If you’re running a fleet of vehicles for your business, such as to help you manage deliveries to your ecommerce customers, then you are likely already aware that they can be one of the most costly aspects of running your business. However, when managed right, the profits of being able to provide deliveries directly should outweigh the costs. This is a lot easier when you know how to manage those costs, so that’s what we’re going to look at here.
Selecting Efficient And Reliable Vehicles
Buying the right fleet vehicles is about more than getting as much storage space as you can for your buck. While the initial purchasing price certainly does matter, you need to be mindful of the total cost of ownership. This typically means the costs of fuel, maintenance, as well as the value lost to depreciation over time. A vehicle with a lower total cost of ownership is going to lead to more substantial savings over time, compared to one that’s just cheaper now. Of course, the vehicles still have to do what you need them to, so don’t cut costs to the point of making your deliveries harder to facilitate.
Optimizing Fuel Expenses
Fuel represents a significant portion of fleet operating costs. Implementing strategies to manage and reduce fuel expenses is crucial. One effective approach is the use of fuel cards, which offer several benefits, such as simplified transaction processes (compared to reimbursing drivers using personal credit cards or cash) and detailed tracking including reports on fuel usage. Perhaps most important, they can offer real cost savings through the discounts and rebates many of them come with.
Promote Fuel-Efficient Driving Habits
It’s not just the vehicle that determines how much fuel is consumed for each delivery. Your drivers have an influence as well. It might seem comparatively minor at first, but it makes a difference over long, repeated drivers. Encourage your drivers to be more fuel-efficient in their driving habits. Excessive idling consumes fuel unnecessarily, for instance. Telling them to turn off their engines when making a longer delivery can help them save a lot of fuel. Similarly, encouraging them to accelerate and brake more smoothly not only saves fuel, but minimizes wear on the components of the vehicle.
Utilize GPS Tracking For Monitoring
If you want a better understanding of driving habits and how much your deliveries are costing you, GPS tracking systems can play a key role in that. With thorough driver monitoring, you can get a better understanding of their habits, such as speeding, harsh braking, and adherence to route planning. This way, you can better individually coach your drivers on how to improve their performance, and offer real-time input on routes that they should be taking. The data collected from GPS systems can be analyzed to identify trends, set performance benchmarks, and implement strategies that enhance overall fleet efficiency.
Efficient Route Planning
With the aforementioned GPS tracking technology, as well as a dispatch team who is able to communicate with the drivers from afar, you can set up a system of strategic route planning. Being able to optimize the routes that your drivers can take can reduce the mileage of every trip, as well as how much time they spend on the road. This can cut the costs of fuel as well as the wear and tear the vehicle suffers. Improved delivery times could also see your drivers making more deliveries per trip, leading to an increased return on investment.
Proactive Vehicle Maintenance
One of the major costs associated with any fleet is repairs. You are going to need to repair your vehicles, and we can look at a few means to prepare for those costs so that you can mitigate them. However, preventing them for as long as possible through proactive vehicle maintenance is a key to effective fleet management. Set up a system of scheduled inspections, oil changes, tire rotations, and brake examinations can ensure that your vehicles run as effectively as they can for as long as they can. Training your drivers to maintain their own vehicles and to recognize issues can help them more readily contribute to vehicle health, as well, rather than always having to rely on mechanics.
Budgeting For Repair Costs
Maintenance can help you put off repairs for some time, but the need will inevitably arise. You can prepare for these costs by putting together a contingency fund specifically for that, so that unexpected repairs don’t end up jeopardizing the financial health of your business. Finding commercial vehicle repair services in your area, you can negotiate ahead of time. Some mechanics may be willing to offer their services at a discount to become your long-term providers, understanding that they’re likely to get more money in the long-term by reducing the initial cost barrier.
Maintaining A Spare Parts Inventory
As likely as you are to need repairs, you are also going to have to replace parts in your vehicles every now and then. However, how readily you can access these spare parts can make a big difference. If you have to wait for the mechanic to source them, then you can suffer a lot more downtime than if you had those parts on hand and at the ready. Do your research in which parts of your vehicle you’re most likely to have to replace more often, and keep some of them on hand so that you can implement those replacements as soon as possible to get your vehicle back on the road.
Choosing Insurance Providers Carefully
As mandatory as it is, insurance can be a significant expense for any business fleet. However, choosing the right provider (and policy) can lead to major savings. Be sure to compare multiple providers, looking for those that provide bundle policies or are willing to combine fleet insurance with other business policies you may use. Adjust your policy based on your needs when renewal time comes and never simply let your insurance “roll over” into a new contract. Review them annually to make sure that you’re adjusting it to the changing needs of your business, especially as your fleet size, vehicle types, and operations evolve.
Investing In Efficiency Upgrades
Aside from maintaining your vehicles to keep them more efficient, you may be able to improve how efficiently they operate on the road, as well. There are a host of truck modifications you can make to improve the productivity of your drivers, such as improved storage solutions like shelving, bins, and cargo organizers, as well as interior LED lighting so that your team is able to carry out delivery drop-offs much more quickly and easily.
Avoiding Excess Vehicles In Operation
If you’re running more vehicles that you technically need for your fleet, then your costs are going to increase exponentially. The fuel, maintenance, insurance, and depreciation costs of a single unnecessary or underused vehicle can be a major financial burden on your business. Make sure that you do what you can to prevent over-expansion. Analysing how your vehicles are used, how often they are required, and whether or not their role could be played by the rest of the fleet if they were gone. You can go further and reduce vehicle utilization by consolidating your deliveries, combining multiple orders into fewer trips to ensure that you’re maximizing the use of each vehicle. If some vehicles are idle while others are overused, redistributing them within the fleet can balance workloads and reduce excess expenses.
Knowing When To Trade in Vehicles For Maximum Resale Value
All of your vehicles are going to depreciate over time. If you’re holding onto aging vehicles for longer than you need to, it’s going to lead to repair costs skyrocketing, and the chances of delays due to breakdowns increasing exponentially. Be sure ot monitor the depreciation trends of fleet vehicles on he market, giving you a better idea of when to trade them in for the best possible return. Measure this against your repair costs. If the costs of repair exceed the car’s residual value, it may make more sense to replace it, instead. Trading in vehicles before they require significant repairs maximizes resale value and minimizes downtime.
Leasing Vehicles To Meet Temporary Demand Hikes
Many business owners deal with peak seasons and unexpected surges in sales. The immediate temptation to buy more vehicles to accommodate these demand hikes might tug at you, but leasing vehicles instead of purchasing them in this case can be a much more cost-effective solution. It allows you to scale your fleet up or down without the long-term commitments or costs of fleet ownership. Leasing requires less capital investment than purchasing, preserving cash flow for other business needs. Many leasing agreements include maintenance services, reducing repair costs and administrative burdens. By strategically leasing vehicles when demand increases, businesses can expand capacity without incurring excessive long-term expenses.
Many of the cost-cutting methods above may seem like they only address certain aspects of running your fleet, but combined together, they can make up for substantial savings.