Reduce fuel costs. Fleet operators should focus on miles per gallon. Fuel costs are a large direct operating expense, especially for fleets with high mileage each month. Many fleet managers approach fuel cost savings by looking for purchase discounts, which aren’t really feasible unless the fleet can fuel in volume at a single site. Fleet fuel cards can be used to direct driver purchases away from premium fuel, which offers some benefits, but the most significant fuel savings come from selecting more fuel-efficient vehicles. Moving away from heavy vehicles and larger engines can provide 30% to 50% fuel economy increases. Using a fleet tracking system to identify poor driving behavior that burns excessive fuel, such as speeding and unnecessary idling can reduce fleet fuel costs by approximately up to 12% per year. Also, a fleet fuel card will help move 8% of fuel purchases away from premium fuel.
Secure the best fleet financing. Proper vehicle financing should absolutely be considered. Leasing vs. ownership of fleet vehicles is a common funding decision for fleet managers, and the economic analysis often ends in a tie. The decision to lease or own frequently hinges simply on balance-sheet considerations.
Sell used vehicles in competitive resale markets. Most fleets value their used vehicles based on market values published from various industry sources like KBB. Fleet managers are usually satisfied with the sale of an individual fleet vehicle if they realize close to the market average or, worse, an amount more than book value. This approach ignores that those published market values are the mean of a distribution of high and low prices. Far too often in a negotiated sale, the purchasing vehicle dealer or driver knows the condition of the vehicle better than the seller, and pricing it at market average gives the upside to the buyer. Only by pricing negotiated sales above the market average or by selling in a competitive bidding market with a larger population of buyers can sellers actually capture above-the-mean value for themselves. This approach can provide an additional 5% in average resale prices, up to $75,000 per year.
Reduce accidents and insurance costs. Typically most insurers will reduce your insurance premiums by over 30% if you install a GPS fleet tracking system. Moving beyond depreciation to other operating costs, fleet vehicle accidents require an average of $1,500 to $2,800 in repairs, but total accident costs are perhaps closer to $11,000 per incident when indirect costs such as injuries, liability, property damage, and workers’ compensation are included. Typical fleet annual accident rates range from 15% to 40% of all vehicles, so the savings opportunities by reducing accidents can be substantial. By mandating pre-employment and annual motor vehicle records checks, requiring safe-driver training, and enforcing a safety scoring system, your fleet can reduce its accident rate by over 15% and save up to $375,000 per year.
Fuel prices in Southern California reached beyond their 2010 peak levels of early May in most zip codes last week, according to the Automobile Club of Southern California’s Weekend Gas Watch. According to AAA and the Oil Price Information Service, the average price of self-serve regular gasoline in San Diego is $3.16, $2.9 cents higher than the week before’s price, $2.6 cents above last month, and 19 cents higher than last year. In the LA and Long Beach area, the price is $3.15 per gallon, which is 2.4 cents above last week, $3.8 cents more than last month, and $10.3 cents higher than last year. On the Central Coast, the average price is $3.22, up $3.5 cents from last week, $4.2 cents higher than a month ago, and $11 cents above last year. In the Inland Empire, the average per gallon price is $3.13, which is $2.5 cents higher than last week, $3.4 cents higher than last month, and 11 cents more than last year.
The average retail price of gasoline in the United States is $2.75 a gallon. Drivers in big cities saw a range of prices at the pump — from an average $2.54 in Houston to $3.20 in San Francisco. In Chicago it cost $2.88 a gallon to fill up, while New York City motorists topped off the tank for $2.73 a gallon. Seattle gas stations averaged $3.10 for regular. Denver drivers paid $2.67 a gallon.
