As the global economy continues to grapple with inflation, fleet companies are feeling the impact on their bottom line. Many fleet managers are asking how to reduce fleet costs in today’s environment. Inflation affects fleet companies in a variety of ways, from increasing fuel and maintenance costs to raising insurance premiums. It is crucial for fleet companies to implement effective cost management strategies to maintain profitability and remain competitive in today’s market.
Supporting fuel efficiency
Inflation can have a significant impact on fuel costs for fleet companies. In the U.S. the average price of a gallon of gasoline more than doubled from 2020 to 2022 – surging from $1.94 in April 2020 to $4.21 in April 2022. With rising prices, fuel expenses can quickly become a significant portion of a fleet company’s budget.
Effective fuel fleet management and strategies to reduce fuel costs are crucial for companies to maintain profitability. With a fleet management system, it’s possible to identify commercial vehicle fuel efficiency, monitor fuel consumption and encourage efficient driving behaviors. A fleet management system can help:
- Monitor speeds: Observing optimal speeds can help reduce fuel usage.
- Identify idling: Addressing unnecessary idling can help prevent fuel waste.
- Supervise fuel spend: Track fuel efficiency and identify causes of high fuel consumption.
A fleet management software solution also allows you to directly integrate fuel cards into the system so fleet managers can monitor fuel spend. With reports to monitor fuel expenses, you can gain near real-time fuel data and help keep your fleet on budget.
Coping with rising vehicle and material prices
Rising material and fleet management costs, from oil to tires to batteries, can impact the cost of vehicle maintenance and repairs. Regular maintenance is important to prevent costly repairs or replacements. Plus, the cost of acquiring new fleet vehicles or replacing existing ones increases with inflation, eating into a fleet’s bottom line. As of March 2023, it is 6.1% more expensive to acquire a new vehicle and all commodities are 1.5% more expensive when compared to March 2022.
It is important for fleet companies to be aware of these rising costs and to develop tactics to manage them effectively. Without a comprehensive telematics system, keeping track of your fleet’s maintenance schedule and service needs can be both time-consuming and expensive. Choosing a telematics solution for your fleet management needs can make all the difference in maintaining your fleet in good condition, with less downtime. A telematics solution lets you stay up-to-date with both preventative and unscheduled maintenance, mitigating the risk of expensive repairs or breakdowns and supporting your operational cost savings goals.
Addressing the surge in insurance costs
One of the main reasons that inflation impacts fleet insurance premium costs goes back to the increasing costs of parts, labor and other expenses associated with repairing or replacing a vehicle. This, in turn, leads to higher claims costs for insurance companies which then get passed on to the policyholders in the form of higher premiums. According to the U.S. Bureau of Labor Statistics, the cost of motor vehicle insurance has increased by 22.8% from January 2021 to March 2023.
Telematics can help your fleet address rising insurance costs by providing data to promote safe driving habits and, with integrated dashcams, can protect your company from false claims. Fleet managers can set alerts for speeding, harsh braking or other unsafe driving habits and distracted driving. In the most recent version of the Fleet Technology Trends Report, companies using fleet management technology reported a 15% decrease, on average, in accident costs.
Navigating inflation with telematics
Fleet companies must take a proactive approach to managing costs amid inflation to achieve a business cost reduction. By implementing effective cost management strategies such as fuel efficiency, staying up-to-date on maintenance needs and addressing safe driving habits, your fleet can maintain a competitive edge in today’s competitive market.
Schedule a demo today to see how a comprehensive telematics solution can help your fleet manage rising costs and improve profitability.
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