Fleet cost reduction – How to succeed?
Fleet Managers are constantly under pressure to reduce costs while maintaining efficiency. Telematics technology has emerged as one of the most effective tools to achieve fleet cost reduction. By tracking vehicle performance, fuel usage, driver behaviour, and maintenance needs, businesses can significantly cut operating expenses.
In this post, we’ll explore how a Fleet Management system helps Fleet Managers reduce fuel costs, improve maintenance schedules, enhance security, and optimise fleet utilisation to deliver major cost savings.
Fuel expenses is the number one priority
Fuel expenses are one of the biggest costs for Fleet Managers, making up around 26% of the total cost of ownership (TCO). Telematics technology tackles this by providing real-time insights into fuel usage, helping you pinpoint inefficiencies.
One major contributor to fuel waste is vehicle idling. For example, a van idling for just one hour consumes 1.9 litres of fuel, costing around £3.50 and producing nearly 5kg of CO2. With a Fleet Management software, Fleet Managers can monitor idle times and coach drivers to reduce unnecessary idling, which can quickly lead to significant savings.
Lower maintenance costs with predictive maintenance
Unexpected breakdowns can take vehicles off the road for days, resulting in costly repairs and downtime. On average, a van being out of service costs a business £800 per day, and 36% of fleets require a rental vehicle to cover the gap. Telematics helps by providing predictive maintenance, allowing you to monitor vehicle health and schedule repairs before they become critical.
For example, a fleet telematics systems can monitor key indicators like tyre pressure and engine performance. If a vehicle's tyre pressure drops by 10%, it can increase fuel consumption by 2%, leading to higher costs over time. By catching such issues early, telematics can help fleets avoid more expensive repairs and reduce vehicle downtime.
Moreover, regularly maintained vehicles run more efficiently, use less fuel, and have a longer lifespan, further lowering overall maintenance costs.
Theft prevention and asset security
In the UK, van theft has increased by 18% year-on-year, and the replacement cost of stolen vehicles or equipment can be substantial. Telematics systems combat this by offering advanced security features like geofencing and GPS tracking, which ensure assets are protected and recovered quickly if stolen.
For example, geofencing allows Fleet Managers to set virtual boundaries around job sites or parking areas. If a vehicle or piece of equipment is moved outside this area, an instant alert is triggered. In one real-world case, a construction company in London used GPS tracking to recover a stolen excavator within 24 hours, saving the business thousands of pounds in replacement costs.
In addition, by reducing theft, telematics also helps lower insurance premiums, which tend to rise by more than 20% following a claim.
Improving driver behaviour for cost savings
Telematics not only tracks vehicle performance but also monitors driver behaviour. Poor driving habits such as speeding, harsh braking, and rapid acceleration can contribute to higher fuel consumption and increased vehicle wear and tear. By addressing these behaviours, businesses can reduce their operating costs significantly.
For instance, one UK fleet noticed that their worst drivers cost 12 times more in servicing costs compared to their best drivers. Telematics provides the data needed to correct such habits through training and incentives. Some businesses have introduced driver reward schemes based on telematics data, offering bonuses for improved fuel efficiency and safer driving.
These improvements in driver behaviour not only cut fuel and maintenance costs but also reduce the likelihood of accidents, leading to lower insurance premiums.
Optimising fleet utilisation
Fleet optimisation is another area where telematics delivers significant savings. Tracking systems provide detailed reports on vehicle usage, helping Fleet Managers understand which vehicles are underutilised and which are overworked. By reallocating resources or adjusting fleet size, companies can eliminate unnecessary costs associated with idle vehicles or expensive rentals. This is a cost savings that will last over time.
By using fleet telematics you can reduce your fleet size. This freed up capital that could be reinvested into other areas of the business, while also reducing maintenance and insurance costs for the vehicles that were no longer needed.
In addition, telematics provides real-time data on vehicle and equipment locations, reducing downtime caused by missing or misplaced assets. This leads to faster project completion and ensures that vehicles and tools are always where they are needed.
Take a look at ABAX Fleet and start reducing costs in your fleet.