How to Reduce Fleet Expenses: 6 Ways
How to Reduce Fleet Expenses: 6 Ways
If the highways and freeways are the arteries and veins of the American economy, the trucking industry is its lifeblood—carrying goods to and from every corner of the nation. As an owner-operator of a commercial fleet, your services are indispensable to the country.
But, to keep the vehicles moving, your business needs to be profitable and minimize expenses.
From maintenance to fuel to insurance, there are dozens of fleet management costs associated with a fleet. For owner-operators operating with thin margins, every step you take to reduce fleet expenses will benefit your bottom line. Here are six actionable strategies you can deploy to improve fleet efficiency, reduce waste, and drive your profitability.
#1 Perform Preventative Maintenance
An effective way to help reduce drastic fleet maintenance costs in the future is by being proactive from the start. Every additional mile on the odometer brings a vehicle closer to its eventual decommissioning.
For fleet owners, the goal is to maximize the value of every vehicle in your fleet by extending its operational lifetime for as long as possible. In this regard, combatting wear and tear is imperative to reducing your fleet expenses.
By not waiting until a vehicle breaks down to address an issue or make a repair, you maintain control of your fleet’s functionality instead of operating at the vehicle’s mercy.
In addition to helping your business operate smoothly, preventative maintenance is crucial for compliance with federal regulations. According to the Federal Motor Carrier Safety Administration (FMCsA), you’re expected to “systematically inspect, repair, and maintain all motor vehicles and intermodal equipment subject to its control.” 1
By practicing fleet management with preventive maintenance on your vehicles, you can:
- Abide by federal safety regulations
- Improve driver safety and retention
- Extend the lifetime of the vehicles
- Reduce the likelihood of expensive emergency repairs or replacements
- Increase fleet uptime
Not to mention, avoiding accidents due to improperly maintained vehicles helps you avoid being held liable for negligent endangerment of your professional drivers and the other vehicles on the road. Preventing such incidents can bolster your business’s reputation and ability to operate.
What Does Preventative Maintenance Entail?
Conducting both dry and wet preventative maintenance can save you big in the long run. By addressing small issues up front, you can prevent them from developing into much more serious and expensive problems down the road.
Ideally, you should set regular maintenance schedules and checklists for:
- Visual inspections
- Part cleaning and replacements
- Fluid level checks
#2 Monitor Fuel Consumption
Historically, fuel expense has been one of the single largest operational costs involved with owning a semi-truck. On average, fuel consumption accounts for at least 25% of the operating budget, with fleet owner-operators spending an average of $4,000–$6,000 per month or $50,000-$70,000 per year 2. Fortunately, there are ways to reduce fuel cost for your fleet.
To handle fuel consumption management as costs continue to rise, you’ll need visibility over your fuel usage data. Armed with such information, you can take the necessary measures to reduce fleet fuel costs and consumption. Steps you can take include:
- Picking the right fuel card – Having a business fuel card increases your control and visibility over fleet fuel consumption. In addition to potentially providing per gallon fuel discounts, the right card will give you the ability to:
- ~Set spending limits
- ~Track drivers’ live transactions
- ~Prevent unauthorized usage and fuel fraud
- ~Use the card universally
- ~Integrate with your accounting software
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- Addressing bad driving behavior – Speeding, constantly changing lanes, sudden braking, or operating at inconsistent speeds all contribute to excess fuel usage. By educating drivers about best practices and continually monitoring driver behavior, you can cut down on the bad habits that waste fuel.
- Route planning – Are you taking the time to make sure that drivers are taking the best route possible to reach their destination? Through fleet route optimization, you can reduce total miles driven and help drivers avoid heavy traffic or poor weather conditions.
#3 Address Excess Idling
Another way to reduce fleet costs is to address unnecessary idling. Although idling could technically fall into either the fuel consumption or the preventative maintenance categories, the cost of truck idling is significant enough to have its own section.
Idling is defined as the time when a vehicle’s engine is still running, but the semi-truck is not in motion. This may occur when a fleet vehicle is at a light or stuck in traffic. Or, it could happen when the driver is on a lunch break or rest period.
It may seem harmless, but the costs of idling can quickly burn into your profits.
The average heavy-duty truck will consume approximately .8 gallons of fuel per hour while idling 3. At a fuel cost of $5.50 per gallon, fuel for a 10-hour rest period would cost you approximately $44. Multiply that across a fleet, and idling alone could represent hundreds of dollars each day in fuel waste.
Additionally, according to Verizon Connect, idling can be detrimental for a truck’s engine 4:
“Running an engine at low speed (idling) causes twice the wear on internal parts compared to driving at regular speeds. The American Trucking Association estimates that idling can increase maintenance costs by $2,000 per vehicle per year while also shortening the lifespan of an engine.”
How To Reduce Excessive Idling
So, how do you address excess idling? Here are three strategies that can help you reduce excess idling rates:
- Invest in a fleet management system – Among its many other uses, a fleet fuel card management system allows you to track and analyze your fleet data, including driver behavior, fuel usage, and average idling time.
