Episode 044: In The News - EPA Report Released On Largest Fleet In The World

Hi everyone, Jeff here from the Fleet Success Show. Before we dive into this week's episode, I wanted to take a quick second and make sure you know about the first of its kind Fleet Success Summit happening here in sunny Phoenix, Arizona on April 20th and 21st. This 2-day event will be unlike anything you've ever seen before in the world of fleet. We're bringing 12 speakers to the stage to share the best in business, leadership, culture, culture, and technology, all with the messages that will help your fleet succeed. Grab your tickets and register to attend at fleetsuccesssummit.com.

Welcome to the Fleet Success Show, a podcast dedicated to talking about the fundamentals, standards, and best practices that empower today's fleets to achieve fleet success. Let's get into the show.

All right. Welcome back for another episode of the Fleet Success Show. I'm your host, Josh Turley, joined today by Jeff Jenkins.

Hey.

And Steve Salzgiver.

Good to be back.

Welcome. Welcome. So this is another fun one from LinkedIn that's been going crazy lately. And that's because recently EPA submitted a report on the largest fleet in the world is not replacing their vehicles with electric vehicles. I know, hold your shock.

That's always been an issue ever since I can remember when electric vehicles came out, you know. So this is nothing new. It could be new now because the price of gas, right?

It could be a big thing. So for those of you who don't know, USPS, the Postal Service, largest fleet in the world, 165,000 assets, uh, and they, they're responsible for delivering mail to every corner of the United States. Every corner, every corner, no matter what. Um, they have recently gone out, you know, in the last— and this is not recent, I'm going to tell you, this is a 6-year process, 7-year process in the making. This started in 2014. Uh, they went out to RFP to get a new replacement for their delivery vehicles. You know, we're pretty familiar with seeing their delivery vehicles on the road, they're ubiquitous. You know, the big— I think GM or not GM, AMC made the first one.

They used to, AMC, American Motors.

Yeah. And so, you know, like it's been a while.

They had Grumman for a while.

You know, but it's an older design. They're older trucks. The maintenance cost is through the roof on them. You know, it's getting harder and harder to find parts. They are due for replacement, right? Like we know replacement's an issue that a lot of fleets face, but USPS is taking the cake on needing to replace their vehicles. They put out an RFP for a replacement fleet with, you know, an initial run, I think, of like 10,000 vehicles with the option that you might eventually be able to replace the entire fleet with your vehicle if you submit to this RFP. They selected a vendor named Oshkosh, which, if you didn't know, develops the MRAP. You know, they develop military vehicles for our—

They build a lot of specialty fire trucks.

Yep. Things like that. They've got some really specialty equipment.

They're a big company.

They're established. They've been around.

Yeah.

And they've shown they can deliver at scale for custom applications.

Yes.

Which the USPS was very custom in their RFP request. You know, this is what they were looking for. They didn't want something necessarily off the shelf. And I think that's probably where if we want to start talking about where they went wrong, that might be the first one is that they were not looking at commercially available off-the-shelf vehicles. They wanted something very customized to their fit. In their fleet, um, you know, which you look at their delivery and their, you know, the way that they do things, there are some things that are different about their fleet than any other fleet in the world with their—

well, I mean, the first thing is their left-hand drives, right? So you gotta—

that's the first custom thing, the right-hand drive.

Oh, sorry, right-hand drive. Yep.

So, you know, every vehicle in Europe is right-hand drive.

Oh yeah, yeah.

So that's—

it's not a globally—

yeah, but not only that, like, they have people driving their personal vehicles that have the adapters that that push the steering wheel over to the other side.

True, true. Right.

So to me, that's just weird. Yeah.

But I mean, they have some restrictions on, you know, on their specifications on how they stack the mail in there and safety and—

Right.

So it's no different than any other fleet. I mean, really, I mean, you gotta have the specifications, you gotta make it, you know, vocation worthy to the driver.

Right.

To be productive.

And some of what they're delivering is a lot different than like, say, what Amazon or UPS deliver because they're focused more on parcels and packages. USPS has to do letters and, you know, mail. But that sounds like more you could figure out a different system within the vehicle instead of changing your entire vehicle.

Yep.

Might be something that I might suggest.

Well, I think there is a bit of this that's steeped in tradition, right? You know, not thinking outside the box.

