Friday 28th Oct 2016 - Logistics Manager

The hidden cost of breakdowns

Breakdowns in the haulage industry are like icebergs, capable of sinking companies, according to the FTA and AA Business Services.

AABS says that usage statistics do not reflect the true ‘below the surface’ cost of having vehicles off the road for any length of time, it says that significant ‘hidden’ costs include the hire of replacement vehicles, which it says can cost around £520 per week (for a 44 tonne truck) and the penalty clauses demanded for failure to deliver on key performance indicators.

Roger Williams, head of major fleets at AA Business Services said: “These industries have moved ahead of ‘just in time’ delivery to ‘supply in line sequencing’ which means that there is literally no buffer stock to sustain the production line if deliveries do not show up within the strictly prescribed timeframe. This means lines can be shut down at a cost of thousands of pounds per minute, and all because your vehicle broke down on the motorway”.

“Although the call out and the cost of being off the road looks low, this does not reflect the true cost to their business for sustained delays. No one wants thawed frozen chickens or components for a car hours after it was scheduled to go down the line”.

Geoff Dossetter, external affairs director for the FTA said: “Breakdown cover for our members is not expensive but failure to deliver can be. Whereas you can put a figure on the cost of the actual breakdown in terms of time off the road and labour etc, but in terms of a missed deadline, it’s a question of how long is a piece of string?”