The big blue trucks that deliver beer, wine and liquor to county-run liquor stores and other businesses are aging fast and in need of replacement, according to a consultant’s report.
The Department of Liquor Control hasn’t purchased a new truck since the Great Recession hit in 2008, according to Director George Griffin.
A new report released this week by a business consultant hired to examine the department’s operations found that “the DLC operates an outdated fleet, which results in higher operational costs, lower employee morale and reduced customer confidence.” The report also says the fleet’s age represents a future cost for the department that hasn’t been properly funded.
The county is a controlled liquor jurisdiction and the department handles the wholesale distribution of all beer, wine and liquor sold in the county as well as the retail sale of liquor at its county-run liquor stores. The trucks distribute alcohol from the department’s Gaithersburg warehouse to restaurants and retail stores around the county. The department’s profit, which totaled about $30 million last year, is transferred to the county’s general fund.
The department owns a fleet of 42 trucks, which range in size and features; some are refrigerated. New trucks cost about $150,000 to $175,000, according to Griffin. From 2005 to 2008, the county purchased 15 new trucks, but none after that.
“Buying new trucks was put on the back burner when the recession hit,” Griffin said during a county council committee meeting on Thursday. “We had to eliminate 13 positions” in the department, he said. “We cut back people, [but] before you do that, you delay buying new trucks.”
Nearly one in three of the department’s trucks were purchased before 1999 and a majority have reached the end of their economic life, meaning that the operating costs of the trucks are higher than the depreciation expense, according to the report.
The report, written by the PFM Group, outlined a couple of options for the department. One option would be to spend about $875,000 per year for the next five years to replace the oldest trucks, and then to spend about $460,000 per year to keep up with truck replacement costs and build a surplus replacement fund to handle future expenditures.
Or the department could lease its entire fleet, which the business consultant estimated would cost about $19.2 million over 12 years, or an estimated $2 million less than the spending option. The report also recommended cutting down deliveries to once per week per store and per licensee to save costs and limit wear and tear on the trucks
The truck fleet issue was one of the many business problems examined by the consultants’ report, which also identified these issues facing the department: aging stores, a lack of brand identity and too few stores.
One idea included in the report and recommended by Councilmember Marc Elrich is to open a few regional superstores in the county to address issues surrounding hard-to-find products.
“We’d probably make a whole lot of money doing that,” Elrich said.
Outside pressure on the agency is also reaching new levels. Councilmember Hans Riemer has called for reforms at the department to make it more consumer-friendly and modern, while Maryland Comptroller Peter Franchot has said he would like to see the county eliminate the department and privatize the local alcohol business.
