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What are the Best Ways Fleet Managers Can Reduce Costs?

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What are the Best Ways Fleet Managers Can Reduce Costs?

Nov 1, 2022 | This article was originally published on Global Trade

Effective fleet management can be expensive. To keep vehicles operational requires spending on labor, fuel costs, maintenance and telematics. Managers also must consider external factors — like driver behavior and weather — that can further impact fleet performance.

When facing tight fleet budgets, it’s important to know how simple adjustments to vehicles and driver practices can reduce costs. These are some of the best strategies fleet managers can use tWhen facing tight fleet budgets, it’s important to know how simple adjustments to vehicles and driver practices can reduce costs. These are some of the best strategies fleet managers can use to do that.

1. Track Driver Behavior

How drivers use fleet vehicles can have a significant impact on fuel economy and vehicle lifespan.

Many modern telematics systems make it easy to track events like harsh braking and idling — practices that can increase vehicle wear and tear and fuel consumption. They can even put drivers in violation of certain city ordinances. These systems can help any business reduce unsafe and wasteful driving practices.

2. Keep Vehicles Maintained and Road-Ready

Proactive vehicle maintenance ensures vehicles are ready for use and less likely to break down on the road — reducing potential downtime.

The correct care can also have a significant impact on vehicle handling and the longevity of different components.

Properly inflated tires, for example, can make many vehicles easier to control and can also help tires last longer. Under-inflated tires tend to run much hotter, according to studies on tractor-trailer tire performance, and just 20% under-inflation can decrease tire lifespan by 30%.

Because tires naturally deflate over time — and because tire pressure can increase or decrease as temperatures change — it’s not unusual for vehicle tires to become under-inflated.

The right grade of motor oil can provide similar benefits for lifespan and fuel economy.

Preventive maintenance is more expensive than repairing vehicles as problems arise, but it can help fleet managers drive down overall upkeep costs in the long run.

Advanced telematics systems can provide fleet managers with instant notification on unusual performance or behavior, allowing them to schedule inspections or repairs as quickly as possible.

For example, networked tire pressure sensors can provide managers with a real-time view of fleet-wide tire pressure readings. Data from engine control units or similar onboard sensors can alert managers when components begin to fail or flag warnings.

In the near future, these systems may also enable predictive maintenance, a maintenance strategy that uses vehicle performance data and AI algorithms to determine when care will be needed.

3. Shop Based on Lifetime Costs

It’s not unusual for a fleet manager to primarily base purchasing decisions on a vehicle’s sticker price. While price will have a major short-term impact on budgets, it doesn’t always reflect how much it will cost in the long term.

Maintenance and fuel costs, downtime, taxation, and insurance can significantly impact a vehicle’s lifetime and recurring expenses. Opting for vehicles that are more expensive but reliable and cheaper to maintain can reduce fleet costs significantly.

When buying a new vehicle, consider reviewing weight and size, vehicle maintenance schedule and customer reviews. Owners may also want to investigate the possible savings alternative fuel vehicles may provide by eliminating the need for gasoline and diesel.

Adopting a forward-looking approach to vehicle and equipment purchasing can help in other ways, as well.

For example, the construction industry currently faces rising demand for almost every type of equipment as the economy recovers from COVID-19. Demand significantly outpaces the industry’s current workforce capacity and supply of resources and heavy equipment.

After a weak year, demand for heavy machinery recovered and then hit record highs in 2021. Many machines are in especially high demand as both residential and non-residential construction starts continue to trend upwards to pre-pandemic levels.

Demand for concrete pumps is expected to rise to meet the need for new foundations and infrastructure investments. At the same time, tight supply has already caused significant price increases for skid steer loaders, tractors, earthmovers and other types of construction equipment.

Considering the state of the market and likely future demand will help managers make additional purchases in the future, when prices are higher and vehicles are harder to come by.

4. Optimize Driver Routes

Efficient route planning is one of the best ways to reduce fuel costs and keep operating expenses low. Many modern fleet scheduling and management solutions offer tools that help managers find the fastest possible route for each given job.

The tool uses information like vehicle location, fuel economy, traffic and even weather conditions to automatically schedule routes so drivers reach jobs as quickly as possible, with minimal fuel consumption.

Savings from optimized routes can add up over time, helping teams cut down on one of the most significant fleet expenses.

5. Know How and When to Right-Size

Fleet right-sizing is the process of purging underutilized or overly specialized vehicles from a fleet. These vehicles are likely not necessary for operations or can be replaced by more useful models. They can significantly increase maintenance, storage and fuel costs while they remain with a business.

The right-sizing process typically follows a few steps, some of which can help managers identify underperforming vehicles in any fleet:

1. Break the fleet down into major vehicle groups or classifications.

2. Calculate average utilization for each vehicle or machine (often a measure of business mileage over a year-long period, or hours in use).

3. Identify vehicles with particularly low utilization — typically in the bottom 25 or 50 percent.

4. Identify low-utilization vehicles that are still necessary for operations.

5. Create a list of nonessential vehicles and right-size.

Other important metrics to use alongside utilization may include fuel consumption, maintenance costs and average hours in use. These metrics can be useful when the miles traveled metric does not accurately reflect the utility of a fleet vehicle.

The right disposal practices can help to make a business’s right-sizing more cost-effective. Selling vehicles as soon as possible after they are identified as being underutilized is important due to the high depreciation rate.

A formal disposal strategy that includes gathering users’ manuals and shop guides and cleaning and removing equipment can streamline the process.

How Fleet Managers Can Reduce Fleet Costs and Streamline Operations

Operating a fleet will always be expensive, but managers can use these practices to keep expenses within budget. Because driver behavior and maintenance costs are significant expense generators, telematics systems and procedures that track and minimize these expenses will typically be a good investment.

Management practices that take advantage of route optimization software and right-sizing strategies will also ensure minimal operating costs.

As alternative fuel vehicles become more common and practical, they may also be a good investment for fleet managers. The electricity these vehicles need is often cheaper than gasoline or diesel, and fewer moving parts can make for lower maintenance costs.

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