If you’re like most fleet managers, you keep a very close eye on your budget and do everything you can to keep costs in check. But in today’s volatile market, with skyrocketing fuel and vehicle prices, even the best-laid plans can be dismantled.
As line items like these spin out of control, fleets are looking for ways to cut costs now more than ever. Fortunately, fleet managers can take some of that control back by finding ways to reduce costs and increase uptime. Employing the following strategies can help, even after the market improves.
If your fleet hasn’t locked in pricing with a fuel contract, the recent spike in fuel prices is likely bearing down on your budget. As one of the biggest fleet expenditures, reducing fuel consumption is essential — even if you have a contract in place.
“Fuel is one of the most unpredictable costs that fleet managers face — and prioritizing its efficiency can greatly reduce expenses,” said Dain Giesie, assistant vice president for Enterprise Fleet Management.
The following are a few ways fleets can improve fuel efficiency and reduce costs:
1. Reduce Idling
When a truck idles, it’s getting zero miles per gallon. Finding ways to cut out unnecessary idling can greatly reduce fuel consumption.
Ross Ingham, senior fleet consulting manager at Wheels Donlen, suggested implementing an idle reduction campaign.
“Reducing unnecessary idling is the simplest and easiest way for a fleet to reduce fuel costs,” he said. “An anti-idling program encourages drivers to turn off their engines when not in use.”
Idling is an effective place to whittle down fuel expenses because the costs of it can add up quickly.
“The average commercial vehicle burns a gallon of diesel for every hour it idles. At $5.30 per gallon and an average idle time of 10 hours per week, that›s nearly $3,000 in waste per vehicle,” said Ed Montes, CEO at GPS Trackit.
Standing in the face of idle reduction efforts are drivers’ misconceptions that frequently starting and stopping an engine uses more gas. Ingham said this is not the case.
“This may have been a concern in the past, but with today’s fuel injection engines, starting systems are more efficient and don’t require as much fuel to start an engine,” he said.
Educating drivers about idling can help, but so can technology like telematics. Leveraging such a solution can help fleet managers identify the biggest idling problems, address them, and monitor progress toward reduction goals.
“Fleets can leverage technology to reduce fuel-wasting behaviors in their fleet,” said Steven Berube, sr. business dev manager - off road, vocational and assets for Geotab. “When considering what fleets should tackle first, fleets must consider the money they stand to save by reducing idling. While some idling is unavoidable, like in heavy traffic, other idling is avoidable and costly for a fleet.”
2. Analyze Fuel Data
Gathering data on fuel purchases via fuel cards is another way to reduce fuel costs.
“There are a few different offerings I would recommend for fleets wanting to get better insights into their fuel economy and fuel costs,” said Jim Perkins, director of sales & marketing for Shell Fleet Solutions. “The Shell Fleet Card can lower expenses for fleets with savings up to 6 cents per gallon. Further, Shell Fleet Maintenance Hub helps fleets ensure vehicles are properly maintained.”
Geotab’s Berube said integrating fuel cards with telematics can further help fleets manage fuel.
“With an integrated fuel card, managers can more efficiently record and monitor fuel purchases, helping minimize the likelihood of fuel theft,” he said. “Using fleet management technology is a good way to maximize vehicle miles per gallon (mpg) performance and reduce fuel costs. For example, telematics data can help inform route planning and determine the most fuel-efficient route, saving fuel, money, and time.”
Implementing a fuel program can help fleets anticipate expenses, too.
“Custom reporting tools can provide insights to inform broader fuel purchasing decisions,” Enterprise’s Giesie said. “Removing underutilized or problematic vehicles in favor of newer, more fuel-efficient vehicles can also have a strong overall impact on fuel cost.”
3. Maintain Tires Properly
Fleets can see significant fuel savings when tires are both properly maintained and rotated.
“For every 1 psi below the tire’s recommended pressure, the fleet could be losing 0.2% in fuel efficiency,” Geotab’s Berube said. “Fleets can save up to 1% of their costs by having properly inflated tires. While that does not sound overly impressive, 1% equates to significant savings.”
Taking proper care of tires also helps prevent catastrophic tire failure, which can result in additional costs. Berube said telematics can help.
“Leveraging telematics and data, fleets can rotate tires based on miles driven and monitor tire pressure in real-time,” he said. “Fleets can avoid costly tire repairs and potentially dangerous situations by staying on top of tire health.”
4. Improve Driver Safety
Driver behavior may not seem like it’s directly correlated with fuel consumption, but it can actually make a significant impact.
“Unsafe driving habits, like harsh acceleration, can significantly impact a fleet’s fuel efficiency because dangerous driving maneuvers burn more fuel,” Geotab’s Berube said. “By implementing a comprehensive driver safety program that supports and rewards drivers for driving safely, fleets can reduce unsafe driving events, optimize fuel efficiency, and reduce costs.”
Preventive maintenance offers several opportunities to reduce costs and keep trucks on the road and drive profits.
1. Use Telematics to Stay on Top of Maintenance
Maintenance is the key to vehicle health, and when trucks are performing their best, they burn less fuel. Geotab’s Berube said telematics data can help fleet managers have a better understanding of how trucks are performing and stay on top of maintenance.
“Telematics data can help inform a fleet’s preventive or predictive maintenance programs, both of which provide managers with insight into vehicle health and performance. Equipped with this information, fleets can take the steps to help minimize unplanned maintenance events or cataphoric failure,” Berube said. “Vehicles that are operating at their optimal performance level burn less fuel, making vehicle maintenance an important factor in maximizing mpg performance.”
