What Is Fleet Management?

To maximize productivity and safety while making cost savings, transportation companies employ a variety of practices that all fall under the umbrella of effective fleet management.

While fuel prices have stabilized, inflation rates continue to rise and driver shortages persist. Therefore, having tried and tested fleet management practices in place to boost efficiency and frugality is more important than ever.

Of equal importance is driver safety, so special attention should be paid towards health and safety compliance and vehicle tracking. This makes up another facet of a well-rounded fleet management strategy.

Read on to learn more about what fleet management involves, the best practices for managing a fleet in 2024, and learn more about the best fleet GPS tracking systems on the market right now.

What is Fleet Management?

Fleet management (FM) refers to the organizational and logistical aspects when overseeing and managing vehicles owned or leased by a company.

Fleet management covers everything from vehicle maintenance, telematics, and fuel management to health and safety compliance. The broad goal is to enable companies to keep track of their vehicles, optimize routes taken, reduce fuel and maintenance costs, minimize vehicle downtime, keep drivers and other road users safe, and abide by regulatory requirements.

‘Fleet vehicles' refers to a wide range of vehicles used for various purposes including freight trucks, rental cars, refuse vans, street sweepers, delivery vans and bikes, construction vehicles and more. They can be powered by ICE (internal combustion engines) or battery-powered.

Why is Fleet Management Important?

For companies that rely on transportation, fleet management is critical if you want to improve efficiency, reduce costs, and ensure safety compliance. Without oversight of vehicle tracking, maintenance and driver management, organizations can run the risk of preventable expenses developing into significant drains on their budget.

Here are some of the key reasons why fleet management is essential:

  • Saves money by optimizing routes, reducing mileage, and improving fuel efficiency
  • Increases productivity by minimizing vehicle downtime due to unforeseen repairs
  • Ensures driver and vehicle safety through monitoring and preventative maintenance
  • Provides data and analytics to support proactive, instead of reactive, decision-making

In today’s economy, every business needs to ensure it’s getting a return on investment (ROI). Effective fleet management is one way for organizations to meet transportation demands in a streamlined, cost-effective manner.

Fleet Management Benefits

A study showed that economic challenges were the most pressing issue for fleet managers last year, while labor shortages, supply chain issues and operational inefficiencies were also up there.

A robust fleet management system has great potential to help overcome these challenges, here's an insight into the main areas fleet management can help with.

Increased operational efficiency

The main draw of fleet management is broadly improving the efficiency of your vehicles and drivers. Fleet management solutions provide real-time visibility into vehicle locations, metrics, and scheduling. This allows for dynamic routing, reduced downtime, and an optimal division of resources.

Cost reduction

The direct effect of optimizing logistics and implementing fuel management programs is saving money on fuel expenses, driver wages, and vehicle maintenance. Cost reduction aims to find ways to maintain the same vehicles and services while spending less. Some key ways to do this are to ensure you are following the most efficient routes, using smarter planning when it comes to jobs and ensuring fuel-saving methods are practiced by drivers.

Driver safety

Another key plus of fleet management is the emphasis on proper driver training, scheduling, and vehicle maintenance, all of which can reduce preventable accidents caused by issues such as driver fatigue or faulty vehicles. Although some drivers may feel uneasy about being monitored by GPS trackers and dashcams, it ultimately promotes safer driving habits and protects their liability in the event of road accidents.

Cost savings

In addition to cost reduction, which focuses on spending less, you can also identify where savings can be made through eliminating some of your fleet management costs. By optimizing the efficiency of routes, vehicles and driver behavior, you can identify redundant vehicles and services, and realize that you can get by with a smaller fleet. In doing so, you'll trim your overall outgoing expenses. Other ways in which you can achieve cost savings within your fleet is by bringing maintenance services in-house instead of outsourcing or by switching from ownership to short-term rental contracts.

Fleet Management Challenges

Like many industries, the fleet industry faces pressing challenges, especially those relating to external economic factors. Going into 2024, fleet managers should focus on reducing costs, improving operational efficiency, and increasing driver productivity in the face of these mounting external pressures:

Cost of fuel

While fuel prices seem to have plateaued, the instability throughout the past couple of years means that fleet managers are still feeling the pinch. It’s estimated that fleets spend around 25% of their budget on fuel, so it’s a significant expense. Optimizing routes and schedules can help fleets save fuel by taking the quickest routes and completing jobs in the most logical order to cut down driving time.

Increased fleet demand

Due to inflation and greater pressure on supply chains, sourcing new vehicles and parts is becoming a greater source of economic concern. Rather than buying more fleets and hiring more drivers, fleet managers can avoid unnecessary investment by focusing on improving the productivity of existing vehicles and drivers. This can be achieved by monitoring driver behavior (such as idling) and optimizing routes to ensure that jobs are completed efficiently.

Driver shortages

The American Trucking Association (ATA) projected there would be a driver shortage of over 60,000 in 2023 – a number that is set to increase to 82,000 in 2024. Hiring trained commercial drivers is proving difficult for fleet managers worldwide. Again, route optimization can help here to ensure that existing drivers are maximizing their output.

