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Finding Solutions to Fleet Maintenance Cost Increases

Hand drawing a pie chart on clear board

Controlling Fleet Maintenance Costs

Fleet Maintenance Cost Increases

There are going to be costs associated with any business. A survey done by GE Capital Fleet Services recently, shows that maintenance costs for fleets in the United States have increased by 7 percent for 2012. This has many fleet managers wondering just how much of an increase these costs will incur for 2013.

“In terms of monetary value, GE Capital Fleet Services found that monthly average maintenance costs for these vehicles amounted to $52.66 per vehicle, against $49.20 in 2011. Two of the most frequent elements within maintenance costs – oil and tires – both increased. GE Capital Fleet Services expects a further slight increase this year”.

Do Younger Fleets Help?

Studies have shown that while the cost for monthly preventative maintenance increased in 2012, younger fleet age did help to offset some of the increased labor and parts cost. The average car maintenance cost raised about $3.46 from $49.20 to $52.66 for each vehicle each month. Factors that influenced these costs include increased preventative maintenance expenses. Costs for oil changes increased although the frequency in which oil was changed decreased which helped to lessen the total impact.

Tires Play a Big Part

Tire expenses also increased, by eight percent and the cost of replacing tires increased by 15 percent. These increases are attributed to higher costs for manufacturing tires as well as larger rims which naturally mean more expensive tires. Overall, the quality of fleet vehicles has risen as well and continues to improve which has resulted in parts that last longer which ultimately means less frequent maintenance in the long run.

“‘While we expect passenger car maintenance expenses to rise slightly in 2013, improvements in vehicle quality will present opportunities for fleet maintenance savings in years ahead,' said Eric Strom, maintenance and safety product manager for GE Capital Fleet Services. ‘As cost savings remain the largest area of focus for both fleet and executive management, we're committed to working with customers to identify and reduce costs across their vehicle fleets.'”

Fleet Maintenance Software Can Help

Fleet management can expect maintenance expenses to continue on the upswing, particularly for fleets that are not yet accepting vehicle replacement cycles. The number of miles driven will increase the chance of component failures that could cost thousands of dollars to repair. The individual costs for replacing things like tires, changing oil and other repairs will also likely increase over the next year. Many industry experts believe that the best way to keep these costs to a minimum is to implement a fleet management system. Software programs that aid with fleet management can be very beneficial in helping to keep costs down.

Another way to offset cost increases is to cycle older vehicles. Aging of fleet vehicles is a large factor in the increased cost of maintenance and vehicles with higher mileage risk even higher costs than average.

“Cycling older vehicles is a great way to mitigate increases in maintenance spends, but careful consideration must be made not only to maintenance, but all aspects of lifecycle costs. The market today is actually favorable to cycling in many cases, due to stronger resale markets as well as better technology that is increasing fuel economy.”

Preventative Maintenance Still Best Way To Save Money

Companies that are looking to keep costs to a minimum can find vast amounts of information on lowering costs. Those who do not have a software program for fleet maintenance are urged to find one. There are a number of programs on the market that will ensure that vehicles are maintenance on a regular basis. Preventative maintenance goes a long way in keeping overall costs down. As a general rule, preventing a mechanical problem is less costly and less time consuming than repairing one.

Driver Safety Is A Top Concern In Fleet Management

Fuel tanker red truck

Driver Safety especially important on Hazmat loads

A recent survey provided by GE Capital Fleet Services suggests that the major concern for fleet managers today involves the safety of drivers. More than 36 percent of all fleet managers cite driver safety as their main concern.

Just last year, only 23 percent of managers cited driver safety as their main concern. In last year's survey, the most important concern facing most fleet managers was cost efficiency.

“Cost savings is still among the leading fleet priorities. To help manage costs, fleet managers are using a number of different tactics. Forty-two percent cited vehicle purchasing decisions as the greatest opportunity for savings”.

While cost is still a major concern for many fleet managers, driver safety is still at the top of the list for most. Drivers of any vehicle are prone to be distracted while driving. Certain distractions like texting or using a mobile navigation application causes more than 80 percent of all crashes according to the NHSA or National Highway Safety Administration.

Field technicians are on the road for much of their workday so they have to understand that driving while distracted can cause a number of negative consequences for fleet management as well as their own safety.

“According to a 2009 NHTSA study (in conjunction with Virginia Tech Transportation), commercial service vehicles and trucks are more prone to the effects distracted driving; texting while operating a complicated maneuver in a service vehicle, for example, almost quadruples the chance of a crash or near-crash”.

