Navigating fleet management costs: 5 strategies for efficiency and sustainability

Fleets are not immune to the modern challenges businesses face. Fleet managers must navigate things like inflation, high volatility in fuel costs, and fluctuating interest rates. This has put business leaders on defense.

Fleet business owners and managers are under pressure. They need to find ways to save on necessary operational costs. Understanding the complexities and considering creative ways to manage your fleet can help. The goal is improving your bottom line and keeping your drivers moving, moving, moving.

Tthe American Trucking Association noted a slight drop in the cost of parts and labor in the second quarter of 2023. This provided some much-needed relief. But how have prices been in 2024? And what’s 2025 looking like? It’s important to get ready for future fluctuations and find cost savings to prepare for the ever-looming possibility of downturns.

Fleet expenses overview: fixed and variable costs

Before understanding what’s driving challenges for fleet owners across America and beyond there are some basics to grasp. It’s important to understand the types of operational costs pertinent to fleet management. It’s good to know what is and is not mandatory, and which fleet expenses managers can more easily control.

Fixed costs

These remain constant regardless of how long fleet vehicles are driven. Fixed costs are typically easier to budget for as they’re more predictable. Examples include:

• Vehicle depreciation
• Insurance premiums
• License fees and permits
• Loans and lease payments
• Taxes

Variable costs

These fluctuate depending on how long vehicles are driven and can be split into two categories: mandatory and non-mandatory variable costs. Effective management of these costs can lead to significant savings. Examples include:

Mandatory variable costs:

• Fuel costs
• Tires
• Maintenance and repairs
• Breakdowns

Non-mandatory variable costs:

• Fines
• Tolls
• Driver allowances or incentives

Top challenges fleet managers face today

Labor shortages, global supply chain issues, and more are still persistent challenges for any fleet operation; but why? And how can fleet managers reduce total cost by effectively managing these challenges?

The labor shortage and its impact on fleet management

The labor shortage continues to be a problem across the U.S., with unemployment little changed at 3.9 in April 2024. The transportation sector in particular has one of the highest unemployment rates among industries tracked by the Bureau of Labor Statistics (BLS) at 4.4%, which makes sense considering labor shortages and talent retention are listed as the third-largest threat to businesses in 2024.

Labor shortages impact fleet costs in several ways, including:

• Increased labor rates: With fewer qualified technicians and drivers available, fleet owners may be forced to offer higher wages and signing bonuses to attract and retain talent.
• Reduced productivity: A lack of staff can lead to longer wait times for vehicle maintenance and repairs, causing delays and keeping vehicles out of service for longer. Additionally, delivery times may be extended, leading to customer dissatisfaction and potentially lost business.
• Composed driver safety: Less access to labor may lead to increased hours for the drivers you do have, which can result in fatigue and an increase in the risk of accidents.

Global supply chain issues continue to impact operational costs

While experts predicted supply chains would normalize in 2023, parts and labor were up nearly 2% in the third quarter of the year. Luckily, the cost of parts has decreased by a total of 2.2% since 2022; however, it’s evened out by the subsequent rise in labor costs, which have hiked 4% in the same period. For this reason, the cost of parts remains a challenge for fleet owners, but hopefully, the trend will continue throughout 2024 and parts costs continue to scale downward.

Fraudulent activity

44% of physical operations leaders — which includes fleet owners and managers — say that fraud has a large financial impact on their business. However, the same percentage of leaders are unsure how much revenue is lost to fraudulent activity; for larger fleets, it’s estimated around 19%, and for smaller fleets, 16%.

What is the solution to this fraud problem? Technology — and specifically AI-enabled tools. However, readily available tech that can provide greater visibility into operations, such as fleet cards and telematics, prove incredibly valuable for recognizing and mitigating fraud risk.

5 creative ways to weather the storm when facing increasing fleet management costs

1. Consider leasing fleet vehicles as an alternative to purchasing 

Shifting from owning to leasing vehicles is one way to minimize overhead and repair and maintenance costs for your trucking company. Here’s how:

• Lower initial investment: Leasing typically requires less upfront capital compared to purchasing vehicles outright. This can free up capital for other investments or operational expenses.
• Maintenance and repairs: Depending on the terms of the lease agreement, maintenance and repair costs may be included or at least predictable. This can alleviate the burden of unexpected repair bills, especially for newer vehicles that are still under warranty.
• Access to newer vehicles: Leasing allows fleet owners to regularly upgrade their vehicles to newer models without the hassle of selling or disposing of older ones. This can provide access to the latest technology, fuel efficiency improvements, and safety features, which may result in lower operating costs over time.

