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Reining in Fleet costs: Using Telematics Smartly

The past pandemic year of 2020 has caused major disruption to many fleets, leaving some with now idle vehicles and others, particularly delivery companies, with a shortage of vehicles, particularly in delivery of consumer goods. No matter the situation, this is a good time to look at how telematics can be used to identify and reduce fleet costs. In preparation, it is important to consider the various component costs of operating a fleet. The pie chart below shows the percentage of various component costs for a typical light duty fleet. This blog post will highlight five cases where use of telematics can make a significant contribution to your cost reduction efforts.

1. Fleet Size and Utilization

The cost of vehicles themselves, at 53%, are clearly the largest component. The effort to reduce or “right-size” your fleet and ensure the highest utilization of each vehicle offers the greatest opportunity to reduce costs. There are multiple ways to monitor vehicle utilization.

Using telematics, a direct measure of vehicle utilization can be made for each fleet vehicle showing hours of service, as well as miles driven, each day, as shown at right. Using these measures from each vehicle enables a full report of fleet utilization to be compiled.

For fleets that originate from a single location, a simple measure of utilization can be had by using the GPS-geofence capability, shown at right, to monitor the departure and return of each vehicle to the fleet yard over the course of time.

Either telematics measure yields summary information on fleet utilization showing the the typical number of vehicles in use on any given day, the number of hours each vehicle is used on any given day well as the usage of any particular vehicle. Decisions on "right-sizing" the fleet can be made using this data. This was used successfully to reduce a fleet of 16 vehicles to 13 this past year*.

2. Preventative Maintenance

Continually monitoring the engine diagnostics report via the OBDII port is an easy win for preventative maintenance. Scheduling maintenance activities before breakdowns occur on the road can reduce not only maintenance costs, but eliminate the cost of extra delays and driver down-time associated with breakdowns.

3. Fuel Usage/Theft

Fuel costs make up the second largest component of fleet costs at 15% and attention is typically given to reducing this cost by monitoring vehicle age, fleet composition with a move to EVs, negotiated fuel pricing. In certain cases, routing can be analyzed and improvements made to reduce mileage and fuel consumed. Additionally, fuel theft should not be overlooked which can easily be detected via continual monitoring of fuel consumption and noting when there is a disconnect between fuel consumption and the number of refueling stops.

4. Improve Driver Behavior and Safety

One of the great trends of the past year 2020 has been the push to make the driver part of the solution to improve safety, rather than to assess blame. In-cab monitoring of drivers simultaneously with the forward view out the windshield has proven to be an effective training tool for drivers by giving immediate in-vehicle feedback to drivers. Fleet managers can periodically sit down with drivers and review what improvements can be made to improve future safety, not only for the driver, but for the safe delivery of goods or passengers. This is a win-win. At the end of each day, every fleet manager wants their drivers to arrive safely. This effort has successfully resulted in reduced crash rates, saving significant cost in collision repair, and filing insurance claims. Below is an example of driver drowsiness which produced an in-cab audio alert.

5. Driver Exoneration--reduce Accident Claim Fraud

Finally, the onboard recording of forward looking video can be used to exonerate drivers when they are not the cause of an accident. All too often, private vehicles have caused the accident, but because the fleet driver is backed by big corporation, the courts all too frequently award fraudulent claims in light of insufficient evidence. The video record can be used to set the record straight and reduce accident claims caused by other drivers. See a previous blog post on this subject here showing video from a close-call that could have been used to avoid a fraudulent claim.


* "Cost Containment Strategies", NAFA Chesapeake Bay Chapter Meeting, 12/10/2020.

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