Shell Fleet Solutions’ Perkins said maintenance insights can help fleets save on fuel and then some.
“Shell Fleet Maintenance Hub allows fleets and businesses to ensure their vehicles are properly maintained, which often helps fuel efficiency, and customers have saved up to 26% on common services and labor,” he said. “These tools all help fleet managers save time and money and improve overall efficiency.”
Monitoring critical systems should also be a part of a fleet’s PM program.
“Fleets should monitor and receive reports on systems including the transmission, the diesel particulate filter (DPF), alternative fuel systems, and engine fault codes — all of which can be provided in real-time via telematics,” Montes said.
GPS Trackit’s Montes said in today’s market, maintenance is more important than ever.
“Maintenance is an even bigger factor today when trucks are in service longer because of the new vehicle shortages,” he said. “Fleet managers with the best information stay ahead of the maintenance game instead of having to be in constant triage mode.”
2. Keep PM Schedules Consistent
Determining the proper PM intervals can help reduce costs, but Ingham from Wheels Donlen said consistency also matters.
“There is a direct correlation between consistency and MTBF (Mean Time Between Failures), meaning that if a vehicle is taken in for PMs at 2,000 miles, then 6,000 miles, then again at 4,000 miles, that vehicle will be at a higher risk of breakdown compared to a unit that is serviced directly at each 5,000-mile interval,” he said.
Ingham said he’s seen fleets skip PMs in November and December to meet the year’s budget goals, but this only ends up increasing operating expenses down the road.
“It may seem beneficial to prolong your PM schedule to reduce costs in the short term, but ultimately extending PM services will cost you more in the long run,” Ingham said. “Performing consistent preventive maintenance prolongs the life of your equipment, reduces downtime, decreases reactive maintenance requests, helps you manage compliance and inspection needs, and prevents costly emergency repairs from occurring.”
3. Know When It’s Time to Retire a Vehicle
As vehicles age, their maintenance needs go up, so optimizing lifecycles can reduce the costs associated with maintenance.
“The best way to minimize maintenance and downtime expenses is to identify the optimum cycle point for your vehicles,” Enterprise’s Giesie said. “Companies can take advantage of higher resale gains, as well as more predictable maintenance expenses, by selling a vehicle before it becomes a problem.”
Selling at the right time can also help fleets get the most out of their resales.
“Finding the best time to sell fleet vehicles is the easiest way to reduce depreciation costs,” Giesie said. “It’s a common misconception that running vehicles until the wheels fall off (e.g., for 10 years or more) is more cost-effective because the vehicle is paid off.”
Rob Slavin, senior valuation analyst at Ritchie Bros. Auctioneers said fleets should also take advantage of the current seller’s market.
“If you’re kicking around the idea of selling your trucks, there is no better time than right now,” he said. “For example, seven- to eight-year old Freightliner sleepers were still selling for 90-100% more in the first quarter (Jan-Mar) of 2022 vs. those sold during the same time period last year.”
Safety, Spec’ing & Selling Strategies
1. Focus on Safety to Reduce Collisions & Lower Insurance Premiums
Driver safety can have a big impact on costs in terms of both the cost of crashes and downtime.
“You could look at safety as a cost. According to OSHA, fleets may spend around $70,000 when an accident occurs,” Shell Fleet Solutions’ Perkins said. “It is critical that fleets do everything they can to prevent safety incidents not only to protect their drivers but to avoid those expenses as well.”
Geotab’s Berube said the costs don’t end there.
“There are obvious costs including repairs, injury costs and insurance premiums, but there are hidden costs that fleets need to consider including legal fees, higher insurance premiums, lost employee time, poor publicity or lost business,” he said. “These are a few of the hidden costs that come along with a collision that fleets should remember and account for.”
Fortunately, fleets can use technology to underscore safety and minimize collision costs.
GPS Trackit’s Montes said GPS systems can help formulate an effective safety program.
“The data can form the basis for a comprehensive driver behavior training program — and the telematics and onboard cameras monitor how successfully drivers are following the plan,” he said.
With a program in place, Berube said the savings go beyond collisions.
“As fleets start to see a decrease in collision rates because of safer driving practices across the fleet, they can then use this information to negotiate insurance premiums. If a collision does occur, the fleet must know why and how it happened — armed with data that can answer the how and the why, the fleet will have the essential information to help manage insurance claims and potential litigation."
2. Properly Spec Trucks to Reduce Cost-Per-Mile
Truck design can either hurt or help costs.
“If you have an undersized truck that is constantly hauling its max payload, you can rest assured that vehicle will have a high cost-per-mile than a properly spec’ed unit,” Ingham from Wheels Donlen said. “Conversely, if you have a PTO installed on a vehicle that does not properly match the depth, pitch, and helix angle of the transmission gear you will not only damage the transmission of the truck but most likely the equipment it is powering as well.”
3. Invest in Remarketing
When it’s time to sell a truck, Slavin from Ritchie Bros. Auctioneers said that while remarketing a unit has an associated cost, the investment is worthwhile.
“It costs money to make money, so I wouldn’t necessarily look at reducing remarketing costs. It’s about finding the right disposition solution to maximize your returns,” he said.
Slavin suggested two ways to improve a fleet’s remarketing plan.
“Look at your truck honestly and ask yourself, ‘would I pay top dollar for it?’ If not, what can you do to your truck to get it into a condition where an operator would be excited to jump in and spend 8 hours a day? That’s the truck you want to offer to the market,” he said. “When choosing a company to help you remarket your assets, make sure to choose a company that targets end-users as they are willing to pay top dollar to put your truck to work.”
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