By Michael van Wyngaardt, Executive, Tracker Business
Fuel costs are estimated to constitute roughly 45% of total operating costs for many businesses, especially those involved in logistics and transportation. The latest fuel price hike has added to this hefty expense, and for businesses operating a fleet of vehicles, the associated running costs are increasing year on year by 12%.
For fleet operators who haven’t made provision for these increases in their charges for services to buyers, these costs will erode profit margins drastically and often result in the demise of transport businesses. Conversely, when transport service providers do cater for these increases they often become uncompetitive in terms of pricing and stand to lose business.
With the price of fuel being subject to various international and local components, including a range of government taxes and levies as well as additional margins along the chain, escalating fuel costs would appear to be an on-going trend. The solution for businesses to remain viable despite the growing financial pressure, is to manage those factors within their control very carefully.
Are your drivers actually driving up fuel costs?
Interestingly, every consequence of cost relating to a vehicle results from driver behavior. So while fleet owners might have little to no influence over rising salaries, maintenance and fuel costs, they do have control over their drivers and how they actually drive.
It is during difficult economic times especially, that fleet owners should exercise control over their fleets big or small and invest in tracking and monitoring systems. The return on investment in most cases ranges between 4-8 months and fleet owners can no longer ignore the fact that drivers and driver behaviour need to be controlled if they are going to manage their fleet costs effectively.
Technology, particularly in the vehicle monitoring and telematics field, can be invaluable to fleet managers in terms of reducing fuel costs. For issues such as driver control, driver education, compliance and safe driving habits, a telematics solution is essential.
Efficient driver habits affect fuel consumption and dedicated monitoring can alert managers to wasteful driver behaviours such as speeding, excessive idling and aggressive acceleration, which can be addressed and corrected almost instantaneously.
The savings are proven
Technology that enables drivers to avoid congested routes and toll roads, and instead opt for the shortest most efficient routes, is enormously valuable. The proven savings are considerable and for example, a courier company able to save 20km per day (per vehicle) for a fleet of 40 vehicles will benefit from an annual saving of more than R260 000, which over three years works out to a saving of around R800 000.
As rising costs in a slow economy put a tight squeeze on company finances, vehicle tracking together with fleet management systems can help minimize costs by increasing overall operating efficiencies. With fleet costs often being the single biggest costs for businesses, fleet owners need to gain control of the pivotal role their drivers play in the process.