How to improve fleet utilization?

How to improve fleet utilization

Trucking volumes have increased by 30% in 2020. -McKinsey study on US freight after COVID-19

Fleet managers play a crucial role in determining the success of logistics. They have numerous responsibilities associated with fleet utilization like improving productivity, minimizing fleet risks, and increasing efficiency. The COVID-19 pandemic has made the already tough job tougher. 

What is fleet utilization?

Fleet utilization involves the measurement of fleet performance or use. 

But is it really that simple an answer. There is optimum fleet utilization for each location, each class of vehicle at different time windows.

Therefore, if you ask for a definition, ten fleet managers could possibly come up with ten different answers. Fleet utilization is a comparison of demand to fleet capacity. Capacity and demand change daily, and hence the approach to manage it varies as well. 

What is fleet utilization

Why is fleet utilization crucial?  

A well-utilized fleet not only improves productivity and reduces costs; it also boosts profitability. Here are the reasons why fleet utilization is important.

Ensure Optimal usage of fleet

A parked truck attracts only storage costs. Also, an empty running truck does not attract any revenue. It’s pointless to store vehicles that are largely going to be under-utilized. Maximizing vehicle utilization helps you increase revenue potential with fewer resources. 

Manage Maintenance costs

Fleet managers have to focus on maintenance costs. A knowledge of optimum vehicle utilization helps them predict and prepare for maintenance related issues. 

Right fleet size for operations

Analyzing fleet utilization helps a company right-size its fleet. Utilization answers two critical questions: 

  • How many vehicles do you need to meet business needs? 
  • What are optimum miles driven (over a set timeframe, say, a day or week) so that a vehicle is considered adequately utilized? 

Four components of a right-sized fleet

  • Right quantity of vehicles– Is there a right number of vehicles that can meet all delivery requirements? 
  • The right location of vehicles– Is a vehicle accessible within a short (er) distance for drivers? 
  • Right type/Class of vehicles– Do you have the right class/ type of vehicle that fulfills delivery requirements? 
  • Right time of vehicle availability– Are the vehicles accessible to drivers when they are assigned a delivery task? 

Designing a multi-pronged strategy to enhance fleet productivity 

The profitability of logistics companies depends on fleet productivity. Fleet managers design a multi-pronged strategy to maximize revenue from fleet optimization. They focus on different angles to improve the productivity of the fleet. Fleet utilization helps them build this strategy using the following insights:  

  • Driving habits, performance, and behavior 
  • The gap between vehicle specifications and its actual usage 
  • Trucks that suit driver requirements 

How to maximize fleet utilization?

How to maximize fleet utilization

A wide range of factors like customer requirements and access restrictions make it difficult for fleet operators to maximize fleet utilization. But there is a process to get the most out of the available fleet.

Focus on crucial fleet metrics 

If you are looking to improve fleet utilization, then begin with data. Here are the essential metrics for measuring fleet utilization. 

  1. Miles Traveled: 

Traveling lesser miles reduces the number of trips and optimizes fuel consumption. 

  1. Fuel Consumption:

Fuel consumption provides an essential and additional view compared to miles traveled. It helps logistics companies reduce their fuel costs

  1. Time utilization

Time utilization is the most crucial metric in any logistics scenario. It involves many aspects of a vehicle like:

  • Time spent on the road
  • Pre-loading and awaiting departure time
  • Idle time
  • Loading and unloading time
  • Delayed delivery time 
  • Maintenance repair time
  1. After hours utilization:

After-hours utilization can eliminate congestion issues, but it depends on environmental regulations. Fleet managers should check if after-hour deliveries benefit their business. 

  1. Empty running/ Vehicle fill 

Logistics companies focus on reducing their empty journey legs and maximizing their average weight utilization. It is essential to minimize the time spent loading and unloading to get this metric right. 

  1. Job History 

After having all the essential metrics established, it is easier to spot areas of improvement in the job history. Logistics managers should analyze driver performance, route, and then find patterns. 

