August 28, 2020
With so many variables associated with maintaining an efficient fleet, it’s critical to have tools and strategies in place to manage inevitable challenges as they arise. That’s even more true for delivery fleets of commercial trucks and commercial vans. With unpredictable schedules, complex routes, and difficult driving conditions, thoughtful planning and consistent maintenance are key.
Some of the most common challenges associated with maintaining a delivery fleet include fuel price fluctuations, unexpected repair and service costs, route optimization, avoiding fraud, and overcoming driver shortages and turnover. Here are some strategies for minimizing the financial impact of each.
No fleet manager has a crystal ball, so it’s impossible to predict when fuel price fluctuations will occur and how severe they’ll be. But you can always use some simple strategies to conserve fuel and save money. That way you’ll save, no matter the price at the pump.
Consider shrinking your service area, especially if it includes locations that are rarely served or expensive to cover. Shorter routes and shorter distances between service calls will help you run a more efficient operation. “We maintain a six-vehicle fleet of commercial vans, and have a very small service area,” says Erik Nelson, owner of Erik Nelson Plumbing in Minneapolis, MN. Nelson says having a small service area is a major factor in reducing stress on his fleet. For some service businesses like Erik’s, reducing the service area may also enable you to be more responsive to the rest of your customers.
How can you reduce your service area during times of extraordinary competitive pressure? Consider the recent COVID-19 pandemic, when many businesses actually expanded delivery options for customers. Think long and hard about your particular business. You may come up with creative options that actually meet your customers’ needs better, like offering curbside pickup at your place of business. With some well-targeted marketing programs, you may be able to pick up enough new businesses in close-by service areas that will be more profitable and easier to serve than the area you delete from coverage.
Another tactic: Consider using a fuel card to secure discounts and help control costs. Fuel card programs offer payment networks that include discounts and volume rebates, plus tools to help prevent unauthorized fuel purchases and simplify reimbursement and accounting. They also help automate expense- and record-keeping, which can help you save on taxes.
Other fuel conservation techniques include monitoring poor driving habits like speeding and excessive idling. Idling can account for as much as $3700 a year in fuel costs for a large truck. Maintaining adequate tire pressure and alignment and using the proper motor oil are other tried and true methods of keeping fuel costs low.
Unexpected repairs and maintenance costs are another drain on many small fleets, so having a plan in place to manage them is key. In small fleets, losing access to even one delivery truck or van can significantly impact operations. That’s where insisting on regular preventive maintenance can pay off. It’s almost always less expensive to keep a vehicle well-maintained and prevent issues or catch them early, than to neglect routine maintenance and get stuck later with a huge repair bill – an inconvenience made even worse when coupled with a breakdown on the job. A fleet management card can help you keep tabs on fleet maintenance by monitoring each vehicle’s service history and expenses.
“We know that, two to three times per year, one of our vehicles will break down and need repairs for one to three days,” Nelson says. “To plan for this, we keep an extra service vehicle that is ready for use on a moment’s notice,” he adds, noting that the extra vehicle pays for itself.
For delivery fleets, route optimization is absolutely critical to controlling costs and maintaining efficiency.
For the smallest businesses, this might be as simple as scheduling routes on specific days according to ZIP codes, or offering service specials for multiple customers in the same neighborhood who schedule service on the same day.
Larger companies with more sizeable fleets and geographic areas should consider more sophisticated measures. Just as in-car navigation systems like Waze and Google Maps have become ubiquitous for most passenger-car drivers, so too have route optimization software platforms and fleet telematics systems for delivery drivers and fleet managers. Consider it a valuable investment that will pay huge dividends in cost savings for your business and increased job satisfaction for your drivers.
Bringing on new drivers inevitably means opening yourself up to bad behavior. But fraud isn’t just committed on the driver side. Packages and other deliveries get stolen or tampered with all the time, and it’s impossible to address all potential instances of fraud. But fleet management platforms (sometimes using AI), fuel card programs, and other automation tools can help centralize and standardize employee expenses, significantly reducing your fraud exposure.
With a good fleet fuel card program, you’ll even get real-time monitoring and control over purchases, providing alerts to suspicious transactions and the ability to turn off card access right there on the spot.
Of all the challenges associated with maintaining or growing a fleet, many in the industry believe the biggest challenge facing the industry is the driver shortage. “In order to have success adding capacity, it is important for companies to treat drivers very well, in addition to paying them well,” says Jim Guthrie, director of recruiting for trucking company Prime, Inc.
Once you’ve attracted good drivers, it’s absolutely critical to keep them around. Turnover for a single driver can cost up to $15,000, says Tim Hindes, CEO and co-founder of Stay Metrics, a driver engagement platform designed to help fleet managers retain their best drivers. “The biggest problem in trucking is missed opportunity cost. Most carriers could handle 10 percent more business if they just had the drivers, but the shortage stunts them.”
Stay Metrics has conducted research showing that engaged drivers are about two-thirds more likely to stay with carriers than those who aren’t. Further, newly hired drivers are more likely to turn over, so it’s critical to understand their needs, then engage them early and often, says Hindes. “Smaller companies have a significant advantage to be able to leverage their size and intimacy and create a family environment.”
Smart fleet managers know that engaged, efficient delivery men and delivery women are worth their weight in gold. That’s why they take special pains to make sure drivers are happy, while still paying attention to the other critical aspects of fleet maintenance.
Knowledge is power, and there’s no substitute for have a good handle on what you’re spending – by driver and by vehicle.
Bad luck can happen to anyone. When managing a delivery fleet, bad luck can be costly. And as fleets get bigger, so do the costs associated with certain — often very avoidable — expenses. Fleet telematics can help you monitor everything from poor driving habits to poor route planning so that you can be aware of the costs and take corrective action.
Again, a good fleet fuel card program can be your best auditor. You can assign fuel cards by driver or by vehicle. With robust reporting, you can see where the money is going. Many programs track not only fuel costs, but the cost of maintenance and repairs. Not only will you be prepared to take valuable deductions at tax time; you’ll get a sense of when a vehicle – or a driver – is costing your business too much and should be replaced.
Keep these common challenges in mind as you’re maintaining your fleet. Because if you don’t expect the unexpected, then you can expect the hits to your bottom line to pile up.
Does your current fuel card give you the data and reporting you need to manage your fleet effectively? If not, talk to a fleet specialist and let us help you find the right FleetCardsUSA program for your needs.
1”Long-Haul Truck Idling Burns Up Profits,” U.S. Dept of Energy, August 2015. https://afdc.energy.gov/files/u/publication/hdv_idling_2015.pdf