You need a fleet to conduct business, but you can’t hide from the fact that they’re expensive investments. Like most business expenses, the cost of running a fleet will eat into your cash flow and make it harder to operate on a monthly basis. You need money to cover other aspects of your company, yet your vehicles draining cash like an unidentified oil leak!
It becomes a case of learning how to reduce your business costs in this department without having an adverse effect on fleet productivity. Knowing the top operating costs to be wary of will help you do this – and here they are:
Acquiring Your Vehicles
The first place to start is with the cost of acquiring your fleet. Your options here are to buy or lease the vehicles. It’s something many business owners debate as they both have pros and cons. The benefit of buying your fleet is that it’s all dealt with in one go, so there are no ongoing monthly payments to worry about.
The downside is that this costs an absurd amount of money. Leasing is normally the best method as you can set a monthly cost depending on your initial downpayment. This lets you fit the monthly costs into your budget, and you can plan around them to prevent cashflow issues.
Leasing also helps you save money when the fleet needs an upgrade. You can get new vehicles in a few years without seeing huge changes in the monthly prices. If you bought your fleet, you’d have to sell all the vehicles (for a much lower price, mind you) and purchase new ones. It’s far more costly, so leasing should help you manage the costs of acquiring your vehicles.
Paying For Fuel
Every business owner knows the perils of fuel consumption for their fleet. You will drive tens of thousands of miles every year in these vehicles. Depending on how many you own, the total amount for the combined fleet could be in excess of 100,000 miles! After running a quick calculation using The Zebra’s fuel calculator tool, you could spend nearly $10,000 of fuel per year if you’re driving 100,000 miles collectively.
And keep in mind that’s with a vehicle getting 35mpg – which a lot of fleet vehicles won’t!
How can you keep the cost of fuel as low as possible? Consider purchasing more efficient and economical vehicles for your fleet. Hybrid vehicles are excellent for this as they can get upwards of 50mpg on the highway, possibly more. It’s also worth measuring the cost of EVs against gas vehicles and seeing if this exhibits cost savings. However, for context, if you managed to get vehicles that can sustain 50mpg using a hybrid system, those 100,000 miles will only cost around $6,800 a year – so that shows the difference an economical engine can make.
Encouraging drivers to drive economically will also help, though this is hard to enforce. We think choosing better vehicles is the best option, as well as planning fuelling trips in “cheaper” locations whenever possible.
Maintenance & Repair Costs
Your fleet requires annual maintenance, which should always be addressed. Ignoring it won’t save money – it’ll merely result in more issues developing, which translates to a higher repair bill for your fleet. Maintenance helps you keep the repair costs at the lowest possible level!
Not a lot can be done to reduce maintenance costs. As mentioned, it’s something you must do, though there are ways to limit its impact on your company. For instance, ensure your fleet goes in for staggered maintenance schedules. This means one vehicle goes in for servicing, and then another, and so on. It will stop your entire fleet from being inoperational while every vehicle is being serviced. You’ll deal with one loss at a time, which ensures your business can carry on operating, and you won’t lose any money.
The main focus here is to prevent high repair costs for your fleet. Regular maintenance does this, but you should also encourage drivers to drive safer and less aggressively. Think about speed limiters in the vehicles to force more relaxed driving. It’ll save the engine, which is often the source of many common repairs. Additionally, automatic vehicles are always a better option as there’s less chance of gearbox issues.
Investing In Fleet Management Software
Managing a fleet requires lots of technical software to keep track of everything. It’s a key investment as the software works together to produce detailed fleet reports explaining all you need to know about your vehicles. You receive data on how the vehicles are being used, which drivers are the most economical, the best routes to take, and so much more.
Fleet management software is one of the few expenses you shouldn’t look to reduce. Investing in good software helps your fleet run more efficiently. It will help you tackle problems like fuel costs and maintenance by finding economical route plans and notifying you when maintenance is due.
Dealing With Tolls, Parking, And Similar Expenses
The final thing to talk about is all the small expenses you run into every day. Tolls, parking, and other similar costs all fall under this category. They seem tiny at first, but they always add up and can be very irritating. Apparently, tolls generate $17.4 billion in the US every year, and commercial trucks account for 30% of this. Your toll bill won’t be anywhere near this big, but it can still cost a decent chunk of cash each year.
The problem isn’t just the tolls; it’s paying fines or fees for accidentally missing tolls or parking in the wrong places. Every business with a fleet is encouraged to get a pass for their drivers. Many passes exist, and they let you drive through tolls without paying each time. A yearly fee is charged, but it’s far less than paying for the individual tolls.
Get ahold of your fleet operating costs to steer your business towards a better place. Don’t let the expense bog you down; there are ways to reduce them, and it can sometimes be good to invest in higher-quality things to gain long-term savings.