Understanding Your Fleet Costs

Understanding Your Fleet Costs

Understanding your fleet cost may not be as simple as knowing how much you purchased your vehicles and equipment. Effective cost management entails a comprehensive fleet cost analysis that would help you establish and control your fleet’s total cost, budget, prices and rates, and the total cost of ownership.

Therefore, it is crucial to understand all the factors associated with your fleet cost. Below are quick notes you need to understand your fleet cost.

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Primary Cost Of Fleet Ownership 

As an asset, a fleet is significant to any warehouse, which utilizes them. To understand the full cost of a fleet, you must first identify every cost, direct and indirect, associated with your fleet.

Effective cost management starts with knowing your fleet’s direct costs, including vehicle purchase cost from research to the acquisition, insurance and licensing, supporting equipment, disposal, and driver costs.

Determine Your Fleet’s Variable Costs

Knowing the life cycle cost of a fleet gives you the best way of determining how expensive it is. However, variable costs such as depreciation, maintenance, parts replacement, fuel consumption, interest, and operating cost cannot be determined until you have purchased the vehicle.

Keep track of the fleet’s metric throughout its lifetime in service. Closely monitoring these costs would help you assess the total cost of running a fleet. Knowing how much fuel your fleet consumes per kilometer would save you money and resources.

Fleet Availability

At the beginning and end of each workday, you should know the number of fleet vehicles or equipment available for use. Track which vehicles drivers could use and which need maintenance or repair.

Fleet Activity And Utilization

Regularly tracking and monitoring your fleet’s utilization would allow you to optimize the fleet in terms of cost, distribution, and disposal. During a 24-hour period, correctly right-sizing your fleet would help you understand your fleet cost.

Aim for 90 to 95 percent vehicle utilization rate and move vehicles amongst fleet drivers to maximize utilization. If you have 100 assets, 90 or 95 of them should be in operation at any given time. However, it would help if you were wary of overutilization that could lead to higher than expected costs.

Your Avoidable Fleet Costs

A vehicle fleet’s avoidable costs depend on service performance and management. These costs may or may not relate to the use of the vehicles. As the name suggests, you could choose to avoid these costs or not. However, preparing for such additional costs such as fines, toll roads, driver’s diet work, and bonuses could help you manage your fleet successfully.

Average Cost Per Accident And Accident Frequency

Accidents, however small, generate cost and eventually affect the efficiency of your fleet. Recording frequency and the average cost per accident would help you understand your fleet’s true cost in terms of the use and size of the fleet.

The average cost per accident includes liability costs, repair costs, rental costs, and downtime. Putting in place an accident avoidance, and evaluation program would significantly reduce the cost and frequency of accidents.

We're Here To Help

Our customers are at the center of everything we do. HCO knows that many of you are navigating unprecedented challenges and we’re here to help.

The current economic environment has created stress on many of the core industries that this country relies on to thrive.
- Corporate liquidity is at a premium and the management of your balance sheet is critical.
- Bank and vendor leasing for equipment is tightening as corporate credit ratings are in flux and lenders are focused on securing their own capital.

HCO is leading through this disruption with customized forklift fleet programs that allow companies to 1) replace fleet assets and 2) service those assets without relying on banks or vendors for leasing. Our managed service programs allow companies to secure assets and service programs with no upfront capital, and no end of term lease obligations. We are reinventing the way companies access equipment and service. Please reach out to discuss whether this would be valuable to your company.

As we execute our business continuity plan, we will rely on the guidance from the Center for Disease Control, federal, state, and local governments to guide our decisions to keep our employees and our customers’ employees safe. We are committed to continuing to provide clients with our valuable services.

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