Whether you own one power unit or oversee several tractors with a pool of trailers, it’s important to know the efficiency of your business. Streamlining your business and cutting out the excess helps you turn a higher profit and keep your customers happy. You want to achieve better fleet utilization, meaning you get more productivity out of your assets and know where to expand to increase your fleet utilization rate.
This blog will cover several key areas where businesses often hemorrhage revenue with unnecessary expenses.
Metrics to Track Fleet Efficiency
To improve your efforts, tracking the right fleet utilization metrics is crucial. Be honest with your numbers and assessment to increase your margins and achieve higher profits with more gigs. Create a fleet utilization log by tracking these metrics.
Utilization & Costs
Measuring operations means understanding the yield of customers and lanes. Comparing the expenses to the outcome helps you determine which gigs are the best use of assets and time. You need to know how to calculate truck utilization and expenses before assessing the value of different lanes.
After examining the lane details, you need to calculate the costs per mile, including variables and lane-specific costs. This would include a vehicle utilization formula that compiles expenses like:
- Driver compensation
- Equipment price
- Insurance coverage
- Maintenance costs
- Broker fees or non-driver compensation
- Overhead expenses
Most companies are spending anywhere from $1-$3 per mile, which must be met with higher job payouts to make a profit. Once you know your lane costs, it’s time to consider lane value and utilization to find the most cost-efficient jobs for your business. Compare lane value by considering the cost of each lane along with these three key utilization metrics.
- Detention time and loading/unloading requirements: What are shippers and customers requiring from your drivers? Not all shippers or receivers will value your time or have efficient processes. It’s important to understand the efficiencies of each lane and how they impact your drivers.
- Empty miles and deadheading: Some lanes are one-way tickets to nowhere. You waste fuel and time if you can’t pick up a load on the way back. Drop-and-hook lanes can be much more efficient because you are taking loads both ways, which might be more cost-effective than a load that pays more one way.
- Percent of truckload capacity utilized: Are you filling your trailers to capacity? Some shippers won’t have full loads, so trailer sharing can be an option. Figure out which lanes are filling up your truck and which gigs are loading light. Consider combining loads to help save shippers money and condense multiple lanes into one.
Safety & Compliance
If you aren’t measuring safety and compliance efforts, you risk unhappy drivers and heightened expenses. Track the following areas to determine where you land with safety and compliance.
- Hours of service (HOS): Tracking HOS is vital for keeping drivers alert on the road and not overworked. However, remaining compliant is also crucial for avoiding violations that take your drivers off the road. Maintaining accurate logs with ELDs can help to gain insight into this metric.
- Fuel efficiencies requirements: Fuel costs are a driving force in your expenditures — typically landing as the second highest expense for carriers (just after driver compensation). While newer trucks following fuel efficiency regulations have helped cut costs, fuel prices are hitting record-breaking highs.
- Mileage management compliance: Driving logs are required by the Department of Transportation. However, this can be inefficient if you aren’t looking for ways to simplify the tracking and filing process. Electronic logging requirements have made this process easier, especially when using an easy-to-navigate system. Track to see how long you are spending to collect or manage data.
- Driving accidents: How many accidents are you having per million miles? Establish KPIs to uncover potentially unsafe driver behaviors. Accidents cause expensive repair burdens and can increase your insurance rates.
Maintenance & Repair
Unusable assets are a drag on your productivity and profitability. To improve the efficiency of your fleet, you must stay on top of tracking:
- Inspection results
- Repair turnover
- Asset life expectancy
- Maintenance needs
Maintenance can help avoid breakdowns that lead to costly repairs and reduced capacity. To support your maintenance efforts, you need to track:
- GPS and telematics connected to fleet management software. Look for unsafe practices that could cause harm to the driver or equipment.
- Diagnostic trouble codes (DTC) help catch issues before they become larger problems. Access to the DTC or engine fault alerts makes it possible to manage maintenance needs faster. You should also measure how often faults occur to understand fleet performance better.
- Preventive maintenance practices can reduce failures and breakdowns. Make sure you plan to provide regular maintenance and address minor problems before they grow.
- Odometer readings help you consider how much wear and tear your power units take. You should have maintenance scheduled automatically based on the odometer readings.
A high turnover rate of drivers can cost your company a lot of money. Poor productivity can also be an unnecessary expense. Evaluating your drivers and looking at how driver experience can impact your company is crucial. Consider such things as:
- Driver assignments. You might be limited to certain lanes with certain drivers. The flexibility and availability of your drivers impact what you can expect from them in terms of capacity.
- Performance metrics. How well is your driver performing? You can compile the overall costs and see how your drivers stack up by average margin and revenue. With this in mind, you should also consider their value to the network and overall labor productivity. Don’t forget to question whether you could be using your drivers more efficiently to get better outcomes.
- Employee satisfaction and retention. Happy employees are more likely to be more productive and efficient for your company. Plus, happy drivers are more likely to stick around. Your company will be more efficient if you address employee satisfaction and reduce turnover rates as much as possible.
