freezer van

Euro-Style Vans Gain Momentum in U.S. Market

Refrigerated Sprinter SalesWhen Daimler AG (DAI), the maker of Mercedes-Benz luxury cars and former owner of Chrysler, brought its Euro-styled Sprinter van with a 14-foot high roof and sloped brow to the U.S., it stood out on the parkway like a pachyderm.

A dozen years later, the commercial-van market has embraced the look. Traditional, big vans, such as General Motors (GM) Co.’s Chevy Express and Ford Motor Co. (F)’s Econoline, are starting to fade from the scene as stricter fuel-efficiency standards are prodding a convergence around a more aerodynamic, European look.

“Guess what? The world has changed,” Claus Tritt, who heads Daimler’s U.S. commercial-van business, said in an interview. “We are no longer the oddball.”

Automakers, including Daimler, Ford and Chrysler Group LLC, are all bringing new, large, fuel-sipping work vans to the U.S. as they gear up for a boom in the highly profitable segment. The surge is fueled by new-home construction and an improving economy, the same forces helping make 2013 the year of the pickup, said Tritt.

Commercial vans, like pickups, have long been a strong source of profit for automakers. Sales of both are tied to the housing market and both have a loyal customer base, which include buyers of fleets such as PepsiCo Inc. (PEP), FedEx Corp. (FDX) as well as plumbers, painters and carpet installers.

The new vans tend to have straighter sides and taller roofs than traditional ones that looked more like bulked up minivans. With their improved fuel efficiency and utility, they complement the U.S. automakers’ best lineup from top to bottom in a generation.

New Models

Ford, which brought its smaller made-in-Turkey van, the Transit Connect, to the U.S. from Europe in 2009, is introducing its larger Transit van next year, replacing its segment-leading E-Series work van. The Transit will be made at the Kansas City Assembly Plant in Claycomo, Missouri. Large vans make up about 80 percent of commercial-van sales.

Chrysler, based in Auburn Hills, Michigan, is bringing a Ram version of the Ducato, the work van of majority owner Fiat SpA (F), to the U.S. this year. Detroit-based General Motors, which sells the GMC Savanna and Chevrolet Express, said last month it will start selling a rebadged version of Nissan Motor Co. (7201)’s small commercial van, the NV200, next year.

Nissan, which entered the light commercial truck business with its NV cargo and passenger vans in 2010, began selling the compact NV200 in April, targeting a segment Ford moved into with its Transit Connect model. New York City chose a taxi variation of the Nissan as its official cab, which will replace the city’s fleet of 16 taxi models by 2018. The van, assembled in Cuernavaca, Mexico, starts at $19,990.

Growing Economy

Nissan may have about 10 percent of the commercial-van market this year, up from 2.4 percent in 2011, according to R.L. Polk & Co. The Yokohama, Japan-based company assembles its larger commercial van in Canton, Mississippi.

Toyota Motor Corp. (7203), the world’s largest automaker, does not offer a commercial van in the U.S., nor does Honda Motor Co.

U.S. economic growth will accelerate to 3 percent or more in 2014 after averaging an annualized 2.1 percent during the first four years of the recovery, according to projections by forecasting firms Moody’s Analytics Inc. and Macroeconomic Advisers in St. Louis. That would be the fastest rate of expansion since at least 2005.

Residential building permits rose 36 percent in April from the year earlier and 14 percent from March, according to the U.S. Commerce Department. Large pickup sales have risen 22 percent this year, according to Autodata Corp.

‘Circle of Life’

“If people buy houses, somebody’s got to build them and the people who build them need materials so someone’s got to take the material to the construction site,” Tritt said in an interview. “It’s almost like a circle of life.”

Commercial-van registrations will probably rise to 301,000 this year from 155,900 in 2009 and may jump 21 percent to 365,000 next year, according to Polk. The category’s share of the U.S. market may climb to 2 percent this year and 2.4 percent next year from 1.5 percent in 2009, Polk forecasts.

Ford, based in Dearborn, Michigan, has long dominated the segment with its E-Series, including the Econoline, topping 45 percent of the market since 2008, according to Polk. GM’s brands have had at least 34 percent during that same period. Stuttgart, Germany-based Daimler’s share rose to 7.5 percent last year from 1.6 percent in 2010.

