Recent research shows that most fleet managers, leaders, and executives in various industries consider runaway expenses their most significant pain point. And in a recent Verizon Connect survey, about 79% of the respondents agreed that rising costs are their current top challenge. Notably, their responses indicate they are skeptical that a resolution will soon materialize.
The survey’s other leading challenges—trouble meeting demand and shortage of quality workers, including drivers and technicians—can also be attributed to rising costs. To remain competitive, companies must pay more and offer better benefits, increasing hiring and retention expenses. At the same time, they feel pressured to push their drivers to run more miles in less time, contributing to accidents and increased wear and tear on vehicles.
For most fleet managers, the revelation that prices have risen drastically isn’t news. High interest rates and inflation have contributed to a lack of capital for many businesses, fleets included. Simultaneously, supply chain issues have caused delays, communication breakdowns, excessive administrative workloads and fractured visibility. These accumulated issues have triggered a trend of exponential cost increases in several areas, including maintenance, accident repairs, and refueling.
The bill for reactive maintenance costs, such as patching flats and repairing engines, adds up quickly regardless of fleet size. While regular maintenance practices increase equipment efficiency and reduce downtime, decision-makers often leverage reactive maintenance strategies, keeping their vehicles on the road for as long as possible to maximize uptime even as their repair costs grow.
Meanwhile, the National Highway Traffic Safety Administration found that large truck crash fatalities have increased year-over-year, as have the preponderance of nuclear verdicts, all adding to potential fleet costs. Finally, according to the American Transportation Research Institute, fuel costs increased by 53.7% in 2022 alongside a 15.5% driver wage increase. When factored with other expenses, this totaled $2.25. This surge marks the first time the average per-mile price exceeded $2.
And in 2023, commercial auto insurance premiums increased by 29% from the third to the fourth quarter, averaging 7.3%. Unfortunately, claims are becoming more frequent and severe. Since almost all states require auto insurance, this expense is inescapable.
How rising costs impact fleet management
These rising costs make fleets more hesitant to opt for noncritical repairs, raises for drivers, and better auto insurance plans, perpetuating these costly pain points even more. Committing to short-term gains doesn’t often translate to long-term security in this industry — and this self-feeding loop is evidence of that.
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Without realizing it, decision-makers transition from implementing cost-cutting measures to cutting corners. This exponentially accelerates their skilled labor scarcity and substantially increases their operational expenses.
For example, taking back roads to skip weigh stations while driving overweight without a permit may sound good on paper because it saves hundreds of dollars per truck each year. However, if drivers get caught, they lose their license and their employer receives fines. Additionally, the liability of an overloaded vehicle crash—which is likely in this scenario—is huge.
Navigating rising costs may seem challenging on paper, but it is possible with the strategic application of specific cost-effective measures. Out-of-the-box cost-cutting solutions are virtually nonexistent. However, a few offer general benefits to small, medium, and large fleets.
Predictive maintenance is one potentially effective measure business decision-makers should consider. It can increase uptime by 10-20%, reduce repair planning time by 20-50%, and lower maintenance costs by 5-10% on average. Whether companies utilize technology-centric solutions or not, proactively fixing issues prevents costly breakdowns.
Driver downtime is another consideration. While issuing more breaks or lengthening off-duty rest periods seem counterproductive, they are generally far more cost-effective than keeping trucks on the road for as long as possible. They can increase job satisfaction, mitigating increasing labor expenses. Moreover, they reduce the risk of on-road accidents, preventing lawsuits.
Many fleet managers would readily admit their job is moderately to exceedingly challenging because they handle everything from monitoring driver behavior to meeting consumer demand. While managing rising costs adds to their workload, it is necessary. With rising costs becoming the norm, simply waiting for costs to drop and enduring with temporary measures may be impractical, so decisive action is essential.