We've got to come up with our own solution, right? We've had our own custom vehicle, the AMC, for years. We need another custom vehicle. We don't want to get, you know, just some Ford Transit electric vehicle that we want to throw at this thing.

Well, and the ones they did, I don't know if you guys seen the picture, they're ugly as all get out.

Oh my gosh, they're always ugly. I never—

they look like a white military vehicle, a duck.

Like, seriously, get a minivan, it looks so much better.

Now they're saying though is that because of the design, like, it is supposed to increase the visibility around the vehicle, that it makes the driver safer. Um, and I guess there's been some issues with the AMC catching on fire but also having poor visibility. And so, like, having seen our mail lady, you know, we love her, but There's been several close incidents where she just doesn't see somebody running around the building and she nearly clips them, but that could also be a speed issue. I digress.

Those are the things I haven't had delivered because I didn't have the right address.

So the issue then that's coming up against the USPS is how on earth, if you didn't know this, Joe Biden, the new administration came in and with the new EPA head, They want— they put a mandate in place that all federal vehicles, they wanted the entire federal fleet to be electric by the year 2030. You know, so I mean, they're pretty much picking the winner, not necessarily most cost efficient, but they wanted to be electric and, you know, to eliminate carbon emissions and dependence on fossil fuels. That's a different issue to tackle. But they did say they wanted the entire federal fleet. Now, I don't know if USPS is technically a part of the federal fleet. Because they are kind of— they're mandated by the Constitution, but they are a private entity that is just, you know, they're kind of quasi-government.

Yeah, they're kind of self-funded. I mean, they, you know, because they sell—

supposed to be—

they sell a lot of products. They've had seed seeding of money, you know, because they fell over the budget and things like that. But they're independently, most of the time, they're running like a business. That's their charter.

They're supposed to run like a business.

That's their charter. But they've never been—

but they've been financially, they've been in trouble since 2006.

They have. It's been a huge issue.

And so they, they've got some major financial issues, constraints, usually tied to their pensions and to the medical, uh, you know, plans that they have to use, that they're mandated to use by the legislature. And that's probably the biggest thing is that they're, they're governed by the government even though they're supposed to be run like a private industry. And so they have a lot of red tape and a lot of things that tie their hands where they keep them from running like, say, a UPS, FedEx, or an Amazon, even though those three are like the gold standard when it comes to delivery fleets.

You know, it's really akin to any government fleet, really. I mean, if you look at a government fleet in California, the board of, you know, like the council or whoever's over your fleet, they want to know why you can't get more vehicles. Well, then when you come in and you show them how much the upfront costs are, They shy away from it. They shy away from it because it always comes down to that capital, you know, and no one has ever solved that problem. I ran into this constantly as a consultant.

Well, you remember they tried to shift to doing more leasing.

Yep.

So you'd avoid the upfront capital costs. But then what they— the problem with leasing is that it just turns it into a long-term OpEx, is that now you're always leasing because you can never go back to buying the—

you know, once you lease, you're done.

Yep.

Well, the other thing they've tried to do over the years has failed miserably is taking the battery out of the capital costs and putting that in the operating costs and then leasing that battery separately. So, because that's going to be the one thing you're going to have to replace eventually, right? And so they— because that's, that's your fuel essentially, which is an operating cost. But that's never really got off the ground. And if they did that, then that would become out of a whole new bucket of your, your budget, right? You know, so they're gonna have to get creative somehow. To really make this thing pan out because nobody that I know of really consistently goes by total cost of ownership because it's just with that front end cap. I mean, think about Jeff, you and the trucking companies, you know, you're always constrained, right? Every year on how many trucks you could buy. Mm-hmm. Because it's that capital budget, right? Every career job I've had in fleet's the same way. I've never worked at a company that had more money for capital than I needed. So you're always behind, you're always backlogged constantly.

Yeah, well, I mean, the government can spend $30 million on crack pipes, but we can't get new vehicles.

Geez, what a concept. Well, here's the thing, all that border money that they're not wasting.

Listen, here's one of the things is like, so the federal vehicles, right, to be EV by 2030, right? And this, the, the USPS is probably the best positioned group to do that because you can do one charge a night, right? You don't have to refuel. So it's the best position. But I guess I'm curious because that's just the, the route drivers, right? That, that would encompass. When you look at mail and how it gets from place to place, it's all through contracted services.

