues.


SBF: What’s the top priority for school bus buyers right now?

MICHAEL CANCELLIERE: There are a couple of different ways to answer that. “Top priority” might vary depending on who you ask. If it’s a business official, his top priority is seeking the highest and best overall value for what they’re purchasing. If it’s the maintenance department, they want a vehicle that’s easy to service and that they’re familiar with and they know that for the 10, 12, 15 years that they’re going to keep it that they’ll get outstanding parts and service support after the sale. If you’re the transportation director, of course, you’re looking to keep your fleet as new and current as you can and your emphasis is operating the safest vehicles on the road. Ultimately, all of these concerns are important.

Many of our customers are challenged to manage escalating operating costs within the confines of a fixed budget. There’s nothing particularly new about that, but what is new is that fuel costs are a very common concern. It’s on the minds of all of our customers. So are the new EPA regulations. Customers are thinking about diesel particulate filters, life expectancy, maintenance costs, fuel economy related to ultra low sulfur diesel. They want to know how all of this is going to impact their operation.

There was a story in the newspaper recently about a school district that closed down for two days to reduce its fuel costs.

That’s a very extreme measure. School districts can do other things to mitigate the fuel situation. Making more money available for the operation of school buses in regard to fuel costs would solve a lot of problems, while recognizing that there’s always competing concerns for funding. When you think about operational changes that can be implemented to address this situation, a few examples come to mind. One, idling, which can deteriorate your fuel economy. Put another way, good idling practices can improve your fuel economy. Idling practices could affect fuel economy by as much as 10 percent. This ties into drivers and driver training. You can talk about engines and fuel economy and the price of fuel all day long, but that’s only half the equation. The other half of the equation is the driver. People need to take a systems approach.

Typically, we talk about the driver from the standpoint of safety, and that’s a given, but the driver is also important in how he or she operates that vehicle — not just the speed of the vehicle, but the idling as well. Some additional training could be important to help reduce idling.

Also, devices exist that can provide transportation directors with reports on the idling of each bus. That’s one of the features of our AWARE telematics package. One of the other things that customers could take a look at is alternative routing. Maybe instead of picking up at every corner, you group a few stops. It reduces the number of stops you have to make and the adverse effect that has on fuel economy. They should be looking at the overall picture, too, to determine if they have the most efficient routing out there to serve their customers and meet their own needs. Additionally, having good maintenance practices in regard to tire pressure can help improve fuel economy.

Customers are being forced to make more choices in other areas of their operation to deal with the fuel costs. For example, do they repave the parking lot or use that money to supplement the fuel deficit?

Our research suggests that bus sales were essentially flat for the 2005 sales year (up 1 percent from Nov. 1, 2004, to Oct. 31, 2005). How do you think the 2006 sales year will end up? Do you think there will be a lot of pre-buying ahead of 2007?

We see the industry slightly up in 2006, maybe 5 to 8 percent over 2005. There is some pre-buying taking place in a few larger fleets, whether they’re private contractors or school districts. But most customers don’t have the opportunity to pre-buy. The money comes when the money comes. Some states are looking to give their constituents funding to buy buses in 2006. States such as Georgia, South Carolina and California are currently discussing bond proposals or other special funds earmarked for school bus purchases. This may coincide with buying ahead of the 2007 emissions changes as opposed to being driven by it.

The other side of this is that some fleets are holding off buying new buses until the 2007-compliant engines are in production. Many school bus customers are looking forward to having newer, cleaner diesel engines in their fleets, and while they recognize the cost implications, they do like the positive contributions these engines will make to the environment.

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