Automation and EVs

Two of the trending topics in the fleet industry are automated and electric vehicles. Although the US is lagging behind Europe in terms of adoption, the government has pledged to switch federal agencies to 100% electric vehicles by 2035, indicating that the rest of the country will soon follow suit. Upgrading vehicles with newer models is already an expensive process, and installing charging infrastructure could make it a significant investment.

How to Effectively Manage a Fleet

Managing a fleet covers everything from hardware solutions to hands-on maintenance. Here are some of the most vital components:

Vehicle Tracking

One of the key tools of fleet management is GPS tracking systems. A GPS tracker usually consists of both hardware and software that allows you to monitor real-time vehicle locations, routes, and vehicle maintenance. It provides data such as mileage, fuel usage, driver behavior, engine diagnostics and vehicle usage to inform future planning and scheduling. The use of predictive analytics technology supports proactive maintenance which minimizes the downtime of your vehicles by catching breakdowns before they occur.

What is a Vehicle Tracking System?

Vehicle tracking systems use GPS satellite connectivity to transmit real-time location data. The hardware tracking devices installed in each vehicle connect to software platforms that gather, analyze and report on the vehicle's data. Managers use this telematics insight to optimize fleet usage.

Driver Management

Comprehensive driver management involves training, route planning, ongoing monitoring, and incentivizing safe habits. The use of tracking software can also help you to track metrics like aggressive driving, idling, hard acceleration/braking and seat belt use. The fundamental goal of driver management is to ensure drivers are fleet safety certified while meeting targets and KPIs. If you have the budget, you may employ skilled dispatchers to oversee routing and scheduling to meet transportation demand efficiently.

Fuel Management

With fuel being the top expense of most fleets, fuel management is critical for cost efficiency. This entails tracking fuel usage, optimizing routes and refuelling stops, and recording instances of harsh braking/accelerating, idling, speeding and the use of cruise control. After collecting this data and identifying areas in need of improvement, you can better coach drivers on how to save fuel. The desired outcome of fuel management is maximized miles per gallon (MPG) across the whole fleet.

Vehicle Maintenance

Consistent preventative maintenance and quick repairs keep vehicles road-ready, prevent major issues, enhance safety, and extend the vehicle’s lifetime. Fleet management systems track maintenance needs and service history across all vehicles. This data can be used to make smarter decisions about servicing, purchasing new parts and, eventually, when to replace vehicles.

Compliance & Legal Considerations

Fleet managers should ensure adherence to all federal and state regulations regarding vehicle safety, emissions, inspections, driver licenses, hours of service, load securing, waste disposal, and more. Not following compliance regulations means you'll run the risk of fines, impound fees, or criminal charges, so standardized protocols and training are crucial. For more information, consult our complete guide to fleet compliance essentials.

Fleet Management Team Structure

Effective fleet oversight requires cross-functional collaboration:

The fleet manager directs the entire fleet operation. They are responsible for assessing current operations, mapping future needs, setting budgets, acquiring vehicles, hiring staff, and oversee the day-to-day running of the whole fleet.

Another key figure, your drivers will operate your vehicles daily to transport any goods and materials. To secure this role, they must undergo mandated training and certification. In addition to operating vehicles, it's important that they can adhere to routing, schedules, and refueling protocols.

Your maintenance team will include mechanics and technicians who will diagnose and repair your vehicles. They may work in-house or externally to perform preventative maintenance and safety inspections, or provide advice on servicing needs and end-of-life replacement.

IT and telematics professionals manage your tracking hardware/software. They compile vehicle analytics reports to inform operational decisions and proactively identify developing issues before they become issues for mechanics to fix.

Safety and compliance officers will cater to the wider business, but will conduct driver reviews and training to ensure adherence to transport regulations.

Fleet Management Software

Fleet management software centralizes the organization, monitoring, and reporting required for oversight into one user-friendly interface.

Systems like Verizon, Samsara, and Motive track vehicles, drivers, fuel usage, and maintenance so that you can seamlessly maintain control over several metrics for multiple drivers and vehicles. The telematics data is then compiled into dashboards and analytics to inform day-to-day operational and logistical decisions. The platforms enhance coordination and visibility throughout the whole team, acting as a line of communication from management to mechanics, technicians, and drivers.

Robust fleet management software is invaluable for efficient operations – that’s why purpose-built solutions have become so popular across the fleet industry. The top platforms can be tailored to a fleet’s needs to empower managers to run their expanding transportation operations to the best of their ability.

Final thoughts

Fleet management is super important for companies as it helps them transport goods and services efficiently. Nowadays, it's even more vital as optimizing the use of fleet vehicles can save a ton of money with fuel prices going up and inflation rates remaining volatile. By keeping track of vehicles and maintaining them well, companies can meet demands cost-effectively.

With tools like GPS tracking and fleet management software, managers can get a clear picture of day-to-day operations. This means that they can make data-driven decisions to cut costs and ensure operations are as efficient as possible.

Although fleet management is not without its challenges, making operations safer and more efficient is crucial to the success of fleet businesses. In fact, fleet management is an essential aspect of running a successful modern transportation company.

Written by:
Alice is one of Expert Market's resident software experts, helping businesses improve their efficiency or reach, with an emphasis on productivity software, CRM and telecommunications.