4 Great Ways to Lower Your Business Fleet Costs
The costs of operating and managing a fleet can easily skyrocket if left unchecked.
In 2018, 56% of fleet companies reported a budget increase. Fleet owners who reported higher operating expenses cited “fuel price increases, parts and oil increases, and technology costs” as the primary contributors to this budget surge.
Cost management is a perennial issue for fleet companies, as most fleet owners recognize that sales generation and cutting expenses go hand in hand in increasing profitability. According to “Fleet Hall of Famer” Mike Antich: “It’s estimated that an average fleet wastes between 5% and 10% of its annual budgeted dollars. For example, how much money is wasted in unnecessary over-spec’ing of vehicles, keeping under-utilized assets on the books, or non-compliance with scheduled preventive maintenance intervals that result in unproductive downtime?”
Fortunately, fleet owners are not helpless when it comes to reducing their expenses, as there are tried-and-tested steps that can be taken to reduce fleet costs.
1. Minimize Roadside Vehicle Breakdowns
It’s money down the drain every time one of your vehicles breaks down. However, it’s much more expensive if your vehicles breakdown at roadside. According to a recent report, fleet trucks should only breakdown after 10,000 miles, but breakdowns are happening sooner. The cost of every roadside repair is currently estimated at $334 per incident, and this doesn’t include the cost of replacing tires.
A healthy fleet is a cheaper fleet to operate, and preventive maintenance is still the single most effective way to prevent unexpected roadside breakdowns. With the emergence of fleet management technologies, this is easier to do today than ever before. For instance, Fleet Complete’s Inspect app allows drivers to promptly report possible vehicle issues to your maintenance team or fleet manager.
2. Optimize Fuel Consumption
Fuel remains one of the biggest drains on a fleet’s operational budget and managing fuel consumption has always been a pain point among fleet companies. A recent survey revealed that 53% of fleet companies exceed their annual projected fuel budget due to reasons such as inefficient route planning, road work, traffic congestion, accounting errors, fuel theft, and poor driver behavior.
When it comes to reducing fuel costs, especially expenses associated with poor driver behavior, data is your fleet’s most powerful weapon. For instance, truck fleets are looking at 1,800 idle hours per truck annually. This is roughly $4,200 wasted on idle time, based on the 2019 average price of diesel in the United States at $2.98 per gallon.
Without knowing how much time your drivers are idling or which drivers are idling the most, fleet managers won’t have the necessary information to take concrete steps to reduce fuel costs. Installing tracking tools in fleet vehicles not only allows fleet managers to track idle hours, but also other things that contribute to fuel wastage, such as route planning and load planning inefficiencies.
3. Get the Best Insurance Premium Rates
The insurance premiums your fleet company pays depend on external factors that you can’t control, but also on internal factors that you can manage. One of the things that contributes to a higher insurance premium that you can control is the safety record of your fleet.
As explained by fleet insurance expert David Ware: “We want to see a clean motor vehicle report (MVR) for at least the last three years — no DUIs, reckless driving, etc. Then we make sure the CDL holder has a minimum of three years of driving under his or her belt. Crashes are an inherent risk in the transportation industry. So we take a close look at what kinds of accidents have occurred and what role the truck had or did not have in causing them.”
When looking at your fleet’s accident record, insurance providers usually distinguish between avoidable and unavoidable incidents. Constant monitoring and assessment of safety-related driving behaviors are crucial to ensure that drivers are prioritizing safety on the road. Dashcams that automatically upload videos to a web platform are a great way for your fleet’s safety officers to provide continuous coaching to your fleet drivers, while ensuring your fleet maintains a good safety track record to keep insurance premiums down.
4. Avoid ELD Violations and Fines
Committing ELD violations can result in hefty fines that can burn a hole in a fleet company’s budget. According to the North American Transportation Association, fines for ELD violations range from $1,000 to upwards of $10,000. In 2018, the reported average cost of an ELD non-compliance fine was $2,867 and the highest fine recorded was $13,680.
Aside from the fines, 22 ELD violations can pull down your Compliance, Safety, and Accountability (CSA) score. A low CSA score often leads to low business sales, higher insurance premiums, and more inspections and audits. Likewise, property-carrying commercial motor vehicle (CMV) drivers, who are caught without an ELD, are placed out of service for 10 hours, while passenger-carrying CMV drivers will be placed out of service for 8 hours.
The costs of fines and downtimes due to ELD violations can easily add up. Before you know it, it has become a significant budget leak for your fleet company.
Complying with ELD rules and regulations is one of the most basic yet most effective ways to cut down on unnecessary fleet expenses. When choosing an ELD provider, it’s best to choose one that is flexible enough to cater to your fleet’s unique needs.
You Can Take These Money-Saving Tips to the Bank
With rising external costs that are out of a fleet manager’s control, the challenge for you is to achieve low overhead costs and keep avoidable expenses in check to maintain your fleet company’s overall profitability as high as possible. Following the steps above is a great first step to reducing your fleet’s operational expenses.
As you can see, technology plays a crucial role in almost every money-saving tactic and strategy discussed above. If you’re looking for a fleet management technology partner that can help you reduce your fleet’s expenses, contact FleetComplete for a demo.