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How To Reduce Fleet Costs: 8 Best Ways
Excessive fleet costs can weigh heavily on fleet owners and managers and prohibit their businesses from scaling effectively. Trimming fleet expenses can free up capital to reinvest and increase profits, but the challenge lies in determining where to cut costs without harming the workforce or limiting the company’s potential.
The following guide explores eight ways fleet owners can reduce their operational expenses to unlock greater potential for future scalability.
What Is the Total Cost of Fleet Ownership?
Reducing fleet-related costs begins with compiling a list of the exact expenses your fleet incurs throughout the year. Assembling these figures lets you calculate the current total cost of owning your fleet. Your total cost of ownership represents the sum of your fixed and variable expenses.
Among the operational expenses you’ll need to identify are several fixed and variable costs. Fixed expenses, such as business and vehicle insurance, permitting fees, lease payments, or vehicle purchase costs, are relatively static.
Almost everything else falls under variable expenses, including fuel costs, toll fees, maintenance and repairs, payroll, driver training, and other related expenses.
8 Best Ways To Reduce Fleet Costs
Once you’ve identified the total cost of owning your fleet, it’s time to sort through the expenses to determine where you can spend less.
Many of the cost-reduction methods listed below guide you in prioritizing what’s vital to your fleet to better align future spending. In addition, all eight methods may not apply to every fleet.
1. Prioritize Compliance
Fleets must comply with several regulations to avoid costly penalties and fines. Electronic Logging Devices (ELDs), Driver Vehicle Inspection Reports (DVIRs), and Hours of Service (HOS) logs all contribute to fleet compliance and safe trucking practices.
Fleet owners must ensure operators have their Commercial Driver’s License (CDL) and maintain adequate insurance coverage for both the fleet business and each fleet vehicle.
2. Negotiate Supplier Contracts
Your fleet requires several products and services to function, from the fleet vehicles that make business possible to the various maintenance and repair parts that keep those vehicles running strong.
Negotiating favorable contracts with suppliers of these vital components can help you sustain your fleet without paying a premium price.
3. Fleet Vehicles: Lease vs. Buy
When acquiring a fleet vehicle, consider whether leasing is more cost-effective than buying the vehicle outright. Leasing fleet vehicles opens the door to newer models and lower upfront costs that can reduce the financial burden on fledgling fleets.
However, depending on your fleet vehicle needs, purchasing the vehicle outright can also lead to long-term savings, provided you maintain any applicable warranties.
4. Blend Preventive and Predictive Maintenance
Lowering maintenance costs can help you allocate fewer resources toward fleet vehicle maintenance and more toward scalability and growth.
A dual approach that integrates preventative and predictive maintenance strategies keeps your fleet running efficiently, even as you gather, analyze, and act upon the data generated through predictive maintenance protocols.
As you learn more about how your fleet operates, you can adjust maintenance and repair schedules accordingly.
5. Integrate Fleet Fuel Cards
Fuel costs represent one of the largest expenses associated with fleets, but they’re also an opportunity for even greater savings with the help of fleet fuel cards. These charge cards enable drivers to fuel up quickly and efficiently while reporting these transactions back to fleet managers, all while ensuring compliance with applicable regulations.
Fleet fuel cards can also help reduce unauthorized charges, track fuel consumption trends, and even unlock discounts and rebates from certain fuel providers.
For example, the Cadence CPG Fleet Card is accepted at over 320,000 retail fuel locations, making it an ideal solution for growing fleets. With this versatile fleet fuel card, you can track fleet fuel expenses, assign driver PINs, and review everything from a comprehensive and intuitive dashboard.
Plus, there are no hidden fees, service charges, or inventory shortages.
6. Invest in Drivers and Operators
Inexperience and lack of training can present significant costs to any fleet. Opening lines of communication with drivers and operators and sponsoring their continued education enables fleet owners and managers to promote safe and efficient driving practices.
A culture of safety limits increased insurance rates due to accidents and the potential cost of replacing one or more fleet vehicles.
7. Reduce Downtime
Downtime refers to any period during which your fleet — as a whole or individually — is not actively generating income, whether it’s because a fleet vehicle requires emergency repairs or you’re down an operator.
Implementing a data backup strategy, performing regular inspections and audits, and creating a downtime response plan are effective strategies to minimize idle time and increase profits.
8. Partner With a Fleet Management Company
Effectively reducing fleet costs can require a significant portion of your busy schedule. However, partnering with a fleet management company can help streamline and accelerate the process, potentially enhancing your results.
The best fleet management services focus on optimization across all aspects, putting your fleet on the path to scalability.
Best Practices for Maintaining a Cost-Effective Fleet
Most successful fleets already incorporate efficient and cost-effective operating procedures to some extent. However, aligning these protocols can better serve the fleet as a whole.
As you prepare to implement one or more of the cost-reduction methods listed above, consider the following best practices:
- Set a cost reduction goal: Whether you aim for a specific dollar amount or cut costs by a predetermined percentage, setting a goal can help direct your cost-cutting efforts.
- Routinely review data: Let the data guide your future actions as you adapt and adjust as needed.
- Measure and track progress: Identify and analyze key performance indicators (KPIs) as you work toward your cost reduction goal.
When innovating company policies to reduce fleet expenses, consider the value of a second opinion in identifying and addressing glut. A trusted fleet management company can open up previously unforeseen avenues to further reduce excessive spending, leveraging past experiences and proven results.
Your Partner in Cost-Effective and Profitable Fleet Management
The experts at Cadence recognize the value of an efficient and successful fleet. Our fleet management services diligently support numerous businesses across America that keep this country moving. Call us at 336-629-2061 to learn more about our fleet management services and how we deliver value at every turn.
Sources:
Inspection, Repair, and Maintenance; Driver-Vehicle Inspection Report (DVIR) | FMCSA
Hours of Service (HOS) | FMCSA