What Is Fleet Management? Logistics Explained

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.

Encompassing vehicle acquisition, maintenance, driver management, and regulatory compliance, effective fleet management practices – typically implemented and organized via fleet management software – are crucial for businesses reliant on transportation, as they directly impact operational performance and profitability, plus the safety of drivers, too.

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

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 track their vehicles on the road, optimize routes taken, reduce costs of expenses like fuel and maintenance, minimize downtime of any fleet vehicles, 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 Team Structure

Fleet management isn’t a one-person job – it’s a well-orchestrated team effort. The structure of your fleet management team can make or break your operations. Who does what, and how well they work together, directly impacts efficiency, safety, and the bottom line.

Typical Fleet Management Job Roles

Every fleet management team needs core players. At the helm is the Fleet Manager, the decision-maker responsible for overseeing operations, setting policies, and ensuring everything runs like clockwork. But there are a few other key roles too, so let’s break them down in the table below:

The Key Components of Fleet Management

What fleet management encompasses can be boiled down into five critical areas:

1. Vehicle acquisition, maintenance and disposal

Choose the right vehicles for the job. Whether it’s electric vehicles for urban areas or heavy-duty trucks for construction, fleet selection impacts costs and performance. Once purchased, regular maintenance ensures longevity and reliability to manage the fleet lifecycle safely and efficiently until it is time to dispose of or replace the vehicle.

2. Telematics and technology integration

Employing GPS tracking, telematics systems, and fleet management software provides real-time data on vehicle locations, driver behavior, and vehicle health.

These technologies, typically consist of hardware trackers attached to or inside vehicles and software to track them. This data often includes mileage, fuel usage, driver behavior, engine diagnostics, and vehicle usage to inform future planning, scheduling and generally facilitate informed decision-making and operational transparency.

3. Driver management

Drivers are the heart of fleet operations. Recruiting qualified drivers, providing ongoing training, and monitoring performance are essential to the success of any fleet management system. Ensuring drivers adhere to safety protocols and regulatory requirements and are ultimately fleet safety certified, reduces risk and improves productivity.

4. Fuel management

Monitoring fuel consumption and implementing strategies to reduce usage can lead to significant cost savings. That could include using fleet fuel cards, optimizing routes and refuelling stops, and training drivers on how to save fuel via fuel-efficient driving behaviors and avoiding others (like harsh braking/accelerating or idling). The desired outcome of fuel management is maximized miles per gallon (MPG) across the whole fleet.

5. Compliance and reporting

Fleet managers must make sure vehicles and drivers meet regulatory standards. Automated reporting systems simplify compliance with Department of Transportation (DOT) regulations and local laws, such as hours-of-service rules, vehicle inspections, and environmental regulations.

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 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.

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.

Future Trends in Fleet Management

Like all industries, the fleet management landscape is accelerating as technology evolves. In the process, these changes provide opportunities for businesses to optimize their fleets in ways that weren’t possible even one decade ago.

Electrification of fleets

Electric vehicles (EVs) are charging their way into the fleet industry. With advancements in battery technology and a growing infrastructure of charging stations, incorporating EVs into your fleet is becoming more practical and cost-effective.

Not only do EVs reduce fuel expenses, but they also lower maintenance costs due to fewer moving parts. Plus, they help companies meet sustainability goals and regulatory requirements focused on reducing carbon emissions.

Autonomous vehicles and driver assistance

Self-driving vehicles may seem a little more futuristic, but autonomous technology is rapidly advancing. While fully autonomous fleets aren’t commonplace yet, driver-assistance features are improving safety and efficiency right now. Investing in vehicles equipped with advanced driver-assistance systems (ADAS) can minimize accidents and improve driver performance, too.

Data analytics and Artificial Intelligence (AI)

Correct usage of data analytics and artificial intelligence (AI) can help fleet managers make informed decisions like never before.

Predictive analytics can forecast maintenance needs before breakdowns occur, saving time and money, with this already possible on more advanced systems like Verizon Connect Reveal. Meanwhile, AI algorithms can also help with optimizing routing, reducing fuel consumption, and improving delivery times.

Mobility-as-a-Service (MaaS)

The traditional model of fleet ownership is shifting towards Mobility-as-a-Service. Instead of investing heavily in purchasing vehicles, companies are exploring flexible leasing options and on-demand mobility solutions.

MaaS offers scalability, allowing businesses to adjust fleet size based on current needs without significant capital expenditure. It’s a smart move for companies looking to stay agile in a fluctuating market.

Augmented Reality (AR) and Virtual Reality (VR) training

Training drivers and technicians using AR and VR is an emerging trend that’s already proving effective. These technologies provide immersive learning experiences for complex scenarios without the risks associated with real-world training. AR and VR can accelerate learning curves, improve retention of information, and help your team be prepared for any situation.