A fleet manager’s guide to fleet cost management

What is fleet cost management?

Fleet cost management refers to the process of tracking, controlling, and optimizing all expenses associated with operating an entire fleet of vehicles and assets. This includes both direct costs (like fuel, maintenance, and driver wages) and indirect costs (like downtime, compliance penalties, and administrative overhead).

The goal of fleet cost management is to maximize fleet efficiency, reduce unnecessary operational expenses, and ensure that fleet operations remain profitable and sustainable over time. Fleet cost management ultimately come down to fixed costs and variable costs:

• Fixed costs: Costs that remain consistent regardless of usage, such as acquisition costs related to leases or loan payments, insurance premiums, licensing and registration fees, and costs for technology such as fleet management software.

• Variable costs: Costs that fluctuate based on activity, such as fuel consumption, vehicle maintenance and repairs, tolls and parking, and driver wages and overtime.

Managing and tracking fleet costs is crucial for effective fleet management, as it plays an important role in accurate budgeting, controlling fleet expenses, and planning for the future. A clear understanding of your fleet costs enables data-driven decision-making around vehicle acquisition, expenditure management, maintenance planning, and more.

How can fleet managers optimize fleet cost management?

Fleet managers face constant pressure to reduce operational expenses while improving safety, efficiency, sustainability, and compliance. By identifying the key drivers of fleet costs and adopting cost-saving strategies, fleet managers can better take a more cost-effective approach to their fleet operations. This enables them to control total cost of ownership (TCO), reduce cost-per-mile (CPC), improve operational efficiency, and maximize profitability. 

Here are a few essential areas that fleet managers can focus on to optimize fleet cost management:

1. Optimize total cost of ownership (TCO)

To get an accurate picture of your fleet’s financial impact, it’s essential to consider the total cost of ownership (TCO). TCO provides a complete view of all expenses linked to a vehicle or asset throughout its entire lifecycle, including acquisition, depreciation, and disposal. To optimize TCO, fleet managers can:

• Regularly conduct a comprehensive cost-analysis for all fleet expenses to identify cost-saving opportunities.

• Plan vehicle replacement strategically based on lifecycle data to avoid unexpected repair costs.

• Implement preventive maintenance programs to extend asset lifespan and reduce depreciation.

2. Improve fleet safety and lower insurance costs

Accidents and safety-related incidents are not only dangerous but also expensive. These costs include repairs, medical claims, liability lawsuits, and rising insurance premiums. Unsafe driving behaviors, such as drowsiness, speeding, harsh braking, mobile usage, and distracted driving can significantly increase fleet costs and raise the total cost of ownership.

One way fleet managers can lower safety-related expenses is through safety technology. Investing in safety technology helps to reduce accidents, improve driver coaching, and lower insurance costs. To improve fleet safety, fleet managers can:

• Install dash cams and telematics systems to monitor driver behavior in real time.

• Implement video-based safety programs to streamline incident investigations and defend against false claims.

• Conduct regular safety training to ensure safe driving habits and regulatory compliance.

• Use AI-powered safety technology to identify risky drivers and proactively coach them on safe driving behaviors.

3. Prevent theft and asset loss

Vehicle and equipment theft is a major concern in fleet management, especially for construction, utility, and field service fleets. Both large machinery and small equipment are frequently lost or stolen, leading to increased fleet expenses and costly project delays. Fleet managers can protect their assets and vehicles by:

• Installing GPS tracking devices on vehicles, large equipment, and small equipment to monitor location and detect unauthorized movement.

• Using asset tags to track smaller tools and mobile assets.

• Setting up geofence alerts to monitor asset location and reduce unauthorized use.

4. Manage driver wages and improve retention

Driver wages and benefits are among the largest fixed costs in fleet operations. High driver turnover increases fleet expenses through recruiting, onboarding, and training. In today’s competitive labor market, retaining skilled drivers is both a financial and operational priority. Fleet managers can improve retention and control wage-related costs by:

• Offering competitive compensation and comprehensive benefits packages.

• Fostering a strong safety culture and supportive work environment built around accountability and positivity.

• Providing career growth opportunities, performance-based incentives, and ongoing training.

