5 fleet management best practices to mitigate the effects of supply chain disruptions

Global supply chains were disrupted during the pandemic and continue to face volatility with factors coming into play such as political tensions, fluctuating fuel prices, and inflation. The only thing predictable about the current state of the supply chain is its unpredictability. Fleet managers — especially those in charge of over-the-road (OTR) trucking fleets — understand the flexibility required to successfully operate in 2024.

The supply chain challenges fleets are facing have been compounded.

The onset of the COVID-19 pandemic created driver shortages. The early stages of the pandemic caused conservative buying habits, and once the world got back to spending, the supply chain just couldn’t catch up. Add in high fuel prices, overseas conflict, and a constantly changing inventory for haulers who operate warehouses, and supply chain volatility continues to impact fleets of all sizes.

Yet fleets have willed their way around these issues, taking a challenging situation and making the most out of it. They’ve excelled in many ways.

Ports on both U.S. coasts continue to see cargo records. The supply chain crisis that began in 2020 with the COVID-19 pandemic, started to slow down in 2022 as businesses began to recover. In 2023, while supply chains had somewhat recovered, rising political conflict overseas continued to hinder supply chains. Overcoming supply chain issues is a tall task for fleet managers, but the resiliency of businesses around the world inspired the following best practices to combat the supply chain challenges.

Five best practices for fleet companies to mitigate supply chain issues

1. Use dynamic pricing to meet market demand and combat freight shortages

The Department of Transportation reported a positive shift since the supply chain disruptions during the COVID-19 pandemic. Following the crisis, in 2021 and 2022, freight volume skyrocketed to more than 53 million units of cargo sitting in the top twelve U.S. seaports, leading to bottleneck and high demand for ground transportation. Trucks, semiconductor chips, and other equipment were hard to come by for fleets of all sizes. The shortage of capacity reverberated across the industry. Since then, cargo volume has normalized to a more manageable level. But, the crisis left fleet managers with an important question: How do we avoid being impacted by future freight disruptions?

One way for fleets to counteract capacity shortages is by adjusting the prices they charge based on current demand and market conditions. Businesses, both shippers and sellers, need goods delivered, and consumer demand is high. With fewer trucks available, charging a higher fee per mile to move goods is a sound and necessary strategy. Fleets should keep prices fluid. It’s key to incorporate the rising cost of equipment, driver pay, maintenance, variable fuel costs, and other expenses into your overall budget.

2. Weigh the pros and cons of buying new vs. refurbished fleet equipment

“In need of an upgrade? New equipment isn’t the only option,” said Susan Kirkpatrick, Executive Vice President and Chief Financial Officer of Birmingham, Alabama-based Buddy Moore Trucking.

With a fleet of nearly 300 trucks, flatbeds, and dry vans, Buddy Moore Trucking felt the impact of the 2021-2022 supply chain crisis positively and negatively.

The good: Buddy Moore Trucking played a key role in delivering consumer goods at the pandemic’s outset, transporting toilet tissue from the warehouse to the end-user. At one point, demand was so high that the product went straight to its trucks from the factory without sitting in a warehouse.

The opportunity: While much of the world stopped, fleet equipment needs did not. New reefer trailers, which are refrigerated vans, couldn’t come fast enough, so Buddy Moore Trucking instead decided to refurbish its own.

“It’s a way to save some money but also upgrade our fleet,” Kirkpatrick said. “We’ve always been a really big advocate of running new equipment, but because of supply chain constraints we’ve had to rethink that a little bit.”

Kirkpatrick and her team identified a handful of vendors to refurbish their 50 reefer trailers, providing specifications to ensure uniformity. Refurbishing costs between $10,000 and $15,000 per trailer, a significant difference from the nearly six-figure price tag for buying new. It’s also a matter of weeks, not months to upgrade.

“This will be a capital expense that we can amortize over the life of the trailer, so we think it’s a smart move on our part,” Kirkpatrick said. “And we’ll get usage of the equipment a lot quicker than if we were waiting for something new.”

