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The management of the company fleet: how is the fleet managed?

The management of the company fleet: how is the fleet managed?

Anyone who deals with freight transport and logistics, and therefore has to manage a company fleet, is aware that one of the most important aspects concerns precisely the management of vehicles. Therefore, the management of the company fleet means the set of activities that allow to mitigate the economic impact that the fleet can have on transport costs. In this in-depth analysis we will effectively understand what fleet management is and we will analyse the fundamental parameters to be kept under control.

The management of the corporate fleet

Fleet management, in the Anglo-Saxon countries known as fleet management, is a fundamental strategic activity for a company operating in the transport sector. It includes a number of activities that relate to:

  • management of the acquisition and disposal of vehicles;
  • management of motor vehicle liability contracts;
  • logistical management of vehicles by means of warehousing and transfers;
  • management of the ordinary and extraordinary maintenance of the vehicles;
  • management of current expenditure on vehicles (fuel, taxes, claims, etc.);
  • management of mission planning activities.

The objective of the fleet manager, i.e. the company fleet manager, is to optimise every single aspect of the fleet as much as possible in order to achieve better efficiency and productivity in each transport operation. In this sense, the fleet manager must keep under constant control several parameters including the total cost of ownership, which we will now analyze.

The total cost of ownership of the corporate fleet

The total cost of ownership, abbreviated as Tco, represents all the sum of the costs necessary to guarantee the owner of a certain equipment. This approach, already used in the past in various fields, is widespread with the advent of computer equipment. A sector in which the obsolescence of equipment is so rapid, requires a careful analysis of the costs and benefits that it will bring.
The total cost ownership approach has also spread to other sectors, including transport. In this case, the Tco represents the total cost of a commercial vehicle, during its entire cost of view. To calculate it, several parameters must be taken into account:

  • net purchase price of the commercial vehicle;
  • interest rate, when purchased with financing;
  • value of the vehicle at the end of the period of use considered;
  • expected years of use of the vehicle under normal conditions
  • expected km/year ratio
  • expected average fuel consumption
  • average fuel cost over the expected period
  • percentage of use of urea
  • cost of urea
  • cost of a set of tyres
  • lifespan of a set of tyres
  • maintenance and repairs
  • cost of the driver
  • average disbursement of taxes envisaged for the purchase and possession of the vehicle
  • motor vehicle liability insurance
  • annual motorway toll

It is clear that some of these parameters require a deep knowledge on the part of the fleet manager of the sector in which it operates: number of annual kilometres of the fleet, average consumption of the fleet’s vehicles, average incidence of accidents on the corporate fleet, etc.. On the basis of these, it is possible to calculate with good precision the total Tco of the vehicle. In this regard, there are specific tools that allow you to calculate the total cost of ownership automatically.
However, one thing should be kept in mind: the overall cost of a vehicle, in itself, is meaningless. It is the strategic analysis of that cost, compared to the benefits it will produce, that can tell the fleet manager the possible sustainability of the investment and the possible margins of efficiency. In fact, a single parameter can significantly vary the total cost of ownership and, therefore, the sustainability of the investment.

Practical advice for the management of the company fleet

As mentioned, the manager who manages the company’s fleet has enormous responsibilities on him. Margins are often very small and careless fleet management can cancel this out as well. It goes without saying, therefore, that fleet managers do not improvise. There are special courses of study to obtain a proper management of the company fleet. Much, however, depends on the experience of the manager.
That said, some tips for effective management of the corporate fleet. A good fleet manager has a system for managing all the data necessary for strategic evaluations. It would be unthinkable, given the latest technologies, to manage fleets, even small ones, with paper and pen. Today, systems are available that can constantly monitor vehicles in every aspect. They can always keep a close eye on mileage, which is crucial to assessing the size of the company’s fleet. In addition, they can highlight any faults, or the approaching of expiration or scheduled maintenance. In this regard, according to the principle that prevention is better than cure, it is essential to provide for a fleet maintenance plan. In this way, forgetfulness, or overlapping, which can make the management of the fleet more complicated, is avoided.