Why should fleets adopt a multi-year procurement plan?

So far in 2025, change and uncertainty have defined everything from the broader economy and operational costs to the political and regulatory environments. For organizations with heavy duty truck transportation fleets, nowhere has this been more prevalent than the relaxing of the California Air Resources Board (CARB) mandate, specifically the “Advanced Clean Fleet” regulation, which would have required these organizations to gradually add zero-emission vehicles to their fleets. 

Even before the change to the CARB regulations, many of these organizations were operating without a multi-year approach to their procurement plan. 

In a recent survey presented to 3,000 transportation fleet executives, 71% said they’re operating trucks more than five years currently. When asked how many trucks in their fleet are model year 2019 or older, more than half (62%) said as many as 50 trucks in their fleet fall into this “higher aged” category. 

Even though the majority say they are running a five-year-or-more life cycle, 68% also admit they feel it is necessary to replace as much as 50% of their fleet over the next 2-3 years, which means they are now looking to shorten their life cycle. When asked what percent of their fleet they are actually planning to replace, approximately three-fourths of respondents said they actually plan to replace as much as half of their fleet over the next 2-3 years.

While 36% said they had a prebuy procurement plan in place due to the mandates, nearly half (64%) said they either do not have a plan or are unsure if their organization has a plan. Even with CARB now relaxed, this is an alarming revelation that illustrates many fleets are unprepared and could face dire financial consequences in the coming years – regardless of the environmental or legislative environment shaping the industry.

Prior to the dismantling of CARB, there was a lot of talk and concern about what the rush to procurement would do for equipment costs. These concerns are growing even now over the possibility of tariffs. According to the American Trucking Associations, a 25% tariff levied on Mexico could see the price of a new tractor increase by as much as $35,000. That is cost-prohibitive for many small carriers, and for larger fleets, it would add tens of millions of dollars in annual operating costs. Clearly, the possibility of these types of costs is more evidence of the need for a strategic procurement plan.

Why is a multi-year procurement plan necessary? Why 5 years?

A strategic five-year procurement plan serves as an important roadmap for procurement decision makers, guiding everything from equipment acquisition, maintenance, and replacement and lease surrender/remarketing. It allows organizations to anticipate and prepare for future needs, technological advancements, and additional regulatory changes. By taking a long-term view, these companies can optimize their fleet makeup, reduce operational costs, and enhance overall performance.

One of the primary benefits of a strategic five-year procurement plan is its ability to align fleet operations with broader financial and organizational goals. “Supply chain leaders will need to remain agile to adapt to fluctuating prices and changing demand,” said Jenna Slagle, senior data analyst at Project44, immediately prior to the tariffs starting.

This alignment ensures that every vehicle acquisition supports the company's mission, whether it's improving sustainability, enhancing customer service, or maximizing profitability. 

Comprehensive financial planning

Financial planning is also an important component of any long-term procurement strategy. By forecasting fleet needs over a five-year period, organizations can better manage their capital expenditures and avoid unexpected financial burdens. This approach allows for more accurate budgeting and can help secure favorable financing terms. Moreover, a comprehensive total cost of ownership (TCO) analysis for each vehicle type enables companies to make informed decisions that balance upfront costs with long-term operational expenses.

Even more so, a five-year plan allows organizations the ability to make adjustments as they go, fully understanding that mandates, regulations, customer portfolios, and financial goals shift and pivot over the years. Having a plan in place allows these companies to make modifications – both big and small – paving the way toward increased business agility.

This type of long-range planning also allows finance professionals to align with their fleet operations teams and review their procurement strategy and finance options more frequently. Following are key financial metrics that should be taken into consideration:  

• Lease vs Buy
• Sales tax analysis  
• Lease Type Analysis (FSL vs. UBL, TRAC, FMV, etc.)
• Comparative cost analysis to determine the optimal time to upgrade equipment  
• Diesel vs EV Comparative cost analysis  
• Per unit P&L  
• OEM Equipment Cost Tracking  
• SWAP Rates
• Residual Values

The process of building a five-year plan begins with working with an asset management partner to conduct a thorough assessment of the current performance of the fleet including a complete fleet list with vehicle in-service and out of service-dates identifying areas for improvement and setting clear objectives such as reducing costs, improving fuel efficiency, improving safety and CSR scores, or enhancing vehicle uptime. Conducting a thorough analysis and a holistic modernization plan is important to determine the optimal number and type of vehicles required in the coming years. This analysis helps organizations align their procurement strategy with business goals and operational demands.

Developing a strategic timeline is also essential for a successful procurement plan. Organizations should work with their asset management partner to create a five-year timeline with key milestones and deadlines. It's important to continuously monitor upcoming and any additional regulatory changes to EPA regulations, which may lead to additional cost increases for new trucks. Planning for a potential “rush” on certain types of high-demand units can help organizations avoid higher costs associated with certain model year trucks. This proactive approach ensures that organizations are well-prepared for future challenges and can manage their budgets more effectively.

Financial assessments are another important component of the procurement process. Conducting a total cost of ownership (TCO) analysis leveraging in-service dates and utilization data for each vehicle helps organizations understand the full financial implications of their procurement decisions. This includes factors such as purchase price, fuel costs, maintenance, and depreciation. 

The right asset management partner can also help establish strong relationships with reliable suppliers, and OEMs to negotiate long-term contracts. A thorough lease versus purchase study can help organizations determine the right type of financing for their equipment, as well as a thorough analysis of various lease types such as full-service or unbundled leases.

Finally, organizations should prepare a clear presentation of the procurement plan for stakeholders, outlining the benefits for each internal stakeholder group. Establishing a change approval process for modifications to the five-year procurement plan ensures that any adjustments are well-considered and aligned with overall business objectives. 

Organizations would also be wise to work with their asset management partner to regularly review and update the five-year procurement plan based on market conditions and fleet performance. This approach allows organizations to adapt to changing business needs and economic conditions, ensuring the long-term success of their operations.
 
As the industry continues with more change and uncertainty in 2025 and beyond, companies that want to remain competitive should adopt a five-year procurement plan and will be well-positioned as the leaders of tomorrow.