Daimler and Chrysler are betting that their new models will shake loose some large buyers from Ford and GM.

“There are more choices out there,” Tritt said “And if the U.S. consumer has choices, they automatically have to look at us.”

Fuel Sippers

To help lure buyers, Daimler is introducing a four-cylinder Sprinter for the 2014 model year, which will improve fuel efficiency by about 18 percent over the six-cylinder. Daimler sells the Sprinter for the same price under the Freightliner brand as well.

Daimler is forecasting 5 percent growth in the market to about 265,000 commercial vans this year, and it expects to outpace the market’s growth and gain share.

“The recession hit the commercial-vehicle market pretty heavily,” Tritt said. “People were holding on to equipment but it’s time to replace. There’s a pent-up demand.”

Len Deluca, director of Ford’s commercial trucks unit, said the E-Series, market leader for 33 years, was due for a makeover.

“From a technology, fuel-efficiency and capability standpoint, it was time,” Deluca said in an interview. “I think we would have become uncompetitive if we didn’t move forward.”

‘Terrific’ Timing

Ford’s Transit, which goes on sale in mid-2014, replaces the E-Series. Buyers can choose from three roof heights, three body lengths, two wheel bases and two four-cylinder gas engines or a diesel-burning powertrain. The Transit is 300 pounds (136 kilograms) lighter, on average, and gets about 25 percent better mileage than the E-Series, Deluca said.

Ford brought the smaller Transit Connect to the U.S. in 2009 and it quickly became an unexpected hit, Tom Libby, lead North American analyst for Southfield, Michigan-based Polk, said in an interview.

“Ford was ahead of the curve with the Transit Connect,” he said. “It really resonated. The timing was terrific.”

Ford sold about 9,000 of the smaller Transit Connect vans in 2009, and sales took off from there, topping 35,000 last year. Before Transit Connect, buyers used larger vans or customized larger sport-utility vehicles, Deluca said. It starts at $22,425.

Fleet Replacement

“Change can be hard, but based on what I’ve heard from customers, I believe they’re looking forward to getting Transit in the U.S.,” Deluca said. “I can’t tell you how many times I’ve heard from a customer, ‘It’s about time you guys did this.’”

The age of the commercial-truck fleet also should help drive demand. Heavy-duty trucks on the road are about 13 years old, on average, about a year older than the light-duty fleet, he said. Ram is well positioned with a new 1500 pickup, as well as a heavy-duty pickup and the ProMaster coming to the market. The ProMaster will show up on dealer lots in the third quarter with a price that starts at $29,630.

“The timing’s pretty good for us to be bringing new products to market,” Bob Hegbloom, director of the Ram truck brand, said in an interview.

Function is a bigger factor than fashion for commercial buyers, especially delivery and cargo fleets, Hegbloom says. The new ProMaster improves mileage, comes with a diesel engine or V-6, lowers the step-in height by three inches and can go longer between routine maintenance, such as oil changes.

“With commercial-vehicle customers, the last thing they’re concerned about is the look,” Hegbloom said. “It comes down to cost of ownership and does it deliver on the capability.”

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Refrigerated Transportation – length-of-haul trends

Refrigerated Van HaulsIf one thing has been widely true about the freight market over the past several years, analysts say, it’s that average length of haul has declined – notably in dry van and, more recently, refrigerated.

“In the mid-2000s, there was a huge move in the general freight dry van business,” says Todd Amen, president and chief executive officer of owner-operator business services firm ATBS. Owner-operators in dry van, he says, “went from an average length of haul running 800 to 1,300 miles down to 400 to 500 miles.”

Over that same period, overall yearly miles also fell and income rose slightly for ATBS clients hauling dry van, Amen says, continuing into the most recent two years. Between 2010 and 2012, ATBS numbers show operators’ annual dry van miles fell 1.4 percent to 115,050, while income rose $3,688 to $48,556.

From the perspective of contracting owner-operators, Amen says, such shorter hauls “take more time, and they cost more money on a per-mile, per-load basis.” The mid-2000s also brought dry van rate increases, Amen adds, “but carriers didn’t necessarily change the pay of the contractors” until some years had passed.