With gas prices this high, it makes sense for fleets to invest in a GPS fleet tracking system. Tracking fleet vehicles can significantly reduce fuel expenses. Lower fleet fuel bills equal higher net profits. For a fleet of 25 vehicles, idling time reduced by only 15 minutes per day can result in fuel savings of 562.5 gallons at a cost of about $1,783 per year at current gas prices. If you reduce idling time by 60 minutes, it would result in a fuel savings of 2,250 gallons at a cost of over $6,000 per year!
Use the right vehicle with the right equipment for the job. Feature and model creep are common causes of excess fleet vehicle depreciation. Drivers love four-wheel drive, extended cabs, plush leather seats, V-8 engines, and all kinds of other features. While providing fleet vehicles with those options may be good for morale and can be a good business decision, it will add to the depreciation cost. Trading in older vehicles for more fuel efficient fleet vehicles is also a good decision and this will be discussed further. Also, choosing fleet vehicles without regard to expected resale value can result in higher depreciation. For example, if you convert fleet vehicles from SUVs to sedans and remove some unnecessary amenities you can save up to hundreds of thousands of dollars in fleet expenses.
Negotiate well with vehicle manufacturers. After selecting the right vehicle, acquire it for the best possible price. Vehicle manufacturers compete aggressively for market share and have significantly increased purchase incentives for fleet customers who buy new vehicles. By sourcing with only one manufacturer, your fleet can improve net discounts by approximately 5%, reducing depreciation by up to $225,000 per year.
Does your company have mobile employees such as sales reps or field service technicians who routinely need vehicle transportation to do their work? If so, managing your mobile employees and fleet vehicles effectively is an important part of maximizing revenue generation and customer satisfaction. Most executives understand the importance of keeping these employees productive, but they are often not aware of the significant productivity and cost-savings benefits that come from efficiently supporting employees’ transportation needs.
The Challenges of Managing Fleet Costs
Vehicle-centric companies, such as trucking and distribution companies, are experts in fleet management and usually have the in-house resources to do it quite well. However, for the rest of us in other industries, executives are primarily focused on managing the core of the business – whether it’s building high rises, manufacturing computers, or servicing HVAC equipment. Fleet managers simply don’t have the expertise or the inclination to invest much time or energy in improving fleet operations. Unless you are an expert in fleet management, vehicle expenses by their very nature are decentralized–usually occurring in small transactions spread across numerous locations and employees. On the surface, fleet management costs seem very difficult or control.
Contrarily, taking the time to focus on fleet management issues via basic operational policies and a little centralized control can significantly enhance worker productivity and result in major cost savings. Optimizing fleet management can ensure that mobile workers get the transportation their job requires while simultaneously yielding up to $1 million in cost savings for a typical mid- to large-size enterprise. Whether your company’s fleet is large or small, the same concepts apply.
1. Fleet tracking systems reduce business operating costs and increase fleet safety by targeting poor drivers that speed excessively, resulting in wasted fuel, excessive engine wear, drive up insurance rates and cause accidents.
2. Many fleet managers like using the system’s automatic mileage reminder to reduce downtime and enhances vehicle resale values by encouraging scheduled, preventative maintenance. Vehicle tracking systems can remind you when it’s time to rotate tires, change oil or perform other scheduled maintenance. Conversely, fleet management systems also can tell you if a vehicle is not in need of scheduled service which helps keep maintenance costs under control.
GPS vehicle tracking devices are a popular tool for thousands of business owners. Fleets with only one vehicle all the way to original equipment manufacturers like Ford, GM or John Deere are including GPS tracking devices in their vehicles. GPS tracking software is most frequently used by businesses in the service, transportation and manufacturing industries. Companies with fleets of one to to fleets of 10,000, such as FedEx, rely upon their tracking systems to improve their profitability.
Vehicle tracking systems should be considered if your company has more than two vehicles. If your company has more than two vehicles, then you have a fleet. The goal of fleet management is to extract maximum value and minimize the cost of maintaining of vehicles. Fleet management is a complex and comprehensive challenge. It involves much more than just knowing where drivers and vehicles are located or routinely checking oil levels in your fleet vehicles. Fleet management includes vehicle procurement, vehicle maintenance, vehicle disposal, vehicle tracking and the management of logistical, operational, functional, regulatory and compliance requirements.