3. Repurpose unused fleet equipment to transform idle fleets into lucrative revenue streams

Some trucks sit idle when there is a slowdown due to blips in the supply chain, curbing potential money-making opportunities for trucking companies. In this situation, identifying creative ways to utilize an unused vehicle provides a supplemental revenue source. For example, fleets can lease unused equipment to other companies, alleviating the maintenance and insurance costs associated with that equipment. In this case, the lessor gets immediate access to equipment and fleets receive some utilization revenue.

Here are more ways to repurpose idle fleets for extra revenue:

• Cargo services: Convert the vehicle into a specialized cargo carrier for niche markets. For instance, it could be repurposed to transport fragile goods, perishable items, or oversized equipment, catering to specific industry needs such as fine art logistics, medical supply delivery, or furniture transportation.
• Mobile advertising: Transform the vehicle into a mobile advertising platform by wrapping it with branding or advertisements. This could involve partnering with local businesses or advertising agencies to showcase their products or services while the vehicle is on the move, generating advertising revenue based on impressions or contracted agreements.
• Logistics partnership: Collaborate with logistics companies or e-commerce platforms to provide last-mile delivery services. Utilize the unused vehicle to fulfill delivery orders during peak demand periods or in areas with limited transportation options, earning revenue through delivery fees or contractual agreements.
• Vehicle sharing: Implement a vehicle sharing program where individuals or businesses can rent the vehicle for short-term use. This could involve creating an online platform or mobile app to make bookings and payments, similar to car-sharing services, enabling flexible and cost-effective transportation solutions while generating rental income as the fleet owner.

4. Take advantage of fleet card spending controls and secure transactions to optimize efficiency without compromising your bottom line

Fuel prices fluctuate, so using fleet card spending controls on a gallon-by-gallon basis serves OTR companies well, especially during a supply chain-induced financial crunch. Fleet card spending controls are set by a fleet manager to create limits on both product types and dollar amount per transaction. Although limiting total spending dollars could translate into partially filled tanks, limits by gallon allow fleet managers to make sure drivers get the most out of each fill-up.

“In our business, perception is reality,” Kirkpatrick said. “If a driver’s fuel card isn’t working like they think it should, the first thing they’ll think is the fleet company I’m driving for doesn’t have money to pay for my fuel.”

Using gallon limits, rather than a dollar amount, avoids this issue.

Verifying the capacity of a truck’s tank and setting a purchase limit for that amount of gallons benefits both the fleet manager and the drivers. Limiting the number of gallons discourages overspending. With WEX’s SecureFuel technology, fleet managers can reduce fraud risk by verifying a truck’s location with the corresponding fuel purchase, and that the amount purchased does not exceed the tank capacity.

Fleet cards can be vulnerable to skimming attacks and fraud. Through enhanced security features, including two-factor authentication, fleet managers can mitigate the rising threat of skimming incidents on the road and the potential financial losses and operational disruptions they can cause. Proactive monitoring and employee training in security protocols can also help protect against evolving cyber threats.

Payments made via single-use virtual credit cards can help limit fraud risk. After payment is made, the single-use number cannot be reused, resulting in a safer transaction. WEX’s SecureFuel technology helps protect OTR fleets by catching unauthorized purchases in real-time, further cracking down on any card misuse.

5. ‘Go with the flow’ when managing your fleet during these uncertain times

Kirkpatrick and the rest of Buddy Moore Trucking’s executives learned early in the pandemic the importance of flexibility, whether it is refurbishing the existing fleet rather than buying new equipment, or dealing with broken-down trucks without immediate access to help.

“We learned you just have to go with the flow and not panic,” Kirkpatrick said.

The supply chain challenges persist, but that doesn’t mean your fleet can’t thrive.

Learn more on how to better manage your over-the-road fleet:

• Fuel card FAQs
• Fraud prevention
• Safety tips
• Tax prep

To learn more about WEX, a growing and global organization, please visit wexinc.com.

All fleet cards are not the same, and different types of fuel cards suit the needs of different kinds and sizes of businesses. View WEX’s fleet card comparison chart to see which fleet fuel card is right for you.

Apply for a fleet card today!

Sources:
Automotive Fleet
Daily Breeze
Freight Waves
New York Times
NPR
CNBC