Yes.

So are they going to require those contracted services to also go EV? Do they count those numbers in the, the largest fleet or is it just part of the numbers of the the route drivers.

I'm thinking this is their white fleet mostly.

It's got to be. Well, the federal side, if the, um, you know, if the military vehicles are also included in that, you know, because you're not making the MRAP or the Hummer into an EV. I mean, as much as GM's pushing the Hummer E3, right, but yeah, no, that's not running a military application. No. So I don't think it's all the vehicles, and I don't know if it'll be all the contract ones, but it definitely— it sounds like, you know, as much as they can.

I would think it's the neighborhood delivery vehicles. But you're right on the car. I mean, all the tractor-trailers are all private contract.

Secret Service fleet might be. I'd be curious about that.

Listen, you're not gonna—

Air Force One. Yeah, I know. I just watched a special on Air Force One. That's not going to be electric, I'll tell you that.

But that is a federal vehicle. Yeah, so quit being hypocrites, people. Geez, I want some electric charging stations in Iraq, in Afghanistan, all these places we go. Let's be efficient, save the world.

Yeah.

So can you imagine that over there fighting a war and your electric vehicle's out, dead battery?

Good luck.

Solar.

Yeah, bring your, bring your solar station. Uh, so, but coming back to USPS, right, and this whole RFP, now there's a huge push going on right now because of the EPA report. Uh, everybody's on LinkedIn that I've seen has been blowing up about, you know, how crooked cronyism has led to Oshkosh getting this bid and Like, forget all that crap. Like, let's just come back to the facts. And is this the right vehicle? Looking at it just on the surface, you know, the vehicle as far as fuel efficiency is not much more efficient than the EMC vehicle from the 1980s, which to me is a huge missed opportunity. If I'm running a fleet and I'm replacing my entire fleet, I'm finding something that's more efficient. I don't care if it's internal combustion or electric. Like, I'm looking at something that's going to cost me a lot less to operate.

Well, you are. And here's like, I have a problem with federal government overall anyway, but this is where the hypocritical nature comes, right? Because they're passing these laws saying, hey, consumer vehicles have to average at least 35 miles per gallon. But then you go and you look at this and this thing is going to average like 9.

Yep.

So, you know, how does that work?

Yeah.

And so it— and I— so this is the one case where I might actually agree with the EPA that, yeah, you're right, this is a bad deal. They need to find a way to get out of this RFP, rebid, and focus on proven technology, proven companies. You know, Oshkosh might be a proven company, but they've never delivered an electric delivery vehicle. But you know who has? Ford, GM, you know, Tesla, you could ask, right? Like, they're working on it. Now, I will tell you, like, I've got some— Tesla has proven they can manufacture an electric vehicle.

Yes.

They have not delivered. I mean, I'm still waiting on the Tesla Semi to come out. They got their first 4, they haven't shipped any yet.

Well, they got orders, so they're good.

Yeah, they got orders. That's the one problem they've got.

There we go, they had 6 recalls last month. Yeah. So that's another issue with Teslas, right?

I've got people on LinkedIn posting about how Lordstown is gonna save us all. And I look at that company, I think that's a dumpster fire right there. You know, Workhorse is the same boat. You know, there's a lot of hype in the electric industry and we have to be careful about the hype machine.

There always is a lot of hype. I mean, when I was with a big beverage company, I had electric vehicles and I'd buy them and a year later that company's out of business.

Yep. Yeah.

And then I got to find an alternative supplier to fix that vehicle when it goes down. Right.

You remember Republic did that whole bid with Nikola right here in the Valley for hydrogen.

Yep.

That hasn't panned out. No, you know, like that company is another one where the hype got out from it. It was almost like this Ponzi scheme of, you know, fraud and all that stuff.

The one thing I would say about post office is they would really be a perfect application, those mail routes. Yes, because I, as a young kid, I drove one of those part-time during the Christmas, and you really don't go very far mileage-wise. Utilization is very, very low. Um, so it would be a perfect application, but you can't just go out and mandate that without restructuring their budget process, right, and funding them. Now, of course, they're giving out trillions to everybody else. Maybe they need to give a trillion to the Post Office to do it right now. But that, that's really the key, because they've got to They've gotta look at this in the long term, not the short term.