2. Place emphasis on preventive fleet vehicle maintenance

While supply chain disruptions have stabilized over the last few years, continued challenges in fleet vehicle acquisition remain a pain point for many fleet managers. In the U.S., the average age of cars and light trucks increased by a staggering three months in 2023, to a new record of 12.5 years.

With fleet vehicles staying on the road for longer, preventive maintenance is a major key for ensuring long and cost-effective service lives —  catching and addressing minor issues before they snowball into major problems.

In the long run, preventive maintenance aims to reduce downtime, improve safety, and extend vehicle lifespan. Here’s what it generally entails:

• Routine inspections: Regularly check fluid levels (oil, coolant, brake fluid), tire pressure and tread wear, lights and signals, wipers and blades, brakes, and other critical components.
• Scheduled maintenance: Follow the manufacturer’s recommended service intervals for oil changes, filter replacements, tune-ups, and lubrication.
• Detailed maintenance records: Keep a history of all maintenance performed on each vehicle, which helps identify potential problems and plan future service needs.
• Prompt repair of minor issues: Addressing minor problems like leaks, worn belts, or faulty sensors.

Utilizing fleet management software or telematics systems to track and remind you of maintenance schedules and monitor vehicles can streamline the entire process.

3. Take advantage of your fleet card tools to help reduce your operating cost

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 consumption tracking, enhanced security, and detailed reporting.

Here are just a few of the ways a feature-rich fuel card can reduce not only your fuel cost but other fleet costs, too: 

• Control and monitoring: Fuel cards allow fleet managers to monitor fuel purchases in real time, enabling better control over fuel expenses. They can track fuel consumption patterns, identify any discrepancies or unauthorized purchases, and take proactive measures to optimize fuel usage.
• Data analytics and reporting: Fuel card data can be used for detailed analysis and reporting, providing insights into fuel usage trends, driver behavior, and overall fleet efficiency.
• Discounts and rebates: Discounts and rebates on fuel purchases at specific fuel stations or networks allow drivers to fuel up at the most cost-effective stations while generating additional revenue via rebates.

4. Engage your fleet of employees and contractors with operational change

Instead of dictating changes from upper management, involve employees and contractors in organizational changes by cultivating 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, helping reduce attrition for your trucking business.

Educate your employees about your vision for the future of your fleet. Why is your business different? What sets you apart from other fleet companies? Why should a driver or technician work for you over another trucking business? By instilling a sense of purpose in your company’s mission and vision, you will attract and retain the best employees.

5. Always be on the lookout for ways to improve your fleet business

Nothing is perfect, but committing to continued improvement can get you close — and one of the greatest commitments a fleet manager can make for their business and drivers. Here are a few ways to prepare for and overcome challenges by taking a vow of improvement:

• Embrace technology: Invest in fleet management software and telematics solutions to track vehicle performance, monitor driver behavior, optimize routes, and manage maintenance schedules.
• Driver training and safety: Regularly train drivers on safe driving practices, fuel-efficient driving techniques, and compliance with regulations. Implement driver performance monitoring systems to identify areas for improvement and provide targeted training where needed.
• Environmental sustainability: Explore ways to make the fleet more environmentally sustainable, such as transitioning to alternative fuel vehicles, adopting electric or hybrid vehicles, and implementing eco-driving techniques.

A fleet management solution you can count on

WEX is committed to helping fleet managers take control of their operations by providing greater visibility into their operations, managing costs, and improving driver safety. To learn more about WEX, please visit our About WEX page.

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!

Editorial note: This article was originally published on November 2, 2022, and has been updated for this publication.

And check out our infographic below for five steps on taking control of your fleet tire stock.

Resources:
American Trucking Association
Bureau of Labor Statistics
Go Motive
Trucker Parts and Service
SP Global