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October 29, 2009  |   Comments (0)   |   Post a comment

Restructuring Transportation for Tight Budgets

by Claire Atkinson - Also by this author

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The American Association of School Administrators has been investigating how the economic downturn has affected schools. The group's most recent study polled 859 respondents from 48 states and found that districts are increasing class sizes, laying off personnel, cutting academic programs and extracurricular activities, and deferring maintenance at rates that have tripled and, in some cases, even quadrupled over the last school year.

In facing these financial conditions, how are school bus operations faring? The majority are dealing with significant budget cuts, forcing some to institute busing fees or reduce service. Most, however, are simply looking more closely than ever before for opportunities to increase efficiency and juggling priorities to make ends meet.

Carol Stamper, director of transportation for Charlotte-Mecklenburg (N.C.) Schools (CMS), saw a reduction of an estimated $3 million to $4 million compared to last year.

School Bus Inc. Manager Jim Shafer, who works with a district that was taking a $1.4-million cut this year, notes, "I've been doing this for 30 years, and transportation's usually the first place they go."

Says Greg Miller, senior vice president of fleet operations for National Express Corp., "The proactive customers are looking not at what is going on right now, but what is it going to look like next year?"

Effective hiring and supplier practices
National Express, based in Downers Grove, Ill., is rolling out company-wide policies aimed at centralizing some procedures and operational activities.

Director of Driver Recruitment Dave DeFalco has been in charge of taking over recruiting efforts for all locations, a process which to be completed by the end of the first quarter of 2010, he says. "It includes advertising, job fairs, working with the chamber of commerce - any creative way we can think of to find driver candidates," DeFalco says.

The company's recruitment staff tracks cost-per-hire at each location and produces forecasts that predict workforce conditions. "We're using scientific methods to look at economic and other factors to that could affect our ability to recruit," DeFalco says. "We have a good idea at least six weeks out what kind of need we can anticipate so we can proactively put together a recruiting plan."

Cost-per-hire data allow National Express to ensure that the company is utilizing the best methods to recruit, a method that could be replicated on a smaller scale for school district operations. "When we have a recurring need at a given location, we can look at the methods that we used to recruit last year and what was most cost-effective," he explains.

In addition to centralizing and standardizing recruitment, the company is also introducing driver care initiatives, such as mentoring and performance management programs. "We're allowing the field sites to be more focused on their current drivers," DeFalco says. "It's still a little early to say for sure, but it appears that so far driver turnover is lower in the locations where changes are taking place."

On the fleet side, Miller has focused on following best practices surrounding fuel purchasing, asset management and working with suppliers.

Petermann Area Manager Mike Miller (left) talks with Lakota Local Schools bus driver Ron Stall. The district adjusted bell times and consolidated routes to promote efficiency and reduce costs.

In a recent move, the company has centralized fuel management to maximize purchasing. "We look at variations in a particular market or geographic location, and we are requiring everyone to sell to us at the average daily low for that particular market," Miller explains.

By changing the company's internal behaviors regarding fuel management, they are seeing about a 2.5- to 3-percent price improvement, he reports. "By placing orders based upon the conditions of the market, you can take advantage of upward or downward trends within that week," he says.

Another operational change that's been made is migrating much of the company's workforce to second or third shifts, allowing maintenance staff to work on buses during off hours and reducing the number of buses that need to be purchased to be used as spares - a significant capital outlay.

"Even if you're not doing your own maintenance, by finding suppliers that can work off hours, you can reduce that dependency on spare vehicles," Miller says. "For illustration, compare an hourly rate of a dealership that works 24 hours and it's $4 more per hour, and you say, 'No, I'll use Joe's Auto Repair down the street and save $4.' But in fact, you may need a spare asset costing $65,000 or $70,000 in order to use that service.

"When we're faced with financial challenges, we look at price - it's natural," Miller says. "The tighter the conditions, we tend to gravitate toward that lower number. We have to resist that and look to the total cost."

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