Different types of costs are associated with a fleet of trucks. Some examples of hard costs include labor, fuel, and truck parts. These types of fleet costs are easy to identify and track. Indirect, or soft costs, can be hard to identify and can remain hidden in a budget. This makes it challenging to operate a fleet in a cost-effective way. Look at how to identify indirect costs and what fleet managers can do to eliminate them.
Examples of Indirect Costs
In a May 2020 article in Heavy Duty Trucking, Ed Petersen, CEO for Wrench explains that, “…soft costs are generally categorized as expenses incurred that create lost revenue opportunities.”
An indirect cost could be an unexpected repair or maintenance task that keeps a driver and truck off the job for a period of time.
This sort of cost can also be a hidden cost resulting in an even bigger loss of revenue. Two examples of hidden costs include a failure to keep drivers up to date on the latest training or not taking advantage of the latest truck technology.
Revealing Soft and Hidden Costs
A fleet manager can’t eliminate soft costs without knowing first knowing what they are.
Steven Saltzgiver, director – business development for Mercury Associates has a suggestion for managers.
“Develop a comprehensive fleet cost allocation plan to identify, capture, and quantify all direct and indirect costs associated with managing your operation.” (Heavy Duty Trucking, May 2020)
Documenting and updating information on all of these costs can help fleet managers to identify them, then determine how to eliminate them.
The Benefits of Telematics
A telematics report provides accurate information on the trucks in a fleet. These reports can convey information on how much fuel a truck consumes. This data could indicate excessive idling which can be reduced to eliminate that cost.
Data on driver metrics can reveal indirect costs as well. A driver may be guilty of arriving early and not getting to work right away. This cost is avoidable by implementing an auto system for logging in and logging out.
Managing Insurance Costs
An increase in insurance premiums is another hidden cost. Fortunately, a manager can take steps to lower these fleet costs. Employing telematics, monitoring driver metrics related to safety, retaining drivers and performing regular truck maintenance are all steps toward controlling insurance premiums.
A fleet of trucks that operates in the safest way possible is going to be a low risk for an insurance company.