Also in recent years, Amen and others note, regionalization has hit the reefer segment. “There’s plenty of that 1,100-mile [or longer] haul left,” says Amen, but cold warehousing and temperature-controlled intermodal have made short haul more of a norm.

As happened with dry van rates, reefer rates offered by brokers and shippers don’t always compensate properly for the increased time associated with hauls of shorter length. “Overall productivity and total miles are coming down” for reefer haulers among ATBS’ clientele, says Amen. “The pay per mile hasn’t really caught up with that.”

However, some carriers driven by fuel prices are well aware of these trends, says Jay Thompson, president of Transportation Business Associates. “It starts to make you do a different sort of planning,” he says.

Produce DeliveryPONY EXPRESS FREIGHT | Long produce hauls from the Mexican border could be parceled out regularly in a series of relays that cut down on transit time, says Transportation Business Associates’ Jay Thompson. The arrangement also holds benefits for operators: In addition to getting home more often, those specializing in a particular area would establish personal relationships with shippers and other customers. Thompson’s plan illustrated here, part of his presentation of the Fresh Produce Association of America referenced in this story, assumes relay points within a 500-mile radius of five cities – Kingman, Ariz., Amarillo and Ft. Worth in Texas; Springfield, Mo.; and Indianapolis.

Thompson – active in consulting among produce haulers, growers and other shippers – delivered a presentation in 2012 to the Fresh Produce Association of America that argued a case for shorter-leg relays “like they have on the dry side.” The old argument against reefer relays was that a shipper preferred having one trusted trucker to watch the shipment until it was delivered. Information technology now has given carrier and shipper back-office staff the ability to keep track of their loads and equipment from afar, says Thompson, eliminating the pressing need for that single pair of trusted eyes. And it’s been a big boon to load planning.

From a larger carrier or shipper’s point of view, he says, “When we think of produce, we think about it as multiple picks, and maybe multiple drops. Traditionally, you tried to assemble as much of a load on the front end from various places to go to one location on the other end. … Now, with planning software, you’re able to get products more quickly identified and a planned load that would end up being picked somewhere closer to the destination. Same thing with beef – consolidated loads that would go to a distribution center strategically built.”

Thompson gives the example of a meat facility in Tucson, Ariz., serving regional Kroger groceries. “When you think of grocery trucks going out of warehouses to stores, they come back empty,” he says. With this model, “you’re able to shorten loads.”

As fuel prices have risen, temperature-controlled intermodal also has made inroads in long-haul reefer freight – to the point that Utah-based Central Refrigerated Service actually adopted regional strategies for different locations, says Nick Burbidge, head of the company’s owner-operator division. For drivers and owner-operators, he says, each strategy “accommodates driver home time and assists in our recruiting efforts in parts of the country we didn’t have a large presence in to begin with.”

Shorter length of haul has helped operators’ bottom lines in that “it is more consistent year-round than the longer business,” Burbidge adds. “We have had to add administrative staff due to the extra volume in load counts and also increased the size of our trailer fleet to maintain utilization for our drivers.” The company’s average length of haul fell about “150 miles per load over the past two years,” and now averages about 875 miles.

Owner-operator Bruce Johnston had a lucrative short-haul gig as part of Sunco Carriers’ “Atlanta Local” team running refrigerated loads with his 1997 Peterbilt 379 through early 2009. Johnston ran back and forth between Atlanta and Birmingham –150 miles. Some years he grossed as much as $3,500 a week all year on just 55,000 miles, paid on a percentage of the load – $3.30 per mile to the truck.

The recession took some of the wind out of those sails. Today a majority of his dedicated runs log about 220 miles from Murfreesboro, Tenn., to Atlanta and then back to the Nashville area – 250 miles. The headhaul takes yogurt to a distribution center where it’s parceled onto smaller delivery trucks. In 2012, his gross was $167,000 on 107,000 miles, or just $1.56 a mile. But he spent $90,000 on fuel, leaving $77,000 for other costs and net profit, which Johnston insists would have put him in quite a bind if he didn’t have his truck paid off.

Fortunately, living in Chattanooga, Tenn., about halfway between Atlanta and the Nashville/Murfreesboro area, he reaps the rewards of what Amen calls perhaps the biggest side benefit of the trend toward shorter hauls.