• Engaging drivers using safety technology to recognize safe driving and celebrate milestones. 

5. Optimize fuel efficiency

Fuel is one of the largest variable costs in fleet operations. Expenses vary depending on the type of vehicle (such as gasoline, diesel, or electric) as well as how that vehicle is driven. Excessive idling, aggressive acceleration, inefficient routing, and poorly maintained engines can all lead to increased fuel costs and unnecessary fuel consumption.

Reducing fuel usage not only improves your bottom line but also supports sustainability initiatives and regulatory compliance. Fleet managers can reduce fuel expenses and cut emissions by implementing a comprehensive fuel management strategy:

• Using route optimization tools to reduce mileage, avoid traffic congestion, and minimize idling.

• Monitoring and coaching drivers on fuel-efficient driving behaviors, improving habits such as idling, harsh acceleration, and speeding.

• Transitioning to electric vehicles (EVs) when it aligns with operational goals.

6. Control maintenance costs

Regular vehicle maintenance is critical for fleet safety, performance, and compliance, and it also accounts for a large share of operating expenses. Parts and repair costs, along with supply chain issues, have made fleet maintenance more expensive in recent years.

Fleet managers can control these costs by adopting a proactive, data-driven maintenance approach. This helps reduce unplanned breakdowns, minimize downtime, lower long-term repair costs, and extend the vehicle lifespan. To control maintenance costs, fleet managers can:

• Develop preventive maintenance schedules to schedule regular maintenance, helping to avoid major repairs and reduce wear and tear.

• Use telematics technology to track engine diagnostics and receive real-time alerts for potential issues.

• Analyze historical fleet data to identify patterns and extend vehicle lifecycles.

• Harness artificial intelligence (AI) to reduce manual processes and improve fleet maintenance.

6. Minimize downtime

Unplanned downtime occurs when vehicles are taken out of service for unscheduled repairs, inspections, or accidents. Every hour a vehicle is down results in lost revenue, delayed deliveries, missed appointments, and increased reliance on rental or spare units. To minimize downtime, fleet managers can:

• Implement predictive maintenance programs that use real-time diagnostics to flag issues before they become critical.

• Schedule regular maintenance during off-peak hours to avoid service disruptions.

• Track and analyze downtime metrics to identify recurring problems,improve fleet reliability, and maximize uptime.

7. Streamline compliance and avoid penalties

It’s critical to maintain compliance with DOT and FMCSA regulations, including ELD mandates, HOS limits, IFTA reporting, and vehicle inspections. Failure to stay compliant can result in fines and penalties, downtime from audits or inspections, and even lost revenue. To stay ahead of regulatory compliance, fleet managers should:

• Leverage fleet management software to automate compliance tasks and documentation.

• Ensure drivers remain current with HOS and ELD logging requirements.

• Use centralized fleet management technology to manage permits, licenses, and inspection records.

Improve operational efficiency and reduce fleet costs with Samsara

Samsara offers comprehensive fleet management software built to improve efficiency, safety, and sustainability across your fleet operations. 

For example, Mohawk industries, the largest flooring manufacturer in the world, leveraged Samsara real-time fleet data to optimize three of their largest operational expenses—labor, fuel, and maintenance—and drive efficiency gains across their entire fleet operation.

Before Samsara, Mohawk lacked visibility into their vehicle locations, miles driven, and routing accuracy, so data collection was difficult. By adopting Samsara, Mohawk was able to close the gap in planned versus actual routes to reduce mileage by 4.2 million miles and improve driver pay processes. They also leveraged Samsara reporting and AI-enabled efficiency gains across every aspect of their supply chain, ultimately improving profitability and their customer experience. By optimizing their biggest expense areas with Samsara data, Mohawk Industries was able to save $9 million annually.

"Without a doubt, we’ve become more profitable with Samsara. Now, we’re able to reinvest in our people—we’ve raised driver pay and regularly award safety bonuses,” said Andy Yearout, Senior Vice President, Supply Chain. “We’re also investing in new equipment and reducing the average age of our assets. Samsara gives us a competitive edge in the market." 

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If you’d like to see how you can reduce fleet costs and improve profitability, dive into Samsara’s Fleet Management Platform and reach out to our team today.