Guides / Fleet Management Principles and Best Practices / What is fleet management? Purpose and definition.

What is fleet management? Purpose and definition.

Fleet management refers to a variety of processes and activities that fleet managers use to improve the operations, efficiency, and efficacy of a commercial fleet.

Companies that operate multiple commercial vehicles to support internal and external customers need a comprehensive fleet management system to run effectively.

Without effective fleet management, the company’s operations will likely be disorganized and drivers may be at risk of operating unsafe vehicles. This compromises the safety, efficiency, and productivity of all parties.

What is fleet management?

Fleet management refers to all activities involved in keeping commercial motor vehicles fleets running on time, safely, within budget, and efficiently, but can vary by industry.

Fleet management covers processes, tools, and systems that work together to help you control the operations of your fleet and improve overall fleet performance.

The following are fleet management essentials:

  • People: Fleet managers, safety managers, back-office staff, and drivers.
  • Data: Information gathered from fleet management devices, such as a vehicle gateway that securely and reliably interconnects and processes data across all vehicles.
  • Technology: Software, devices, and tools necessary for effective fleet management, including telematics, GPS, fleet management software, and vehicle dash cameras.

The purpose of fleet management

For companies aiming to scale, it’s essential that you learn the specific purpose of fleet management.

Along with helping you control and track your commercial vehicle’s life cycles, fleet management can effectively assist in reducing risk, improving efficiency, ensuring compliance, and increasing productivity.

The purpose of fleet management is to:

  • Control maintenance costs. A well-managed, efficient fleet with a planned maintenance program helps keep your vehicles in optimum conditions and avoid breakdowns. This reduces potential breakdowns and damages that lead to hefty repair costs or, even worse, liabilities due to traffic accidents.
  • Improve safety. Implementing proper fleet management will help you adhere to mandated safety standards designed to protect drivers, operations, and other drivers.
  • Reduce costs. Efficient fleet management helps with resource planning and allocation, getting more mileage out of your assets,  and optimizing your operations.
  • Improve employee retention. Effective fleet management makes for a better, safer work environment, which helps improve job satisfaction.

For example, having a well-managed fleet of vehicles means your commercial drivers will have clean, safe, and well-maintained vehicles to operate. Also, your mechanics will have manageable workloads because you’ll have fewer vehicle breakdowns.

All these lead to smooth operations and reduce the stress caused by inefficient processes.

Companies and organizations that need fleet management

Commercial fleets of all types and sizes need some form of fleet management. The size of the fleet can range from five to ten vehicles, to large companies with thousands of commercial vehicles.

The fleet management system can be simple or complex, based on the requirements of your fleet.

Regardless of the size, a crucial part of fleet management basics is having systems and processes to ensure organized, seamless, and safe operations.

Some industries that require and use fleet management solutions are:

  • Food delivery
  • Landscaping
  • Construction
  • Mining
  • Oil and gas
  • Security
  • Emergency Services
  • Public transport
  • Governments
  • Utilities
  • Fast-moving consumer goods
  • Leasing and rental
  • Telecom
  • Pest control
  • Transport and distribution
  • Engineering
  • Equipment dealers
  • Hospitals
  • Agriculture

Below are general categorizations of fleet types:

  • Commercial. Commercial fleets generally include various types of vehicles in large numbers. These can serve numerous purposes, including local delivery and cross-country shipping, and might require teams of people to manage and maintain operations.
  • Trucking. Trucking fleets can consist of a few or dozens of trucks and often have large trailer-drawing tractors for transporting high-volume loads. These heavy vehicles have strict compliance and safety standards because of their size, load capacities, and operation on the interstate highway system.
  • Transport. Transport fleets generally have vehicles, such as rented moving trucks, taxis, and rental cars that customers may or may not choose to drive themselves. Leased vehicles that customers are driving require extra regulation and must adhere to strict safety and maintenance standards since equipment malfunctions and negligent driving can lead to potential liabilities.
  • Delivery. Delivery fleets are often used for transporting local deliveries for parcel shipping businesses. After the products arrive at a distribution center, they’re transferred to a delivery vehicle to reach their end recipients.
  • Utility fleets. Deliver repair and maintenance services.
  • Field services. This group may include lawn care service fleets, plumbing, electrical, pest control services, roofing and gutter services, etc.
  • Public transport fleets. Fleets under ownership of a public entity that provide transportation services to entire communities, municipalities or counties.
  • Agricultural fleets. Farming equipment or vehicles that are allocated, scheduled, routed, and monitored.  

