COVID-19 pandemic was a black swan event that turned businesses on their heads globally. We might have not fully recovered from the pandemic, but we are able to witness how it has impacted the fleet management businesses.
The spike in online ordering has led businesses to deal with a massive volume of orders in their last mile and the profit margin for freight businesses is too low. As the pandemic subsides, there is huge pressure on these businesses to control their fleet costs.
Though controlling fleet costs is mandatory, fleet management businesses also have delivery promises to fulfill. Hence, they are focusing on maximizing their fleet utilization to hit their on-time delivery targets by controlling overall last-mile delivery costs. The major focus of fleet management companies post COVID-19 has been to minimize costs and maximize fleet utilization.
Challenges faced by businesses in fleet management since Covid
Since the outbreak of the coronavirus pandemic, fleet management businesses have been facing a slew of challenges. Their delivery complexities and inefficiencies are increasing their fleet costs on a daily basis. It’s time for them to address the delivery challenges that result in high delivery costs and reduction in fleet utilization. Some of these challenges are as follows:
- Difficulty in estimating an accurate delivery time
- Inability to deal with ad-hoc delivery requests
- Increase in vehicle downtime
- Difficulty to save on fuel costs and consumption
- Rise in driver shortages
- Difficulty to fulfill new customer expectations
- Improving customer experience without driving up operational costs
Post-Covid initiatives businesses are using for cost reduction and maximum fleet utilization
Crisis management consists of four different stages: mitigation, preparedness, response and recovery. In the years 2020 and 2021, businesses worked in the first two stages—mitigation and preparedness. 2022 is the year for working out response and recovery strategies and fleet management businesses are not an exception to this scenario.
COVID-19 pandemic has forced fleet management businesses to have a complete overhaul of their systems and processes. It is the time to direct their efforts towards cost reduction and fleet utilization. Find out the initiatives that fleet management businesses take in their last-mile to reduce costs and maximize fleet utilization.
Rightsizing the fleet
Driver shortage is the burning issue that fleet management companies have been facing this decade. Lack of workforce planning has led managers to seriously assess their fleet size. Rightsizing the fleet may be a fleet reduction measure from the eyes of decision-makers, but they have to approach it carefully.
A significant number of vehicles removed from the fleet might only give fewer cost savings. The decision to rightsize the fleet depends on how effectively freight managers have allocated orders to assets and resources.
Monitoring fleet productivity
The first step to ensuring fleet utilization is to effectively monitor fleet productivity. Businesses are adopting fleet tracking technologies in the last mile to bring changes in the way they utilize fleets.
With the help of a vehicle tracking solution, fleet managers can find out the vehicles that drove maximum empty miles and put them to right use. It helps them check and rectify any route deviations that lead to a fall in productivity.
Managing fuel consumption
As the Ukraine-Russia war broke out, fuel prices began to skyrocket. The biggest challenge that every fleet manager faces is managing fuel consumption. When dealing with urban deliveries, managers are actively looking for opportunities to minimize the excessive or unnecessary idling.
To handle these rising fuel costs effectively, fleet management companies have started investing in technologies such as route planning and fleet tracking software. A route planning software factors real-world constraints for deliveries and returns to create optimal routes.
By integrating fleet tracking software and route planning solutions, fleet management companies can track excessive idling and devise strategies to counter it. Reducing vehicle idling helps them minimize their operational costs and improve their fleet utilization.
Improving on-time delivery metrics
Customers want their products to be delivered on a specific time window as promised. To fulfill on-time delivery targets, fleet managers should assign the orders to the right vehicle and suitable driver. The more a business hits its on-time delivery targets consistently, the better the customer experience.
The machine learning algorithms of a route planning software takes into account all delivery constraints like capacity, vicinity, driver skill set, vehicle type, delivery windows, order preferences etc and generates efficient delivery routes. The improved quality of routes help drivers complete their deliveries on-time, thereby improving metrics like the First Attempt Delivery Rates (FADRs) and On-Time In-Full (OTIF) delivery rates.
By employing a fleet tracking software, businesses can easily identify when they are breaching their Service Line Agreements (SLAs). The software alerts notify the fleet managers when there are breaches of any type like route breaches, service breaches, or geofence breaches. These timely alerts on service breaches help them notify customers on delivery delays and estimate an accurate delivery time for it.
As unexpected events disrupt fleet operations, it becomes difficult even for well-experienced managers to keep their fleet in check. An investment in last-mile logistics technologies supports them in their delivery planning and management. It supplements their efforts to develop an effective fleet utilization strategy that contributes to cost reduction and improves operational efficiencies.