Jaime de los Rios
Director General
Don Miguel Transportes
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Insight

Resilient Smaller Fleets Offer More Efficiency

Mon, 09/01/2014 - 11:45

“The business model of Don Miguel Transportes has been streamlined to promote efficient services and quick decision-making, a factor that distinguishes us from other fleet companies,” says its Director General, Jaime de los Rios. Established in 2008, the company started with 30 truck units, but it has now expanded to accommodate 50 units and 120 trailers. De los Rios ventures to say that “with 50 trucks, we can accomplish the work of a company that has 100. This is precisely because, by being a small fleet, we can control maintenance and other factors.”

Don Miguel Transportes’ fleet is characterized by varied brands, like Navistar and Kenworth for which it owns the T600 and T800 units. Diversity is not seen as a major concern, according to de los Rios, who claims OEMs change their models constantly and have different series. It is also distinguished by its wide age spectrum. “The average age of our units is eight years, although we do have new units from 2014,” says de los Rios. Having a wide age range allows the company to comply with the demands of clients as the automotive industry is notorious for its high spec requirements in terms of fuel efficiency and green practices. For example, one client, Ryder, has a fleet age limit of five years that Don Miguel Transportes complies with. “If there is a potential client with a particular need, the company has to make sure that it is met, even if it means we need to buy other units,” he adds. While having a wide range in terms of age and brand in the fleet can pose a challenge in terms of maintenance and servicing, it allows Don Miguel Transportes the opportunity to efficiently serve a client base with diverse needs.

Rising fuel prices are not the only barrier fleet owners must overcome. For de los Rios, toll roads are becoming more expensive and represent an ever higher cost. Don Miguel Transportes has identified a discrepancy in the northern region of the country in terms of toll road costs. “The distance from El Paso to Chihuahua is 400km but involves the use of two expensive toll roads that cost over US$80. The same distance travelled is far cheaper in other states like Nuevo Leon,” de los Rios explains. At a glance, US$80 might not seem like a significant expense but this cost accumulates with the amount of trucks that must travel through this route. While the automotive industry is transitioning to the Bajio region, de los Rios believes it can serve that market from Chihuahua just as efficiently. “The perception is that as industries go to other regions, fleet companies must migrate alongside them. I do not see this as necessary.” Despite surging costs like toll roads, for Don Miguel Transportes, the northern region of the country continues to represent a vast market of opportunity.

The automotive boom has sparked ambitious growth opportunities for Don Miguel Transportes. “Already 40-45% of our business comes from that sector, especially from our biggest client Grupo Bocar,” says de los Rios. His target for the next five years is to double the number of units from 50 to 100 to seize future growth. However, achieving this expansion will require the consideration of many factors besides fuel and toll road costs. Firstly, buying new units is an important investment, according to de los Rios. “Today, the price of units from OEMs like Navistar, Kenworth or Freightliner oscillates between US$116,000 and US$120,000.” As an SME, purchasing these can seem daunting, but de los Rios points out that associations like CANAPAT can help its members acquire new fleets through government funding and incentives. However, according to de los Rios, there are times when SME companies do not even get the chance to buy any of these units from the association, as they are largely snapped up by big corporations.

The purchasing of new fleets is also influenced by government regulations such as Article 50 of the Law of Roads, Bridges, and Federal Ground Transportation that regulates the use of double-skip trailers. Don Miguel Transportes does have a few double-skip trailers, and for de los Rios, these reforms will help regulate their use. When these units are used, de los Rios ensures that the units use toll roads as these are in far better condition than ordinary freeways. While some steps are taken for the growth of SMEs, Don Miguel Transportes has a defined approach in terms of fleet purchasing and management. “Being one of the most used modes of conveyance by any industry, the transportation of goods via trucks should be seen as one of the priorities on the government’s agenda. It must help that sector continue to grow.