“Drivers generally are home many more times a week,” he says, adding that average yearly miles for ATBS clients have fallen by 29,000 from 138,000 over 10 years. “That’s like driving two and a half months less. Drivers are still working hard, but it’s just a different situation. He can be a family guy much more than he used to be.”

On the reefer side in particular, rates need to come up to compensate properly for shorter runs, says Amen. Over the same two-year period analyzed for annual client figures in dry van, ATBS numbers show annual reefer-operator income falling slightly $535 to $46,756, with miles falling much more than on the dry side: 4.6 percent to 121,799.

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Insulated Refrigeration Vans for Sale

photo_7If you’re considering buying a refrigerated van, it’s beneficial to do some research ahead of time.  Make sure you are comparing “apples to apples” as you get competitive price quotations.

Take for example van insulation.  Only ReeferTek USA uses the highest density closed-cell polyurethane foam for maximum R-value insulation.  Many of our competitors are using inferior insulation products including fiberglass.  Proper insulation is the most important factor in manufacturing a refrigerated van.  This is how goods are stored and transported at the precise temperature.

Only spray foam insulation will properly seal the entire storage compartment of a refrigerated van.  The product is applied as a liquid which adheres to the outer walls then immediately expands into a solid foam which forms a continuous impermeable shell. Each ReeferTek technician is certified to apply this material in the state-of-the-art manufacturing facility.

Be careful if you see used refrigerated vans for sale that contain fiberglass insulation.  Depending on your specific usage, the refrigeration technology may not be adequate. If you have any questions, please feel free to contact us for solutions.

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Manufacturing custom refrigerated vans since 1997

Refrigerated Van from 1997ReeferTek is proud to be the oldest manufacturer of custom refrigerated vans in the US.  We were looking through our archives and found these photos from 1997.  Look at the Trump Towers still under construction in the New York skyline.  Look closer at the refrigerated van… this was cutting-edge technology in 1997!

During the past 14 years, we have revolutionized the refrigerated van industry.  We have leveraged new computer and GPS technology, closed-cell spray polyurethane foam insulation, and thermal refrigeration control to give precision temperatures.  ReeferTek refrigerated vans are the Refrigerated Van from 1997safest, most reliable, and coolest vans on the market.  Each refrigerated van comes with a full three year warranty.  No other manufacturer will make this claim.

Any business that depends on refrigerated transportation knows the importance of having a reliable refrigerated van.  Whether you deliver frozen foods, flowers, dairy products, or produce, you shouldn’t have to worry about the performance of your refrigerated van.  Your business depends on it.  With this in mind, wouldn’t you want to partner with the most established refrigerated van manufacturer in the industry?

Refrigerated Van from 1997ReeferTek will work with you every step of the way to ensure your refrigerated vans are exactly what you need. No matter what your refrigerated transportation needs, contact us today for a free estimate.

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Getting Started with a Refrigerated Vehicle

ReeferTek USA custom refrigerated delivery van

Look at the slick interior design

Are you searching for high quality fridge vans, freezer vans or refrigerated vehicles? ReeferTek USA manufacturers high quality, custom refrigerated vehicles.  With 30 years experience and knowledge within the refrigeration van industry, we are proud to provide you with a wide selection of refrigerated vehicles that will meet your exact requirements.

If you are a new business looking for your first refrigerated van or an established company currently running a fleet of refrigerated vans, give us a call.  We leverage the latest innovative technology in our custom vans.  This includes spray foam insulation, modular design, and Thermo King Refrigeration units.  ReeferTek can deliver vehicles which hold temperatures at -20 degrees and is used by businesses such as seafood, dairy, ice, meat, food service, and ice cream.  We are so confident in all our products we back everything with a 3 year warranty!

Researching refrigerated vehicle units and options can seem overwhelming.  ReeferTek USA will guide you through the entire process.  We will discuss the pros and cons of various models and options to keep within your budget.  We invite you to call us for further information on the appropriate refrigerated van for your business.  Our custom manufacturing facility is also available for tours.  Come see firsthand our proprietary process.  Contact us to schedule an appointment.

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