- Install idling reduction technology (IRT) – There are a variety of modern IRT devices that can automatically reduce the amount of idling time.
- Educate drivers on best practices – Even advice as simple as telling drivers to shut off the engines if they expect to idle for more than 10 minutes will save you money. Contrary to popular belief, idling consumes more fuel and causes more damage than simply turning the engine off and back on.
Although some idling is unavoidable, the less frequently it occurs, the better it will be for your bottom line.
#4 Expand or Reduce the Fleet Size
Is your fleet operating at its most efficient capacity?
For a private fleet, the average cost per trucking mile in the U.S. is $2.90. 5 So, for every 100,000 miles driven, you can expect to spend $290,000 to keep a single truck on the road. That includes input costs like driver salary, fuel, equipment, insurance, maintenance, and repairs.
But this is just an average.
To determine your actual total cost of ownership (TCO), you must dive into the data for each truck. From there, you can compare the value each truck currently provides and make plans to adjust the fleet size accordingly.
Depending on what the numbers show, you may want to reduce the number of vehicles operating in your fleet to lower your fixed costs. Or, you may want to add more vehicles to the fleet in order to generate more revenue on a per-truck basis.
#5 Build a Safety Management Program
Although accidents aren’t entirely avoidable, every single accident that you do prevent will save your company money.
According to LCK Insurance, commercial fleets “have a 20% yearly accident rate, and the average cost of a fleet accident is $70,000.” 6
By designing and installing a safety management program, you can take actionable steps to reduce the frequency and severity of roadside accidents. A safety management program can help improve driver safety and behavior, reduce commercial auto insurance premiums, and improve your company’s reputation.
What does a robust safety management program look like? Some best practices include:
- Top-down management commitment to fleet safety
- Fatigue risk management
- Strict mobile phone policies
- Determining severity as a part of collision reviews
- Incorporation of in-vehicle monitoring systems (IVMS)
- Driver training programs
- Vehicle inspection and maintenance schedules
#6 Retire and Resell Vehicles Before They’re Decommissioned
One way to lower fleet maintenance costs is knowing when to get rid of a vehicle before it's too late. Although you may wish to squeeze as much value as possible out of every single vehicle, driving a truck into the ground will likely lose you money in the process.
In some cases, it may be more cost-effective to resell a truck before its rate of depreciation accelerates past the point of no return. In addition, by keeping your fleet in top condition with preventative maintenance, you improve their resale value.
While there are many avenues to consider for truck resells, driver-to-employee truck sales are a common arrangement within commercial fleets. Creating a buy-back program is advantageous since it:
- Incentivizes drivers to take better care of their vehicle
- Results in higher residuals
- Saves you money on auction fees
Cut Your Fleet Expenses with AtoB
To run a successful commercial fleet, trucking industry professionals must carefully and continuously track, analyze, and assess their fleet expenses to enjoy the benefits of fleet management.
By applying these tips for reducing fleet expenses, you can instill a company-wide ethos that champions operational efficiency. It may not move the needle overnight, but given time, the incremental savings will add up.
When it comes to reducing costs and fleet fuel management, AtoB fuel cards can help.
Our fleet fuel cards are universally accepted anywhere Visa is accepted and they don’t just save you money with a per gallon fuel discount program—they also give you greater visibility and control over your fuel spend.
Using the AtoB dashboard, you can set spending limits, track drivers’ live transactions, and receive automated insights that will help you save even more money on fuel.
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Learn more about how our fuel card can reduce your expenses by reading our AtoB Fuel Card Reviews.
Sources:
1 Cornell Law. 49 CFR § 396.3 - Inspection, repair, and maintenance.
https://www.law.cornell.edu/cfr/text/49/396.3
2 Trucking Research Org. An Analysis of the Operational Costs of Trucking: 2021 Update.
3 Department of Energy. Long-Haul Truck Idling Burns Up Profits.
https://afdc.energy.gov/files/u/publication/hdv_idling_2015.pdf
4 Verizon Connect. How Much Gas Does Idling Waste? What Engine Idling Means for Your Fuel Tank?
https://www.verizonconnect.com/resources/article/engine-idling/
5 National Private Truck Council. 2020 Annual Benchmarking Survey Instrument.
https://www.nptc.org/wp-content/uploads/2020/07/2020-NPTC-Benchmarking-Survey.pdf
6 LCK Insurance. The Value of Fleet Safety Programs.
https://www.lckinsurance.com/blog/business-insurance/the-value-of-fleet-safety-programs
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Reviewed by
Vedant Khamesra is the driving force behind product management at AtoB. Specializing in strategic partnerships, SMB solutions, and new product development, Vedant seamlessly navigates P&L responsibilities while leading product execution and strategy. He is fueled by AtoB's mission to empower truckers and fleets with intelligent financial tools and services, making their lives easier and more rewarding.
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