Welcome back to Part II of our in-depth look at fleet utilization. Today, we will have a closer look at the basic information belonging to the quantity class, owners’ locations, and basic attributes. We talked about vehicle quantity in our last post, but it is not as straightforward as it may seem. Let’s dive right into more on how fleet utilization should be addressed.
A Look at Vehicle Visibility
In fact, it is quite common to initiate a utilization study and identify those key personnel that do not have visibility regarding the quantity of vehicles or pieces of equipment in your fleet. To perform even basic calculations such as average distance driven per vehicle or the amount of fuel burned per vehicle, you must know the count of vehicles in the fleet as each day passes.
First, you want to avoid the temptation to exclude vehicles which people feel should not be counted for whatever reason. It is fairly common for a reserve fleet to not be counted. Still, these vehicles should be counted, as they affect utilization and the fleet’s bottom line.
Another aspect trucking companies must look at is pre-delivery or inspection. A CMV that is awaiting pre-delivery inspection or awaiting remarketing is often counted on the books. But it should not be counted when considering utilization. These vehicles, and vehicles that are out of service for other reasons, influence utilization rates and should be properly counted or discounted when considering fleet utilization.
A Look at Odometer Readings
Understanding odometer and hour meter data for a certain period is critically important. Generally, odometer or hour meter data is the key metric for utilization. In fact, fleet managers still use it today. It is also of great value to capture and use if your fleet management system provides such data.
Odometer data is at the core of large utilization initiatives such as in the Federal Government Vehicle Allocation Methodology (VAM) and in many state governments fleets. While it is an objective, easy to capture data point, there are quite a few variables that can heavily influence the value of odometer or hour meter data. Consider that there are many other data points that may prove more valuable in evaluating the true needs of a fleet relative to utilization.
Odometers or hour meters can be an important source of data. It can be used to compare one CMV to another and even one fleet to another. Odometer data is used to compare miles driven per vehicle class across different Federal agencies. The federal government even has a utilization chart they provide for fleets to evaluate as they isolate odometer readings.
It is also important to consider that a miles-driven metric can vary significantly from one fleet to the next. This is solely based on the geographic area of service of the fleet or a given fleet’s pattern of use. A utility vehicle on a small municipal yard compared to a last-mile delivery vehicle of the same class driven across a large county will have very different odometer or hour readings even though they may both be used similarly over a given period.
A Look at Number of Hours and Days Used or Idle
One of the most valuable metrics relative to monitoring utilization is typically a metric that shows how often a vehicle is being used or is otherwise unavailable to other truck drivers. Conversely, if the vehicle is sitting, it is not-in-use or idle.
This may sound straightforward, but there are two very different ways to interpret whether a vehicle is in use. First, the vehicle must be in use by a driver. In other words, they are in possession of the keys or the vehicle. Second, the vehicle must be moving or idling as measured by GPS or other telematics devices.
To ensure you are getting the full picture, make sure you collect data you need to make decisions and changes to your fleet. In fleets with short duration trips, for example, understanding hour-by-hour utilization of each vehicle may be important. Why? Because the same vehicle is often in use many times per day. If the data is limited to presenting utilization only by the day, you won’t get a true understanding of the number of vehicles required to get the job done.
In most fleets, the ability to view day-by-day utilization is sufficient to understand the proper count of vehicles and their use. Still, some fleet management systems can present data that shows the actual number of vehicles used in each period. It can measure this against the maximum number of vehicles in use.
As a rule, vehicle utilization statistics are quite valuable. It is difficult to understand what fleet changes you should make without considering vehicle class, location, and other important vehicle utilization attributes. Knowing that you have a situation of under-utilization is good. But knowing which class of vehicle is contributing to that under-utilization is even better.
A Look at Fuel Consumption and Trip Number
Fuel consumption closely mirrors odometer or hour meter data in its usefulness to a fleet manager assessing utilization. Fuel consumption is also an easy metric to capture. This is especially true if you enable electronic data capture for fuel management. Use your fleet management system or truck telematics for this task.
There are a couple things to consider about this metric, however. One, idling significantly impacts fuel metrics. Idling represents a different type of utilization yet is equally important to understand. Differing classes or types of vehicles, whether Class 8, van, hybrid, or electric, will provide different types of data. As such, your reporting and data analysis should differ by vehicle class and type.
Number of trips will also be important as you analyze your utilization metric. Counting the number of trips a vehicle takes is a simple way to determine utilization. While this metric is good for comparing relative use across a fleet or across vehicles from one period to the next, it has its flaws. Because rarely does it provide the insights necessary to determine whether the right quantity and type of vehicles are available. You must combine number of trips with other metrics to gain proper insight into your overall fleet utilization.
There is one exception to this rule, however. The value of capturing the number of trips increases if used to cost-justify keeping a vehicle. In the end, understanding the number of requests for vehicles that cannot be fulfilled is an important metric. Why? Because fleet utilization occurs in a shared fleet environment. Trip number is an indication of vehicle need.
A Look at Outside Rentals
Occasionally, trucking companies must look to outside rental companies to backfill capacity they may not have on hand. That’s why it is important to monitor the occurrence and expenses related to outside rentals, especially as you analyze fleet utilization. Many times, trucking companies use outside rentals to meet peak demand, or when there are not enough vehicles in the fleet to complete a specific request.
Fortunately, it is pretty easy to do a cost/benefit analysis when it comes to rentals. The key thing to do is to examine the cost associated with the rental versus simply purchasing a vehicle or leasing one long term. As with all utilization metrics, fleet managers want to analyze outside rentals over the long-term. They need to look at the overall cycle of fleet use. Analyzing this data may yield clues that allow fleets to be more cost-effective.
In some trucking companies, fleets do not manage outside rentals. Instead third-parties manage them. Or they may group with other fleet management efforts. No matter who analyzes this data, fleet managers must have clear visibility of all vehicle use operations that impact overall costs.
A Look at Personally Owned Vehicles
This is a little-known or looked at factor in most fleets. It is important that fleet managers evaluate this metric from a similar standpoint as they do with outside rentals. Why? Because research has found that personal vehicle reimbursement can be over 30% more expensive than utilizing an internal motor pool or even an outside rental.
It is critical that fleet managers have full visibility of costs related to the use of personal vehicles. In fact, it is not common practice for fleet managers to be notified of personal vehicle reimbursement. This is especially bad because personal vehicle reimbursement can hit a trucking company’s bottom line twice. This happens both to reimburse for the use of the vehicle and the cost of the vehicle sitting idle.
This concludes Part II of our in-depth look at fleet utilization. In Part III, we will conclude our series with a look at how trucking companies can perform internal studies. Only then can they ensure they have a handle on their fleet utilization needs.