With the trucking industry experiencing rising prices of everything from windshield wipers, to fuel, to labor, many fleet business owners and managers are having a difficult time keeping their operations running smoothly and effectively. In these uncertain times, understanding the complexities, and considering creative ways to manage your fleet can help improve your bottom line and keep your fleet moving.
According to the American Trucking Associations’ Technology & Maintenance Council and Decisiv Inc Benchmarking Report, “Maintenance costs rose 3.7% in the third quarter of 2022, and are up more than 10 percent higher from the previous year.” Fleet companies have sizable financial challenges to overcome.
The labor shortage and its impact on fleet management
The 3.7% rise in maintenance costs during the last quarter is primarily because of increased labor rates. In just a year, overall labor costs jumped 14.2% and the cost for parts increased by 8.8%. Fleet businesses are faced with paying more to recruit and retain skilled and sought-after technicians to keep their fleets operating.
The labor shortage is a problem across the US and beyond. Not only are wages increasing with a smaller pool of technicians and assemblers, but manufacturers have had to implement socially distanced workstations. Without the ability of 8-10 employees working on an assembly together, production has slowed and wait times for service and repairs have increased significantly.
Global supply chain driving up fleet operating costs
On top of this, bottlenecks in the global supply chain are increasing vehicle parts prices. Some of the largest parts increases have been for engines, exhaust systems, and brakes. As a result, every North American fleet company is in the same situation, trying to keep their vehicles operating. Older trucks, for example, are on the road for longer periods, experiencing the potential for more breakdowns.
With many fleet owners forced to keep fleets in service for longer periods of time, the repair costs on vehicles with higher mileage are increasing. According to a report by the American Transportation Research Institute (ATRI), An Analysis of the Operational Costs of Trucking: 2022 Update, the marginal costs of trucking increased by 12.7% or $1.85 per mile in 2021. Now at a 15-year high, the operational cost increases are driven by fuel costs, parts, and maintenance.
High demand for commercial motor vehicles (CMVs) impacting fleet costs
There are seven companies that make or assemble Class 8 commercial motor vehicles (CMVs): Peterbilt, Mack, Western Star, Kenworth, Volvo, Freightliner, Western Star and International Trucks. All these companies have the same global suppliers, which means that demand is higher than supply and the price for trucks, new or used, has increased significantly.
Nine creative ways to weather the storm of increasing fleet management costs
Without much improvement forecasted in the near term, the fleet industry is faced with adapting to a new economy by operating more efficiently and with greater technological savvy to save time and money. Let’s look at the ways your fleet businesses can think creatively to weather the storm.
#1: Fleet leasing
Shifting from owning to leasing vehicles is one way to minimize repair and maintenance costs. Fleet businesses will have the benefit of newer equipment, yielding better fuel economy. Best of all, leasing does not require a large capital investment and it comes with tax benefits when you deduct the cost of a lease.
#2: Prioritizing fleet vehicle repairs
With labor, parts, and maintenance costs at an all-time high, prioritizing the type of repairs you perform each day can help keep your fleet moving. Start with safety or necessary repairs, followed by service or standard maintenance repairs. Of course, the repairs for comfort or convenience are the least important.
#3: Creatively managing parts inventory to stay on top of fleet maintenance
Some fleet businesses are stocking inventory so they will not run out of parts. While it is impossible to stock up on every part, having some foresight can help get disabled vehicles back on the road faster. Other strategies like searching for alternative or aftermarket parts, pre-ordering parts that are expected, repairing instead of replacing parts, and using your network of repair shops and partners will help minimize downtime.
#4: Partnering with roadside service providers
To keep fleets moving, it’s essential to have good partners to provide roadside assistance. When you partner with one or more maintenance companies, you can strategically make decisions about how to provide the service where the driver and vehicle are located.
#5: Investing in fleet telematics
The most sophisticated telematics tools can substantially improve a fleet’s fuel consumption and overall safety. These tools provide ongoing monitoring of your driver’s fuel usage and driving habits that will allow you to make adjustments and save costs. When you help your drivers adopt safer driving strategies, you will reduce maintenance repairs and overall service stops.
The WEX GPS tracking solution combines technology, data analytics, and customer service to benefit your drivers and your bottom line. Effective data management tools will help you track problems by following a data trail, looking at things like fuel usage and best routes to save money.
Examples of ways to improve fuel efficiency with telematics include tracking aggressive driving behavior, tracking idling time, providing optimal driving routes, keeping on top of tire pressure, safety, and maintenance. By watching your drivers’ performance, you can optimize your fleet while keeping your drivers safe. When you reduce the number of collisions, you’re also saving on insurance costs.
#6: Moving to a mixed fleet that includes hybrid and electric vehicles
With rising fuel costs and more electric charging stations available every day, there are ways to seamlessly incorporate electric vehicles (EVs) into your SMB fleet. Partnerships like WEX and ChargePoint, the world’s largest electric vehicle charging network, are making the ease of integration of EVs into a mixed fleet a reality.
Making the transition from ICE vehicles to clean electric vehicles is happening more rapidly as the federal government invests more heavily in the infrastructure of charging stations across the US. There is more and more focus on moving to a clean energy economy, and transportation is one of the key sectors making the shift.
Transitioning part of all your fleet vehicles to electric can reduce your operating costs because EVs are less expensive to own and operate. The fuel cost of electricity, for example, is much less expensive than diesel fuel and electric vehicles are more energy efficient. EVs have fewer mechanical problems, and there are no oil changes or other engine fluids necessary to replace.
#7: Use your fleet card tools to help you keep costs down
The most technically advanced fuel cards give you powerful tools to reduce your spending, regardless of your fleet size. For example, WEX fleet management solutions, provide automatic fuel expense tracking, enhanced security, and detailed reporting. If you are considering adding EVs to your fleet, WEX offers seamless integration for hybrid fleets.
With powerful mobile applications, you can access your account and your fleet’s activity 24 hours a day, seven days a week. Advanced software puts overall fleet operations at your fingertips, including vehicle location and driver purchases.
#8: Engage your fleet employees with operational change
Instead of dictating changes from upper management, involve employees in coming up with the best solutions to cultivate a collaborative work environment. When your employees are engaged in the decision-making process, they are more likely to accept and embrace the changes that are best for your business. They are also more likely to remain loyal to you and you’ll be able to reduce attrition for your fleet business.
Educate your employees about your vision for the future of your fleet. Why is your business different? What sets you apart from the other fleet companies? Why should a driver or technician work for you over another fleet business? By instilling a sense of purpose in your company’s mission and vision, you will attract and keep the best employees.
#9 Always be on the lookout for ways to improve
Fleet businesses that can embrace new technology and creative solutions will be best positioned to navigate the financial challenges of today and in the years to come. By using better channels of communication and collaborating with your network and your workforce, you will more readily solve problems and save money along the way.
Perhaps most of all, always be looking for ways to improve to weather the storm and keep your fleet moving.
Learn more about how WEX payment solutions can be tailored to your business, so you can operate easier and faster while creating lasting growth and success.
All fleet cards are not the same, and different types of fuel cards suit the needs of different kinds and sizes of businesses. WEX offers cards for any fleet or business both inside and outside the trucking industry. View WEX’s fleet card comparison chart to see which fleet fuel card is right for you.