Reining in the Top Three Fleet Management Costs with Technology

Reining in the Top Three Fleet Management Costs with Technology


There’s no question that developing and controlling a fleet’s budget is a key responsibility of fleet managers. A fleet manager’s value is often measured by how well costs can be controlled or cut, which is no easy task. Costs can get out of hand and bust even the most carefully planned budget.

The good news? The challenges associated with ballooning budgets — and the headaches that accompany them — can be alleviated with fleet management technology. This technology can help control and cut costs while providing fleet managers the flexibility to allocate budget towards growing their fleet and bottom line.

To that end, let’s take a look at how fleet management technology can help fleet managers rein in the top three fleet management costs.

1. Insurance Claims Costs

Insurance claims may not be the biggest line item expense for smaller fleets, but for larger fleets, they can be a huge expense. Unexpected legal issues and associated costs can quickly add up and knock a budget completely off track. These costs include:

  • Auto Liability — Claims for third-party bodily injury or property damage due to a vehicle accident.
  • Vehicle Repairs — Claims for physical damage of a company vehicle that was involved in an accident.
  • Workers’ Compensation — Claims for injury to an employee as the result of an accident.

Creating a Budget Cushion

Because of its video capabilities, fleet managers can use the information captured from fleet management technology to control costs associated with an accident. This feature allows fleet managers to immediately address claims, minimize legal fees, and possibly avoid false claims.

Video can also be used as a tool to coach drivers on risky driving behaviors, such as distracted driving, speeding, and not wearing a seatbelt. With improved driving skills, collisions and their severity can be reduced, which lowers associated costs and creates a boost for budgets and the bottom line.


2. Fuel Costs

Fuel costs must be monitored closely. For one thing, they’re a huge expense, accounting for approximately 30% of a fleet’s total operating budget. Plus, they’re difficult to predict because prices are always fluctuating. When a fuel budget gets busted, fleet managers are on the defensive, scrambling quickly to find solutions to manage and minimize fuel use.

Creating a Budget Cushion

Fleet management technology can monitor fuel use and pinpoint excessive budget-busting activities. Fleet managers can then use that information to proactively address problem areas.

For example, data from the engine control module (ECM) provides fleet managers valuable insight on:

  • Excessive Idling: Idling can waste a quarter to a half-gallon of fuel per hour. Fleet technology can determine if a vehicle has been idling for too long, giving fleet managers immediate control over the problem and limiting the amount of fuel wasted.
  • Speeding: Drivers can be monitored with speed management technology to determine if they’re exceeding posted speed limits or limits set by company policy. According to the US Department of Energy (DOE), this can mean a fuel economy benefit between 7-14%.
  • Poor Dispatching: Faster and shorter routes mean lower fuel costs. With real-time GPS tracking capabilities, dispatchers can optimize routes and improve fuel efficiency considerably.
  • Driver Behavior: Insight into aggressive driving behavior, such as harsh braking and acceleration, can mean a fuel economy benefit between 10-40% according to the DOE.

3. Maintenance Costs

Preventative and routine maintenance costs are on the rise as the result of numerous factors, such as:

  • Advances in vehicle technology
  • Shortages in skilled labor
  • Engines that require high-capacity and synthetic oils
  • Increases in shop overhead costs

Maintenance costs can also be impacted by uncontrollable factors like weather events and warranty coverage, which can make budgeting and cost control challenging for fleet managers.

Creating a Budget Cushion

With ECM data provided by fleet management technology, fleet managers gain valuable insight into areas that can help them lower maintenance costs, including:

  • Miles Driven: Knowing miles driven, fleet managers can accurately flag when preventative maintenance is needed.
  • Risky Driving Behaviors: Harsh braking, fast acceleration, and other risky behaviors such as hitting curbs can increase wear and tear on brakes and tires.

Data collected helps fleet managers keep vehicles in top condition, prolonging vehicle life and reducing labor, repair, and replacement costs. Plus, it allows issues to be quickly handled before they become budget-busting problems.

Want to learn more about managing your budgets? Download our free guide, Fuel Hedging 101: How to Control Your Fuel Costs.