How to reduce fleet expenses: where waste occurs

Reducing costs is challenging in an industry that spends as much as road transport.

Although most people already know fuel and tires are a fleet’s main expenses, several other factors help create a cost reduction plan.

You therefore need to monitor all expenses and understand whether they are truly necessary. By neglecting fleet financial control, you do more than miss savings in important areas such as fuel consumption.

In fact, you also contribute to monthly expenses exceeding the company’s budget.

In other words, you need to check the main factors that may be undermining savings in your transport company.

Vehicle and team idleness

Idleness is defined as time spent stopped. Whether vehicles or the team are idle, waste occurs — along with a drop in productivity.

Keeping a vehicle idling wastes fuel and increases engine wear. Energy efficiency references indicate that idling can consume a quarter to half a gallon of fuel per hour, close to 1 to 1.9 liters.

With this in mind, organization and planning need to be impeccable. This avoids extending loading and unloading time, holding up drivers over missing documentation, delivering outside the period agreed with the customer and creating other waiting periods.

A vehicle that falls short in its daily inspection can also end up damaged and inactive for corrective maintenance, which can take days or weeks depending on the problem.

You therefore need better organization and communication between processes. This allows the operation to determine the right time to move a product from inventory to delivery, keep cargo ready to enter the vehicle, prepare the team for unloading when needed, and so on.

Routing that considers weather, traffic and service windows to avoid delays and waiting periods is also essential.

Routing and monitoring

Ineffective route planning results in fewer deliveries per trip, more trips and increased distance traveled. Do you know the consequence?

Higher costs for maintenance, repairs and fuel.

In addition, without careful planning to optimize deliveries, the chances of delays and unexpected events along the way are high.

Various routing tools are already available, both free options such as Google Maps and paid tools with more advanced optimization features. Use them, therefore, to ensure reduced operational costs.

Planning better routes helps reduce distance traveled, stops at traffic lights and time stopped in traffic. In practice, this improves vehicle efficiency and gives the operation greater predictability.

When a company uses route monitoring tools, the data should serve to compare planned and actual performance, identify recurring deviations and adjust the process. The central point is turning the route into a management routine, rather than just a path chosen at the start of a trip.

Administrative expenses

Reducing costs is harder when it comes to administrative expenses, but it is still possible. These expenses include rent, taxes and duties, salaries and the company’s marketing and communication work.

What can you do to save in these areas?

Hire intelligently, plan extensively before opening new branches, understand the real need for new storage warehouses, consider taxes in freight pricing — even by region, as Brazil has federal, state and municipal taxes — and review contracts that no longer make sense for the operation’s current size.

It is also worth separating direct from indirect costs. Total cost of ownership considers both acquisition price and indirect costs throughout the life cycle of a good or service, helping reveal waste that is missed when analysis focuses only on the purchase.

Cargo weight relative to vehicle capacity

Did you know that both overloading and too little cargo can harm your fleet? With vehicles carrying light loads, it is not necessarily bad for the vehicle itself, but for your operation’s budget.

A vehicle with more capacity than you need consumes more fuel, generates fines and makes the trip slower.

It is therefore important to have varied vehicles for transport operations of different scales and know when to use them.

Inappropriate driving

Driving at excessive speeds, braking harshly, using air conditioning at low speeds or keeping windows open at high speeds are actions that reduce vehicle efficiency on trips.

For example, fuel economy references indicate that aggressive driving can reduce efficiency by about 15% to 30% at highway speeds. This behavior also increases the risk of fines, accidents and fleet maintenance costs.

Consumption tends to worsen rapidly at higher speeds. Speed control, anticipating braking and progressive acceleration should therefore be part of routine driver guidance.

Consequently, driving style should not be treated only as an individual driver behavior. It needs to be included in training, goals, safety discussions and cost analysis.

Wasting resources through driving is prevented by driver training and creating a culture of defensive, economical driving. This also prevents mechanical wear and increases route safety.

Remember to monitor operational indicators to know whether actions and training are effective.

Vehicle depreciation

A lack of vehicle care results in accelerated vehicle depreciation and increases maintenance expenses.

As vehicles are among the fleet’s most valuable assets, you do not want this to happen.

They need to be in good condition. You can ensure they are put to good use and retain their value — as much as possible — through daily vehicle inspections and more comprehensive pre-trip inspections.

A comprehensive maintenance strategy helps fleet managers and drivers keep vehicles running efficiently. Inspections should therefore be seen not only as an operational obligation but also as part of cost control.

Lack of understanding and visibility of resources and expenses

Not knowing how much is spent or on what. If this does not sound absurd to you, something is very wrong with your management.

A transport company’s costs can be fixed, when they do not change in the short term with activity volume, or variable, when their total changes with the company’s activity level.

Whether using a cost spreadsheet or a management system, you must control all accounts. It is the only way to anticipate and generate a reduction in logistics costs.

This control also helps estimate assets’ total cost of ownership. By looking at acquisition, operation, maintenance and useful life, the company can allocate resources better, reduce waste and make decisions based less on impressions.

Get to know Prolog App

Our company focuses on technological solutions for your fleet’s everyday routine. We provide savings, productivity and standardization for your transport operations.

Prolog supports digital mobile inspections, automatic work order opening and preventive maintenance automated by mileage or schedule.

Learn more about Prolog and see how to simplify fleet management with greater control over inspections, maintenance and workshop routines.