Businesses in the commercial vehicle industry are often sitting on a gold mine of opportunities to maximize their profits. But with all of the nuances that go into managing a fleet and handling their day-to-day operations, many of these opportunities can go unrecognized without the right guidance.
What Goes Into Managing a Fleet
There are many aspects that go into managing a fleet of commercial vehicles, and for someone who is unfamiliar with the job of fleet managers, it can be overwhelming. In order to manage a fleet, you must optimize your fleet’s cost-effectiveness and efficiency, maintain your vehicles, manage your drivers and other workforce members, and ensure vehicle safety while complying with legal requirements.
For a fleet manager, many of these duties may feel routine, but the duty to optimize the cost-effectiveness and efficiency of their operations doesn’t have to be. There are many companies that are finding ways to reevaluate their fleet management practices, and by learning from them you can find smart ways to earn more with your commercial vehicles.
How Is Bottom Line Calculated
The bottom line for any business is calculated by deducting total operating expenses from the total revenue that the company brings in. The bottom line is also referred to as the net income or profit of the organization. In any business, the bottom line is very important because if the bottom line is not positive, it means that the organization has lost money, and may result in the business’s closure.
When a company is looking to maximize its bottom line, it can do so in two ways: 1) by increasing its revenue, and 2) by decreasing its costs. It may seem simple enough, but opportunities can be missed if a fleet manager is not thinking of how to apply strategic action to achieve these goals.
Problems Faced by Commercial Vehicle Fleet Managers
Commercial vehicle fleet managers have to face many challenges that are hard for them to control that affect their bottom line. Between turnover, driver behavior, changing fuel costs, inclement weather, and more, it’s hard to truly control and optimize costs when circumstances don’t allow for it. But there are things that can be done to mitigate these problems and try to make them as minor as possible when they do arise.
- Driver Turnover
Driver turnover is one of the most costly issues a fleet manager faces. Turnover makes it difficult to ensure proper driver training is done and may mean a fleet isn’t able to complete all of the scheduled routes needed for the business to function.
Though turnover is not something that can be controlled, you can help some drivers reconsider leaving by improving their working conditions. For example, allow options for them to have more input into which routes they’re assigned, and be flexible with giving them time off when they need it. You can also ensure that you provide them an avenue to complain if they are having issues with suppliers being late or rude to those drivers. If you give them an avenue and then act on the complaints, you can help them feel valued.
It may seem counterintuitive to invest in these things if you’re looking to reduce costs, but the money saved by reducing turnover and having more experienced drivers will pay back your investment over time.
- Inclement Weather
Poor weather conditions are responsible for many accidents when transporting freight. Though weather can’t be controlled, you can control how prepared your fleet is for any weather conditions.
One way to save money and avoid having a huge issue is to invest in regular maintenance of your vehicles. Particularly, ensuring that your brakes are good, maintaining the tires on your vehicles, and addressing any warning lights that come on is a good start. Not only will this make sure you’re providing your drivers with the best vehicles to handle all weather conditions, but this will also save you money from an expensive repair due to lack of maintenance in the long run.
You can also provide additional training to your drivers for handling their vehicles in different weather conditions, and provide maps with shelters and other safe stopping points for drivers that determine the weather conditions are too bad to continue.
- Driver Behavior
Speaking of driver training, another big variable that affects a fleet’s efficiency is the behavior of their drivers. Drivers are human beings, and we all know that we can’t control a human being. However, we can control the conditions that influence a human being’s behavior.
For example, by preparing them for poor weather conditions, or by giving them reasonable routes that can be driven without requiring the driver to speed, you are encouraging good behavior. Likewise, if you’re dealing with residential neighborhoods and deliveries in your fleet, require your customers to provide instructions to your drivers for quicker and more accurate deliveries.
These little steps can provide the behavioral modification needed to provide a consistent quality driver experience.
- Unstable Fuel Costs
Fuel costs are often the highest expense fleet managers have to deal with. They are constantly shifting in pricing, and fuel costs can vary greatly based on geographic location. If you’re looking for smart ways to tackle this problem, you’ve got options. For starters, you can use apps that show you the prices of gas at different gas stations, and instruct your drivers to fill up at the cheapest ones along their route.
You can also explore the option of upgrading a few of your vehicles to electric models. These models are typically great for local deliveries and can save you the cost of fuel.
Commercial Vehicle Fleet Managers Escaping Traditional Models
Some examples of modern Fortune 500 businesses that are escaping traditional models of fleet management through innovation include UPS and Amazon. Both are able to do what the other does, but they were industry leaders in their respective movements.
UPS understands that there are variables that can’t be controlled in fleet management, but what they have become very successful at doing is collecting data and learning from it. UPS will collect data related to the engine status of their vehicles, total trip fuel consumption, driver behavior, and route choices. This collection of data allows their analysts to pull out the key insights that allow them to modify behaviors or routes to optimize costs. In turn, this results in UPS saving an estimated $300 to $400 million annually by learning from their insights.
A fleet manager can learn about the importance of data in their own fleets by understanding the UPS method. From there, they can make strategic decisions about how to mitigate costs and optimize efficiency.
Amazon has become a beacon for many as they have popularized the art of regionalizing fleets and distribution centers. This is a key move in the industry due to rising fuel costs. With closer hubs, routes are shorter and use less gas due to needing fewer miles to be driven, causing this method to minimize the number of long-haul trips needed to transport goods.
Not only does this save on fuel costs, but this also makes staffing drivers easier, since the routes are more local and do not require long hours away from home, which is typically a deterrent to many qualified applicants.
What Educated Business Decisions Can You Make Today
The business decisions you make today can help you earn more with your commercial fleet. You can learn from other industry leaders like UPS or Amazon, and you can make proactive decisions about managing your vehicles and drivers. But even when doing all of this, you may not be maximizing your revenue. For example, what if you just have idle vehicles that aren’t being utilized by drivers for paid routes? An idle vehicle still requires maintenance, but it’s losing you money by just sitting there.
One important and educated business decision you can make to earn more with your commercial vehicles is to leverage a commercial vehicle sharing platform like COOP to rent those idle vehicles. COOP allows you to put any idle vehicles you have on the platform and allow them to be rented by local trusted businesses in need. You also get to set the terms of your rentals and determine if you want them to remain within state lines or what hours they can be picked up and dropped off.
By making this smart business decision, you can make money without having the fuel costs associated with a trip. Many vehicle Owners on COOP find that they can make upwards of four figures on each vehicle they rent. This money can be used to fund many of the investments and innovations we mentioned above, allowing you to maximize the money you make and keep your business moving forward into the future.
The decisions you make today affect your business tomorrow. Make sure you make the ones that will help you earn more and maximize your commercial vehicle fleet’s profits and efficiencies.