The biggest challenge facing fleet companies throughout the country is finding a way to reduce operating costs, according to a recent survey on fleet-wide trends conducted by Automotive Fleet.
In virtually every organization, there is growing pressure for spend decreases taking place at all levels, and fleet operations is simply another department requested to cut costs.
And because of this, reducing fleet costs has become an unyielding battle for all fleet managers. For well-optimized fleets, it is becoming increasingly problematic to find any additional cost savings.
The survey revealed that a large number of fleet managers are reporting they are given a precise savings goal factored into their annual fleet costs and it is up to them to create a way to achieve the new benchmark. The outcome has produced fleets that are implementing a multipronged approach to cost containment. Industry-wide, there is mounting pressure to find resourceful ways to cut costs without impacting production or morale.
Outside of cost-cutting measures, there were other noteworthy topics identified in the survey results.
Maintenance costs have remained flat, the quality of vehicles from all OEMs is gradually advancing, and extended powertrain warranties have covered some expensive repairs at high mileage.
However, there have been some increases. One such continuing fleet maintenance concern has been the increased cost of replacement parts. In many instances, the parts price increase can be attributed to raw material cost increases.
Another maintenance expense on the rise is the cost of replacement tires. Again, the key factor to higher tire prices is the price of raw materials, in particular the higher cost of oil, which is a key ingredient in tire manufacturing. The industry is forecasting that passenger tire costs will remain stable, but the unpredictable raw material costs will continue to make it difficult in determining future costs.
Applying an efficiency strategy in a large company is very difficult undertaking, especially because a fleet extends to a large number employees throughout an organization.
Many fleets are looking at technological advances – such as telematics and GPS systems – to increase driver productivity. The primary use for GPS and telematics systems is to improve route and operative efficiency. Other fleets are using GPS to enhance fleet safety, modify poor driver behavior, improve customer service and delivery times, and reduce the miles being driven.
However, for some fleets, the previously mentioned cost constraints are causing a delay in implementation of these technological solutions.
Unpredictability of Fuel Prices
Fuel prices remained relatively stable during 2013, which was a surprise to many fleet managers.
Despite this, fleet managers are constantly examining ways to reduce overall fuel spend. Since it is the largest cost of fleet’s operating expenses, there is a heavy focus on strategies that will reduce fuel spend.
Fleet managers responding in the survey said the issue is the unpredictability of fuel costs and how long they will remain stable.
For businesses that rely on their fleets to move products to market, higher fuel prices not only impact fleet operations, but also business in general. And companies that depend on trucks to transport products, increased fuel prices become a concern because the price margins are already tight, forcing them to explore less costly methods to distribute merchandise.
Driver behavior has become one of the biggest challenges facing commercial fleet managers.
More specifically, the issue of driver compliance.
Some companies have put an added focus on driver risk assessment during the hiring process, including behavior, prior issues and adhering to a company’s compliance policy.
Companies have also begun implementing programs which train employees to drive in a more fuel efficient manner, such as driver scorecarding. This includes eliminating poor habits like fast starts, hard stops and engine idling. Encouraging drivers to stay within posted speed limits is also an effective way to increase fuel efficiency.