Drivers should be offered instruction on the importance of safety while driving. Distractions such as cell phones and tablets should never be used while driving. Experts agree that not having a cell phone on when driving could help many to avoid crashes or near crashes. While mobile technology has certainly helped drivers to keep in touch with home offices, organize their day and communicate with customers, their use should be avoided when the driver is actually operating a vehicle.

Minimizing the paperwork that needs to be done in the vehicle can also help to keep drivers from being distracted. Software programs that help to minimize actual written paperwork can make the process faster. Paperwork should be managed before the driver begins driving or it should be saved for a later time, when the driver is not behind the wheel. Digital programs that allow drivers to instantly send back their paperwork can be very beneficial in these cases.

Preventable accidents are common. The definition of a preventable accident is one that could be avoided but is not because the vehicle driver has failed to act in a manner that would have prevented the crash. It can be difficult to determine whether or not a driver actually had reasonable actions for avoiding an accident.

“Preventable accident on the part of a motor carrier means an accident (1) that involved a commercial motor vehicle, and (2) that could have been averted but for an act, or failure to act, by the motor carrier, or the driver”.

A fleet safety management tool that will establish the safe driving standard for drivers and evaluate drivers could help to solve many preventable accident issues. Programs that are designed for management could help to monitor the effectiveness of programs implemented to enhance fleet safety. They could aid in the implementation of recognition programs for drivers who meet certain safety criteria and evaluate the performance of individuals and the fleet as a whole with regards to safety.

Fleet managers that are concerned about driver performance and safety should take the steps necessary to ensure that all fleet drivers are practicing safety habits and trying to avoid being distracted when behind the wheel.

Pros and Cons of Outsourcing Fleet Management

In a tough economy, both government and private fleet operations face a lot of pressure to cut their costs. One of the most popular solutions is to outsource any non-core business functions, including fleet maintenance. Many companies find outsourcing to be an attractive option because it brings about direct cost reductions as well as long-term cost savings. However, this decision should not be made lightly. Any time you turn a portion of a company over to a third party, there is risk and reason for concern.As you consider this solution for your particular fleet operation, weigh both the pros and cons of outsourcing fleet management.

Pro: The valuable expertise is an asset to the company.

When companies are under pressure to reduce their budgets, having an outsourcing partner who brings insight, experience, processes, and skills into the business can accelerate growth plans. It is important to keep in mind that this outsourcing relationship should be a partnership. A third party must work with a client to learn why they want to grow and what goals they have for their business in order to create a successful plan of action.

Pro: Outsourcing does not have to be limited to procurement handling

If you don't have a lot of experience with outsourcing or do not have any contacts in the fleet industry that use outsourcing, you may not have a clear understanding of the sorts of tasks that you can delegate to a third party. Many companies have their outsourcing partners handle any number of different jobs including daily rental vehicles, end-of-term vehicle checks, reallocation and storage of vehicles, and fines management.

Pro: Outsourcing leads to measurable, increased efficiencies and improved company focus

When you outsource fleet management and maintenance, you will see increased efficiency for any number of different aspects of the company. Rate of efficiency is dependent upon current maintenance management systems. However, it doesn't take most companies a long time to realize that when they're spending less time on their fleets, they have more energy to focus on core business tasks. Fleet operations see multiple benefits, including heightened fleet availability and reliability, higher cash flow, and increased productivity.

Pro: Outsourcing leads to heightened human resource productivity

  • Redirected resources. Companies get the opportunity to use financial and personnel resources for core business tasks as opposed to non-core activities.
  • Decreased head count. One of the most effective and quickest techniques for managing human resource requirements is outsourcing maintenance operations. Third parties can provide training, benefits and advancement opportunities for existing employees within a fleet operation.
  • More high quality services. When companies do not have the necessary resources in-house, they often turn to outsourcing, which opens up a whole new world of services for drivers.

Con: Employees don't have anyone to talk to within the company

Some companies have found that keeping an in-house fleet manager instead of outsourcing the position actually saves the company money. An in-house manager talks directly to the drivers whenever they have questions or concerns. When a well-qualified individual holds this position for many years, he or she builds solid relationships with the drivers as well as the local dealerships, insurers, and account managers. This level of personal contact is very difficult, if not impossible, to achieve with outsourcing.

Con: Companies can lose valuable insight when they fully outsource vehicle management or absorb it into another position, such as finance or HR

As businesses weigh the pros and cons of outsourcing fleet management, budget is often their first priority. While budget may drive the decision-making process, you cannot discount the notion of insight and expertise. For example, a fleet specialist has cross-business expertise and extensive experience that allows a business to increase its efficiency and to save a significant amount of money every year. Fleet specialists also have a strong understanding of a company as a whole and are frequently some of the first individuals to know about a business's new developments.

