Managing vehicles and drivers is expensive. The costs of fuel, vehicle repairs, workers’ comp claims, legal costs, and other line items can add up quickly. Investing in a fleet management solution can help you reduce these costs, so you have the flexibility to dedicate budget toward growing your fleet.
Types of Fleet Management Costs
Before explaining how the best fleet management solutions can help create some cushion in your budget, let’s discuss where most of the spend goes in the first place. There are three primary cost categories for the majority of fleets:
1. Insurance Claims Costs
While insurance claims may not amount to the biggest line item on the expense sheet for many smaller fleets, they are often a huge priority for larger fleets. Legal issues, and their associated costs, can quickly add up. Insurance claims costs include:
- Auto Liability: Claims for third-party bodily injury or property damage due to a vehicle accident.
- Vehicle Repairs: Claims for physical damage of a company vehicle that was involved in a collision.
- Workers Compensation: Claims for injury to an employee as a result of the motor vehicle accident.
2. Fuel Costs
Most fleets monitor fuel costs closely. This is a huge expense that’s difficult to predict because prices at the pump fluctuate with shifting (and uncontrollable) economic conditions. When fuel budgets get busted, fleet managers have to scramble to find ways to manage and minimize fuel consumption.
A truck that gets 6 miles per gallon at 65 mph will drop to 5 miles per gallon at 75 mph, increasing fuel cost by nearly 17 percent.
3. Maintenance Costs
Preventative and routine maintenance costs, such as replacing a vehicle’s brakes and tires, are on the rise. Like fuel, fleet maintenance costs vary and can be impacted by uncontrollable factors that range from warranty coverages to bad weather. Understanding the maintenance costs that can be controlled and adopting new practices and technologies to help reduce the related expenses can be critical to a fleet’s success.
How Fleet Management Technology Can Help Reduce Costs
Fleet management technology has evolved way beyond traditional telematics systems by providing layered, detailed insights. With video, machine vision technology, and vehicle data such as GPS, fleets are finally able to get more insights than ever before. With these insights, fleets can improve operations and safety, while lowering unnecessary costs.
Here’s an overview of how fleet management solutions can lower costs in the three categories outlined above:
1. Reducing Claims Costs
How much time, money, and energy does it take to investigate insurance claims? Millions of hours and dollars, every year.
Fleet management technology with video, captured from vehicle dash cams, reveals what happened before, during, and after a collision. Video is a powerful tool to help control costs because it provides a straight arrow to the truth, so fleets can immediately address claims to minimize legal fees, and potentially avoid false claims altogether. For example, Cargo Transporters used video evidence to exonerate their drivers from two fraudulent claims, saving between $50,000 and $100,000 in litigation costs.
According to NCCI data for 2016-17, the most costly lost-time workers’ compensation claims were the result from motor-vehicle crashes, averaging $78,293 per claim.
Video can also be used to coach drivers on risky behaviors, like distracted driving, running red lights, not wearing a seatbelt, and many more. As drivers improve those behaviors, collisions, or at least the severity of collisions, thereby reducing associated costs. Reducing risky driving behaviors can have a powerful impact on the ROI of a video fleet management tool.
2. Reducing Fuel Costs
Fleet management software helps manage fuel costs by collecting data from the vehicle engine control module (ECM). The resulting reports offer insights on activities that burn excessive fuel, like:
- Idling: Idling can use a quarter to a half gallon of fuel per hour. When a truck is idle for too long, a fleet management system can raise a flag so managers can talk with drivers about how to limit their idle time and avoid wasting fuel.
- Speeding: Each 5 mph driven over 50 mph can cost an additional $0.19 per gallon for gas. Speed management technology can monitor when drivers are exceeding posted speed limits or limits set by company policy. This provides managers with opportunities to increase fuel efficiency and lower costs.
- Dispatching: Faster, shorter routes directly translate to lower fuel costs. GPS fleet tracking arms dispatchers with real-time GPS locations, helping them optimize drivers’ routes and get to where they need to be without burning fuel.
- Driving Behavior: While not as quantifiable as the previous bullets, having insight into driver behavior is important for reducing fuel costs. For example, data could show excessive fuel usage due to “jackrabbit starts” or hard accelerations out of a light. Another example is using video clips triggered by drivers exceeding posted speed limits—coaches can educate drivers on how speeding can burn excessive fuel, as well as put them at greater risk for collisions.
Fleet management technology can reveal how much fuel is consumed by the fleet each week, month, or year. It also uncovers instances of excessive fuel use, which can be addressed by talking with drivers or by making adjustments to daily operations.
3. Reducing Maintenance Costs
Fleet management solutions can provide ECM data that helps fleet managers get information that may affect vehicle maintenance. Insights that can help fleets lower maintenance costs include:
- Number of miles driven (by vehicle and by fleet) to flag when proactive maintenance is needed.
- Risky driving behaviors, such as accelerating, hard braking, or hitting curbs, that increase wear and tear on brakes and tires.
Having this data helps fleet managers keep vehicles in top condition, reducing downtimes and addressing issues before they turn into expensive problems on the road.
Finding Fleet Management Software to Control Your Costs
Based on your industry and fleet size, some costs may be higher than others and become priorities when researching fleet management software. For example, a smaller fleet may be more concerned with tools to help lower fuel costs while a self-insured, larger fleet may be focused on reducing claims costs.
If you’re in this for the long haul, you’ll need a fleet management system that can keep up with your evolving needs. You’ll want to find a solution that can be combined and customized to prioritize your most pressing business challenges.