Right, when you have to solve the post office's major issue, which is funding overall. Like how do you get that company as a business to stop losing money? And that means you've gotta rethink how are you structuring the post office legislatively? You know, are you mandating that they do, that they deliver to Nome, Alaska? And if you are, why aren't you giving them the freedom to do that competitively.

Yes.

You know, not to necessarily not do it, but to make sure that if they do have to make that delivery, that everybody that's been covered and it's, you know, they're not running at a loss. Uh, that's the problem that I've seen so far, is that the USPS is being run like a private enterprise, like a government would run a private enterprise. And that's the, the issues. They're trying to have their cake and eat it too. And like, there's no way to solve this problem with their fleet without solving the bigger issue, which is how do we make this a long-term sustainable entity?

It's really become a political football. I mean, my dad retired after 40 years from the post office, and so I grew up in this environment. And he'd come home, he was a manager, he would come home and complain all the time. Nobody understands what we do. Nobody understands what— I mean, he was complaining that time because he was over the express mail.

Yeah.

And the express mail is more competitive with UPS and FedEx and, you know, DHL, people like that. Well, one stroke of a pen, some legislature passes a law and takes all that away from the post office, and that's where they made their money. So then all of a sudden now they're in a deficit.

Yep.

Because they privatized it, which, you know, if that was the right thing to do, that's fine if that's a cost-effective way to do it. But, uh, you gotta comp— you got to do something to balance that budget then.

You got to—

right, you can't just let them keep going in the hole because they lost their whole package business, right?

The only way the Postal Service will ever be efficient is if you privatize it. You got to— everything the government touches costs more than it should, is full of waste. Privatize it, and I promise you the thing will go back.

I actually agree with that totally. Um, every time I bring up some government program, you know, like the Do Not Call List— well, how'd that go for you, right? Yeah, you know, I get a thousand of these calls a week now.

So, but it says spam on my phone, so I know not to answer it.

Yeah, well, that's— thank you, Verizon, because the private business did that to help you, right?

All right, well, I think we've, uh, we've kind of beaten this one up, and unfortunately we didn't solve the world's problems today.

But no, no, no, hold on, we solved it. People need to listen.

That's it, we're right and you're wrong.

Yeah, the brain trust in this room just solved it.

So as always, come join us. Fleet Success Summit, Mesa, Arizona, April 20th through 21st. fleetsuccesssummit.com. We really do have some awesome speakers lined up. You've got myself, Mike Brayband. You have Mike Pritchard, Paul Loria, Kristen Hadid. Patty Early's coming out. So we have like the who's who of fleet management coming out to speak to us about everything from leadership, culture, Resources, risk management, all of it. Like everything that we need to know to be successful as a fleet. You know, I compared this lineup to the '27 Yankees. I had somebody ask me, well, what's the '27 Yankees? For those of you who don't know, this is Murderers Row. This is Babe Ruth, Lou Gehrig. Like these are the who's who of Yankees lineups. You know, and a lot of people consider this the best lineup of sports history, let alone Yankees history. And I look at our lineup for these speakers and I think the same thing. We've got some amazing talent coming in to speak to our fleet people.

So I would say if you planned your budget on another event, make a switch.

Make a switch.

This is going to be a different one than your traditional.

And it's affordable. It's what, $695 for a pass out here?

Yeah, this is reasonably priced and it's going to be awesome. It'll be well worth it.

Life-changing. I anticipate this will be life-changing.

Yeah. Yeah.

This isn't more for you know, the skill part of fleet. It's how to be successful. It'll give you the tools for your leadership.

This is big picture.

Yeah, this is, this is not the small in the weeds. This is big picture. How do we become more efficient? How do we get more successful? How do we get more out of our people? How do we get more out of ourselves? We're very big into let's talk about personal development of ourselves and others. And this will be part of, very key part of that.

All right. FleetSuccessSummit.com. Go get registered. As always, tell your friends, tell your coworkers about the Fleet Success Show. Tag us on social media @fleet_success.

And until next time, love you, Postal Service.

Thanks for joining us on this episode of the Fleet Success Show. If you liked our show, we'd appreciate your 5-star review. Be sure to subscribe anywhere you listen to podcasts and come hang out with us anywhere on social media @fleet_success. See you next time.