- The customer experience. Customer experience is critical to measure because it can impact your business’s reputation. While each customer is important for revenue, a negative reputation can drive away potential customers. To help your business be more efficient surrounding customer experience, measure:
- Customer retention. Your reputation is impacted by whether or not customers choose to return. Forming solid working relationships with shippers offering consistent lanes is much more cost-effective. Drivers working with the same shippers or receivers face fewer unknowns. Measure how often customers are returning for additional business.
- Customer satisfaction score. Measure how your customers feel about your service. Understanding customer satisfaction can help you improve customer retention. Make as many changes as possible to accommodate your customers without hurting efficiency or driver morale.
- Customer revenue growth. Are customers spending more with you? Measuring what customers pay and what you net from the exchange helps you determine the value of the relationship. Look at how customers are growing as a company to assess the long-term value of the relationship.
- Damage claims. Are you struggling to get products into loading docks without issue? Damage claims can hurt your reputation and profitability. You aren’t efficient if your speed causes heightened damage. Track damage claims and work to pinpoint any consistent issues in your process. Is only one customer making most of the damage claims? Maybe you need to rethink loading or address their packing process.
Technology can be a huge advantage if your company has the right systems in place. It’s important to measure the efficiency surrounding your systems and employee practices. You may find that there are software solutions to help your team do their jobs faster by automating manual tasks. Measure the time surrounding:
- Fleet management
- Trailer rental
- Loadouts or relocation
- Empty miles
These tasks have modern tech solutions that can help you streamline the process. For example, vHub helps carriers, owner-operators, and brokers manage their assets. With vHub, you can digitize the load-out process, streamlining relocation and reducing empty miles. You’ll have a smarter way to manage asset rentals or trailer sharing.
Metrics don’t mean much if they are just numbers on a sheet. What are you comparing your results to? There are several ways you should compare your metrics to increase efficiency.
- Competition rates: How do you stack up against other companies in the industry? Knowing competitors’ metrics can help determine if a better process is possible.
- Past benchmarks: Have you improved since you started tracking efficiency metrics? Before making any changes to address efficiency, it’s important to get a baseline. You should compare your new numbers to that baseline as you make changes. If you don’t see improvements, you know you need to try a different strategy.
- Company goals: What do you think you could realistically achieve? Setting goals isn’t about wishful thinking; it’s about strategy. You need to set goals that are challenging — but possible — to reach. Your team will feel discouraged and frustrated if your goals are too lofty. If your goals are too low, you won’t hit the growth and productivity levels your business is capable of achieving. Establish fleet management KPIs (key performance indicators) to help determine if you are on the right track.
How to Improve Fleet Efficiency
Are you looking for ways to improve fleet efficiency? If you can reduce company costs, you can lower the consumer’s costs and increase business as a preferred carrier.
Here are four tips to help you get started.
Perform an Equipment Audit
First, know what you have and what it’s costing you. Ownership isn’t cheap, and your assets should stay in use to help improve your bottom line. To perform your equipment audit, make a detailed list of:
- Vehicle and trailer (assets) available.
- Available parts and inventory.
- Repair or maintenance resources.
- Current capacity.
Determine Asset Utilization
Once you have a solid idea about what you have on hand, you need to determine how efficient your setup is and how you could improve. This means you need to list:
- Asset productivity and utilization.
- Wasted or idle assets.
- Issues impacting asset utilization.
- Potential capacity with increased assets.
Evaluate Maintenance and Repair Needs
All assets should be in good working order or they are simply wasting space. To make your fleet efficient, you must evaluate what can be repaired. If the cost to repair an item is too high, you need to offload the asset by selling or junking it. In some cases, you must replace assets to increase your capacity. To get started, take stock of:
- Asset replacement needs.
- Asset repair needs.
- Technician productivity and turnaround time.
- Financing options to replace assets.
Consider How vHub Can Help
As you take stock of what you have on hand, you may find that you have too many trailers on hand without enough tractors. Or you might find that you have plenty of power but not enough trailers when some get held up at receiving docks.
vHub is a modern solution that helps you digitalize loadouts and trailer sharing. Using our platform, you can list excess trailers to gain back profits on assets that would otherwise sit idle. Rather than dive into financing new assets, you can also use vHub to rent trailers to benefit from increased capacity.
Improving Trucking Fleet and Trailer Utilization
Your business can undoubtedly benefit from smarter and more efficient technology. With the right system in place, you can accomplish more without overloading your team.
Understanding your fleet management metrics allows you to set goals and work towards a better system. The more you can lower the bottom line, the better your margins and the more competitive you can be with pricing.
If you are interested in improving asset utilization, vHub can help. Our platform manages smart asset sharing — making it easy to see listings, complete rental agreements, and track rental information in one convenient place. Listings include trailer details, images, availability, user ratings, and more.
Getting started is fast. Simply sign up for a vHub account and begin browsing listings now!