Regardless of the industry or company, proper fleet management is critical to track all fleet activities effectively, increase safety, make better business decisions, and run operations efficiently.

Biggest challenges in fleet management

Some of the biggest fleet management challenges are:

  1. Poor fuel consumption efficiency. Fuel is one of the biggest expenditures for most fleets. Optimizing fuel consumption to keep fuel costs in check is a big fleet management challenge.
  2. Vehicle breakdown and maintenance. Frequent vehicle breakdowns directly affect fleet productivity. It’s a challenge for most fleets to stay on top of vehicle health.
  3. Fleet safety. Safety is the #1 priority for fleets of all types and sizes because even a single incident can financially cripple a transportation business.
  4. Administrative burden. As fleets grow, so does the administrative burden. How fleet managers stay efficient when the organization scales is a significant fleet management challenge.
  5. Detention time. Detention can cost up to $1,280 per year per driver. Keeping detention time in check is a priority for many in the logistics industry.
  6. Driver shortageDriver shortage was ranked as the biggest issue in 2019 by ATRI.

Fleet management best practices often follow industry trends. Here are some of the more enduring trends to leverage when creating your fleet management strategies.

1. Adoption of electric fleet vehicles

The use of electric vehicles is on the rise. It’s only a matter of time before companies make the switch to fully electric fleets.

One of the concerns about the transition from traditional to electric fleet vehicles is the cost.

Most experts predict that electric vehicles will be as competitively priced as internal combustion engines by 2022.

While transitioning to electric vehicles comes with high upfront costs, the money saved on fuel can eventually make up the expense.

In 2020, researchers at the U.S. Department of Energy’s (DOE) National Renewable Energy Laboratory (NREL) and Idaho National Laboratory performed an analysis on electric vehicle cost savings over the asset’s lifetime.

Their research showed that the average lifetime fuel cost savings can be between $3,000 to $10,500 over 15 years. The amount varies depending on the vehicle charging behaviors, equipment expenses, and geographic region.

For example, plug-in hybrid electric vehicles (PHEVs) in Washington can save $12,409 over a 15-year lifespan and up to $14,480 for battery electric vehicles (BEVs).

You can also offset the initial purchasing costs with a federal tax credit and some state utility incentives.

Electric vehicles even help improve your fuel economy. For instance, compare the U.S. Environmental Protection Agency’s (EPA’s) city-and-highway fuel economy estimates of the 2020 Toyota Corolla Hybrid with the 2020 Toyota Corolla four-cylinder, automatic vehicles using the U.S. DOE’s tool.

The comparison shows that the hybrid vehicle’s approximate mileage is 52 miles per gallon (mpg) while the conventional 2020 Corolla gets 34 mpg. That means the former is more efficient than the latter.

Additionally, electric vehicles reduce your carbon emissions compared with conventional vehicles. Electric vehicles and PHEVs on all-electricity modes produce zero tailpipe emissions. Although PHEVs using the internal combustion engine (ICE) can produce evaporative emissions, these are significantly lower than those by conventional vehicles.

Running electric vehicles contributes to greater long-term financial savings, environmental protection, and overall business sustainability for your fleet.

2. Remote fleet management

Technology is continually evolving, making it possible for businesses to work with remote fleet management companies, saving them significant time, money, and resources.

For instance, using fleet management software provides real-time visibility across multiple areas of operations, allowing for constant contact and seamless oversight anytime, anywhere.

3. Advancements in autonomous vehicles

While it will take some time for fleets to fully transition to autonomous vehicles (AVs), many companies are keeping a close eye on the full deployment of AVs for the simple reason that AVs have the potential to increase driving hours, productivity, and profitability.

4. 5G technology expansion

5G technology will continue to impact fleet management by improving response times and data transfer speed, boosting connectivity across applications and devices, and lowering operating costs.

Other benefits of the 5G expansion are:

  • Improved sensors. Internet of things or IoT sensors will improve road safety by ensuring commercial vehicle drivers keep to their lanes at all times, avoid collisions, and automatically dial 911 when there’s an emergency.
  • Real-time vehicle-to-vehicle apps. V2V apps allow every fleet vehicle to share data on speeds, traffic, and routes, making trucks responsive to their surroundings. This can significantly reduce the number (and severity) of collisions and crashes.

A reliable fleet manager plays a crucial role in achieving efficient and effective fleet management.