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The Hidden Costs of Fleet Management

The Hidden Costs of Fleet Management

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Are you running a fleet management business but can’t seem to break even?

Let’s face it: You can train your drivers and get a consistent flow of clients but still not improve your profit margin.

Why?

Simple: hidden or soft costs. Most fleet managers only consider hard costs like maintenance costs when budgeting.

But, fleet management businesses also incur other costs that aren’t as clear as hard costs. Not planning for these costs could be the reason your profits are low.

What are hidden fleet management costs? Read on as we explore costs that may indirectly affect your bottom line.

Warranty Recovery Costs

Ideally, a warranty is supposed to save your company money. After all, vehicle manufacturers chip in on repair costs or cover total expenses. So, most fleet managers don’t plan for vehicles within their warranty periods.

However, warranty recovery isn’t always straightforward. Remember, manufacturers are also in business and want to reduce their expenses. Many will assess faults to determine whether they result from inherent defects or carelessness.

This takes time, which translates into lost money. Investing in fleet management solutions like trackers can speed up the process. Vehicle tracking gives you data you can use to make your case with a manufacturer.

Background Check Costs

Fleet drivers need more scrutiny than regular employees since they transport expensive cargo. You’ll need to conduct criminal history background checks to protect your company.

You’ll also incur costs when assessing drivers’ driving violations if any. These costs are astronomical when you have many fleet vehicles. So, budgeting for these costs beforehand is essential.

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Poor Operator Behavior Costs

No number of background checks can determine your driver’s future behavior. Drivers’ behavior on the road may sometimes increase your operating expenses.

One such behavior is speeding. Speeding has a direct impact on operating costs because it increases fuel consumption. It also wears a vehicle’s moving parts, so you may incur recurring maintenance charges.

Idling also increases operating costs through increased fuel consumption. Light-duty trucks consume up to one gallon of fuel for every hour spent idling. So, this could be the reason your fuel costs are unusually high.

GPS tracking is a great way to assess drivers’ road behavior. Installing trackers could save you thousands of dollars and improve your profits. You can learn more here.

Insurance Costs

Though insurance is a hard cost, rising premiums are hidden costs. Your insurer could raise your premiums if they determine you’re a risk.

So, you may need to assess your risks from your insurer’s eyes. Are your drivers careless on the road, or are your commercial vehicles in poor condition? If so, you’ll need to minimize risk by cautioning drivers and servicing your vehicles.

Hidden Costs of Fleet Management Explained

You’re bound to come across some soft costs in fleet management. Though hidden, insurance and warranty recovery costs could impact your profits. Luckily, you now know to look for them and can budget more appropriately.

Did you enjoy reading this article? Great! Then, check out the rest of our blog for similar content.

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