The only way to assess the original plan and the resulting performance is by analyzing job history. It helps you identify bottlenecks in delivery schedules by improving customer service or speeding up the delivery time. It tells where you lack in terms of meeting customer delivery standards. 

Selecting the right vehicle size 

Fleets cannot find a one-size-fits-all approach to ever-changing customer demands. The right vehicle size for effective fleet operations depend on 

  • Different-sized vehicles
  • Customized fleet requirements
  • Under-utilization of vehicle deck 
  • Volume of deliveries 
  • Optimal use of extra vehicles 

Loading and Unloading 

It is necessary to make every delivery count. Fleet managers aim to reduce under-utilized space by planning deliveries, load shapes, volume, and height effectively. 

Fleet managers should also balance the time lost by drivers in loading and unloading in an optimized manner.

Last-minute re-routing challenges 

The biggest challenge for a delivery company is to manage last-minute changes due to traffic, roadblocks, accidents, breakdowns, etc. It is necessary to optimize route planning so that the last-minute changes are accommodated. This helps them avoid missed or failed deliveries. 

The efficiency of a fleet depends on how delivery companies manage last-minute routing challenges. 

How can technology improve fleet utilization?

How technology improves fleet utilization

Beyond workforce and fleet assets, logistics optimization software plays a vital role in improving fleet utilization. Here’s how delivery logistics software benefits fleet utilization. 

Reduces fleet fuel costs 

Poor driving behavior leads to increased fuel consumption. Idling vehicles, rash driving, and harsh braking leads to increased fuel consumption. These also lead to increased wear and tear.

A fleet tracking software monitors the whereabouts of a vehicle and generates useful reports on driving performance. These insights help fleet managers eliminate risky driving behavior and reduce time spent on the road. 

Provides optimized delivery routes and schedules 

Optimal route planning ensures improved customer satisfaction. Delivery time windows and accurate arrival estimates are crucial for  success. A route planning software provides the best possible route, and fleet tracking software enables you to check how long each delivery takes. These technologies shorten delivery time. 

Route optimization software provides updated and dynamic route plans even if there are last-minute changes. It leads to satisfied customers and also improves driver safety as drivers need not rush for deliveries, thereby reducing the risk of accidents. 

Enables Contactless deliveries 

Industries in the US have witnessed a 20% increase in contactless deliveries.- McKinsey report on Customer experience after COVID-19. 

COVID-19 has led to  rise in contactless deliveries globally. Electronic Proof of Delivery software helps field agents to collect delivery notifications without any physical contact with customers. This solution allows logistics companies to reduce fraudulent return costs and failed delivery costs. 

An increase in repeat deliveries and failed deliveries affects fleet utilization. The use of e-POD software validates completed deliveries, thereby improving First Attempted Delivery Rates (FADR). It also helps fleet managers check the on-time delivery status for completed deliveries. 

Minimizes fleet maintenance costs 

Fleet tracking solutions collect insights on mileage, fuel consumption, idling, and engine hours. This helps plan and manage the fleet proactively. The data also helps fleet managers identify and categorize vehicle breakdowns. 

Real-time fleet tracking software and route planning software reduce the miles driven on the road. Also, these solutions reduce the maintenance costs for the fleet and improve fleet utilization. 

Conclusion

A clear understanding of the components of fleet utilization helps logistics companies to right-size their fleet. Delivery logistics technology effectively captures fleet metrics and maximizes utilization. Beyond all, it helps them reduce the last-mile delivery costs

Locus’ logistics optimization software helps delivery companies reduce the overall fleet size while also improving efficiency standards. It enables logistics managers to track fleet performance based on dynamic on-ground conditions and devise strategies to improve them. It also helps them re-route drivers optimally if there are any unpredictable last-minute changes.

References

  1. https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/adapting-customer-experience-in-the-time-of-coronavirus
  2. https://www.mckinsey.com/industries/travel-logistics-and-transport-infrastructure/our-insights/us-freight-after-covid-19-whats-next
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Customer ExperienceFleet Managementfleet utilizationLogistics CostsLogistics OptimizationSmart Logistics