Maximizing Asset Value in Your Fleet
When running a company of any size, making sure you are maximizing the value of all your assets has a huge impact on your profitability. It is easy to think about your Truck and Trailer as assets, but what can be lost in the shuffle is the treatment of your tires, most importantly casings, as an asset. This may seem like a stretch, but I assure you the tires on your truck are not just an asset but also a potentially valuable one.
In this article, I will be putting my focus on the casing value and not the pros and or cons of retreading, but many of these same items with the casing would apply.
Cost Per Mile (CPM) Considerations for Tires
When purchasing tires for your truck and trailers, you will have anywhere from 1-24 tires currently on the unit to be replaced. It is important to make sure you look at these incoming and outgoing tires from not just an upfront cost perspective but also from a Cost Per Mile (CPM) lens. What the CPM will include is the upfront cost of the tire in addition to any FET or additional taxes or fees. This calculation will also include the projected or actual miles to removal of the units and the casing credit or retread ability. Generally casing credits will not be issued if a tire is 5+ years old and/or has been previously recapped. This should be confirmed by your local dealer to know their parameters.
Understanding Casing Grades and Dealer Parameters
In discussing casings and the value of them to your fleet you need to understand a couple of items. First, not all casings (regardless of age) have a similar value; in fact, there are basically three grades of casings. A grade A casing is traditionally from Four Manufacturers Michelin, Goodyear, Bridgestone, or Conti. The second tier would be anything made by these companies such as their secondary brands BFG, General, Kelly, Firestone etc. If you are looking at anything outside of these parameters, you would want to take into consideration that they may not be eligible to receive a casing credit or be capped at the end of their original usable tread, thus upping your end cost per mile. This will vary by dealers so it is something you will want to speak with your servicing dealer about prior to choosing a tire. While these higher tiered brands may cost more up front then an import or lower tiered tire, by taking into account the $25-$100 credit at the end of useable tread vs the $12-$15 disposal, you may actually be saving money up front even without the consistently higher miles to removal these top tier brands will bring.
Securing Casing Credit at Point of Sale
The final step of maximizing your casing asset is making sure you receive credit at the point of sale of your new units. It is strongly recommended regardless of where you put the tires that you have the casings inspected with yourself present and that the dealer goes over the credit they will or will not be providing and the reasons why. The value of the casings will vary by dealer, age, and size, but make sure you are actively involved in the process of the issuance of credit or rejection of the casings. When a casing credit is agreed upon it is also important that it is documented on your invoice and it matches what was agreed upon. When you leave the dealer or truck stop it will now become difficult if not impossible to track and get your credits.
In closing, understanding casing value and the process behind why and how it is applied will save your fleet thousands of dollars over time. It is often an overlooked part of the purchasing and decision making process for new tires, but is also forgotten at the point of sale. Treating these casings as an asset until you are compensated for them will pay off and is just good business and more profitable in the future.