With the assistance of modern technology such as fleet GPS devices or vehicle tracking systems, fleet management has now become much easier and cost effective. Fleet management is an important and often overlooked part of many private organizations. Due to the economy, private fleet operators today are under more pressure than ever to control expenses. Optimizing your fleet’s operations can improve your company’s productivity, reduce costs and have a positive impact on the bottom line.
GPS fleet tracking systems are successfully being utilized in the largest cities in America for good reasons. According to Helen Rane Carbone, Chief Programmer and Analyst for the Chicago’s Department of Transportation “Before we implemented GPS, our fleet managers and dispatchers had virtually no real-time information on the whereabouts or activity of our fleet vehicles. We relied on very basic communication using two-way radios and hand-written reports. This was never able to provide the type and depth of information we needed for real performance monitoring, improvement, and accountability, which is expected of all city departments.”
According to Carbone, “before implementing a vehicle tracking system, simply keeping track of mobile resources from a dispatcher’s perspective – vehicle and driver scheduling, routing, call response, location in the case of emergencies – was a very difficult daily task. Truly measuring fleet and mobile employees’ productivity was practically impossible.”
Cities like Chicago are also using GPS fleet management systems to enhance their efforts to go green. Fleet managers are using real-time vehicle location data to optimize routes and reduce excessive idling in an effort to reduce gas consumption, CO2 pollution and other hazardous greenhouse gas emissions. According to Ms. Carbone, telematics plays a big part in many of Chicago’s environmental initiatives in becoming a true green fleet. “Fleet GPS management systems help with everything from the number and type of vehicles we’re using for a particular task, how they’re being used, and the amount of CO2 emissions they’re producing. Everyone is looking to big cities like Chicago to lead the way in this, and remote fleet management has gone from being a valuable tool to an absolute necessity.”
One of the best things about real time fleet tracking is that it enables fleet managers to work hand in hand with their drivers and other mobile employees, even when they are thousands of miles apart. Every day there so many unforeseen circumstances arise, resulting in the need for last minute changes. So having a real time two-way communications system between fleet manager and commercial vehicle drivers is critical to a running an efficient fleet. Taking into account things like traffic jams, accidents, unpredictable weather conditions, delivery instructions, last minute pick-ups, and employee issues is an important part for a successful person managing fleet vehicles and drivers. Commercial vehicle tracking facilitates instant and accurate responses to ensure that the best solution can be deployed with the least amount of time or costs.
An average day someone overseeing a mobile workforce can involve matching busy schedules with the nearest available resources or service personnel to a new or changed location. Without a fleet management system, a telephone can be used to stay abreast of the constant changes, and to communicate with mobile employees. But a vehicle tracking device is by far superior to using a telephone to communicate – even if you have a smartphone with SMS text messaging, email and GPS navigation. The bottom line is a telephone no matter how smart it is, just doesn’t compare to a vehicle tracking solution.
Garmin’s fleet management interface provides the best way for fleet managers to improve response times, optimize fleet resources, and ultimately… Read more »
Fleet management and trucking company owners should consider investing in eco-friendly driver training for their fleet truck drivers. Running a green fleet will decrease your fuel costs, vehicle emissions, reduce fleet vehicle wear and tear, and improve your company’s image. Eco-safe truck driver education courses teach drivers how to eliminate identify and eliminate poor driving habits that waste gas and produce harmful CO2 emissions.
Typically drivers who complete eco-friendly training usually see an improvement in MPG of between 10% and 25%. In addition , green driver training courses can dramatically improve fleet safety with the effect of reducing fleet accident rates and the associated costs. Intelligent route planning and speed control techniques learned in the course can generate substantial fuel economy savings for your entire fleet.