The cost of fuel

Compared to its big run up, crash and rise in 2008, the price of diesel has been relatively stable for the past three years. Even so, wild fluctuations between a low of $3.65 and a high of $4.16 per gallon in 2011-2014 have made it a difficult expense to budget.

There is little one can do to control the cost of fuel, although many fleets are taking a cue from the airlines and taking advantage of fuel hedging programs to achieve more predictable fuel costs. Rather, efficiency measures are the first line of defense that can — and should — be implemented. As a side benefit, fuel-saving strategies can also help satisfy company and customer sustainability requirements.

When replacing or adding vehicles to your fleet, consider investing in some of the energy-efficient fleet vehicle technology now available. Examples include not just hybrid and other alternative drivetrains, but advances in design such as improved tractor aerodynamics, lightweight carbon fiber trailer bodies and LED lighting.

Resizing fleets to adjust to actual load capacities is another strategy fleet managers can use to cut expenses. If you are consistently running light loads, you may want to downsize your fleet vehicles or add a few smaller vehicles to your fleet to use when transporting smaller shipments.

Of course, sometimes the problem is not over-capacity but poor logistics. Analyzing your routes to ensure optimal use of company assets can help reduce empty miles.

Another often-overlooked way to increase fuel efficiency is driver behavior management. Tracking your drivers in real time can reveal fuel-wasting practices such as excessive speeding and engine idling during rest stops. Proper education and feedback can help your drivers reduce fuel use substantially.

Finally yet importantly, proper vehicle maintenance helps maintain optimal fuel efficiency. Servicing your vehicles regularly and making sure tires are properly inflated will not only make a significant difference in fuel costs, it can also reduce vehicle downtime, cut down on accidents and increase vehicle life span.

Controlling expenses

Fuel is the big one, but today’s fleet manager is under heavy pressure to keep costs down across the board — not an easy task with the rising price of acquisition of new and used vehicles, labor shortages and increasing pressure for spend reductions at all levels.

While smart fleet managers are constantly on the lookout for budget-shaving opportunities, the unfortunate fact is that there are few low-hanging fruits when it comes to fleet spend reduction. However, getting back to the basics of good management can go a long way toward keeping costs under control.

One very important principle that busy managers sometimes neglect to follow is simply to track profit and loss consistently. It’s a good idea to run a P&L every month and examine where the money is going, which can do a lot to eliminate unnecessary expenses.

You can also analyze your current systems for efficiency and switch to alternate routines or services that may be more cost effective. For example, one fleet manager switched to using a mobile oil-change service that services vehicles on site. The reduced vehicle downtime more than made up for the added expense.

Outsourcing non-core tasks such as payroll and recruiting can also help. While it can be difficult to relinquish control, companies that specialize in them perform many of these tasks far more efficiently. This allows the fleet manager to spend more time doing work that actually contributes to the bottom line.

On the other hand, there are times when it is more cost effective to bring certain tasks in house. For example, hiring full-time marketing staff may reduce that expense considerably.

Of course, it is always imperative to make sure your fleet is being used as efficiently as possible. Relentless tracking and planning will help to reduce costly wait times, eliminate excess moving and handling, and ensure the most efficient use of all company assets. 

Data overload

Tracking, however, has its own challenges. Managing a large fleet can easily result in information overload. If you can’t find the information you need quickly, and/or properly utilize the data you collect, you may find your data pool quickly turning into an unproductive quagmire.

If this is a problem for you, you may find it helpful to re-evaluate your current tracking software. Is it bloated with features you don’t need and don’t use? Is it confusing to use? How fast can you retrieve the information and reports you need to stay productive? Is their support team helpful, and available when you need it? If you find yourself questioning any aspect of your current system, it may be time to look for a better alternative.

Increased regulatory requirements

From the Compliance Safety Accountability (CSA) program to the recently approved requirement for electronic logging devices, the Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA) continues to come out with new safety regulations and requirements.

While the safety benefits are indisputable, compliance with these requirements puts yet another cost burden on already stretched fleet budgets. The threat of audits and penalties for noncompliance adds an additional layer of stress to the mix.

While many of the new regulations will not go into effect until 2016, the time to start preparing is now. It is much easier to budget a smaller amount each quarter for necessary new equipment than to scramble for funds at the last minute. Getting an early start will also help in planning driver training sessions and ensuring that all staff is properly prepared. This is also a good time to begin working out compliance implementation systems.

Driver hiring, training and retention

One result of increased regulation has been a worsening of the already existing shortage of fleet drivers in the workforce. Last year’s Hours of Service (HOS) changes by the FMCSA mean that many companies have to hire more drivers to do the same amount of work. Add to this situation the fact that many more drivers are retiring than are entering the industry, and it’s clear why many fleet managers are scrambling for drivers.

Unfortunately, this situation appears to be an ongoing problem that will only worsen with time. (The American Trucking Association estimates that the driver shortage will reach 240,000 by 2022.) Adding to the problem from a fleet manager’s point of view are high driver turnover rates — often topping 90 percent for large fleets.

Any strategy that increases driver retention is likely to pay for itself in reduced hiring and training costs. While increasing driver pay is an obvious tactic, wages are not the only selling point for drivers.

Good communication is essential for keeping your workforce happy. Make a point of listening to your drivers and taking their suggestions and complaints seriously. If they feel they are a valued part of your team they are more likely to stay around.

Fair treatment is also a huge factor in driver retention. Be sure to handle any paycheck problems promptly and politely. Also, keep tabs on your HR staff to ensure that promises made during recruitment are realistic and accurate. Little things done to improve on-the-road comfort — such as offering lumbar support devices — can also increase a feeling of loyalty in your drivers.

While most fleet managers prefer experienced drivers, many are starting to consider hiring fresh out of driver’s school. If this describes you, consider offering tuition reimbursement as part of your incentive package.

You can combine your driver retention efforts with your cost- and fuel-saving initiatives by involving and incentivizing your drivers. Share the results of your productivity tracking with your drivers, and reward them when they help you meet your goals. Real-time tracking is also invaluable in keeping your drivers on the road and working productively and safely, which is as important to them as it is to you.

Tracking vehicle availability and optimizing productivity

Finally, while it may seem obvious, the importance of efficient tracking and dispatch cannot be overestimated. Because today’s fleet manager is often asked to wear many hats, it’s easy to let efficiency fall by the wayside while taking care of day-to-day emergencies.

Knowing where your vehicles are at all times, planning effective routes and optimizing time spent at each location are all basic strategies. Make sure you have systems in place to help you maximize efficiency in each of these areas. Run monthly reports to ensure continued productivity.

One of the most important things you can do to ensure optimum efficiency is to make sure your dispatchers understand your tracking software thoroughly and are comfortable using it. Keep your lines of communication open, and let new trainees know that they won’t be penalized for asking questions. Of course, having equipment and software that is easy to use is a big help in this department. When tracking in real time, it is especially important that your system allows for instant visual identification of each vehicle on the map, and that the user can zoom in and out with ease to locate individual vehicles.

Source: Track Your Truck