Con: Outsourcing can come with a loss of accountability.

The bottom line is that directors are always responsible for their drivers. Even when you use outsourcing for some of your fleet management tasks, you must maintain in-house procedures for monitoring performance, analyzing risk, and working with providers to ensure a safe, compliant operation. You cannot simply hand over all of the responsibility and hope for the best. Most companies find that best practice is to keep an in-house staff member for policy and oversight and to outsource interactive tasks including accident reporting, purchase handling, and taxes.

Implementing and maintaining a fleet management system that is just right for your particular fleet operation is a balancing act. Successful outsourcing is dependent on multiple factors, including organizational culture, in-house expertise, and cost imperatives. HR must maintain some level of responsibility no matter what solution a company chooses.

About the author:

Robert J. Hall is president of Track Your Truck, a leader in GPS vehicle tracking systems and software for small and midsized companies.

Today’s Top Fleet Management Issues

Every year the trucking industry deals with a combination of familiar issues, old issues with a new twist, and brand new problems. From the truck cab to the truck company boardroom to the government committee room, there are any number of different places where issues can occur. It is important to stay on top of today's top fleet management issues as well as new truck regulations that are in the works. The following list includes just a few of the top issues that the industry is facing right now.

Fuel prices

At the end of 2012, driver wages and benefits were the highest motor carrier cost for trucking companies, and fuel and oil were the second highest cost. With high fuel prices, it is not surprising that this is one of today's top fleet management issues. It is unlikely that the per-gallon fuel price is going to change significantly before the end of 2013, but that doesn't change the fact that fuel prices are higher than normal. Even though the prices may become less volatile, they will most likely remain high.

California-based trucking companies may run into problems with the new low-carbon fuel regulations that went into effect on January 1, 2013. The state may see an increase of $1 per gallon for gasoline and $2 per gallon for diesel. The current fuel prices and the new regulations may push companies to consider vehicles that use natural gas fuel.

Driver shortage

As of late 2012, 90 percent of for-hire U.S. truckload carriers are not able to recruit a sufficient number of drivers who can meet DOT requirements. With approximately 750,000 trucks in use, the shortage numbers run in the range of 20,000 to 25,000 for-hire drivers. If you think that these numbers are bad, consider that with the current driver trends, the shortage could skyrocket as high as 239,000 by 2022.

Government regulations are not going to help this problem. There will be hours-of-service regulation changes within the next year that will most likely bring motor carrier productivity down as much as three percent. As such, carriers will have to increase the number of drivers and trucks in their forces to compensate for it.

A number of prominent truck carriers stress that a large part of the driver shortage issue stems from high turnover rates. There are very few wage increases available right now, and the increases that are available are minimal. Given the GDP growth of the past few years, that is not likely to change any time soon. Drivers become frustrated with the low rates and turn elsewhere for higher pay.

Regulatory compliance

As previously mentioned, there are new regulations taking effect every year, and this is also not likely to change in the near future. More regulations mean more complexity and potentially higher costs. Fleets must stay on top of what they need to do to stay compliant, which is a never-ending effort.

For example, the Department of Transportation's Federal Motor Carrier Safety Administration launched a Compliance Safety Accountability (CSA) program. This program took the place of the SafeStat system. While the CSA is considered to be an improvement, there are a number of details that are a major concern for fleet managers. The Department of Transportation is under scrutiny to open its decision making process up to the public.

In response, there are plans to put together a committee of industry executives that will do a comprehensive review of the CSA program. The review will include the priorities, focus, and objectives of the program as well as specific details such as risk prediction and how effectively the data mirrors safety performance. Additionally, the review committee will consider regional disparities in data reports, how shippers and brokers use the data, and how insurers use the system.4

Lack of sleep

One of the longstanding battles between federal regulators and truck drivers is the issue of sleep. The recent regulation changes decrease the workweek hours to 70 (down from 82), require periodic rest breaks throughout the day, and limit the number of nights that truckers can be on the road. This is the most substantial rule overhaul in relation to truck driver hours that we've seen in the past decade.

The government administration believes that these new regulations will decrease the number of crashes that occur due to sleep-deprived drivers. Fleet managers believe that the changes will cost them money by necessitating higher numbers of trucks to move the same number of loads, which will have little benefit for the trucking companies.

The Federal Motor Carrier Safety Administration plans to enforce these regulations by conducting periodic driver work log check-ins and charge fines for every offense. The fines may run as high as $2,750 for individual drivers and $11,000 for trucking companies.

About the author:

Robert J. Hall is president of Track Your Truck, a leader in GPS vehicle tracking systems and software for small and midsized companies.