Fleet management companies can put you in the driver's seat.
A new strategy for minimizing capital requirements while maximizing access to company vehicles is gaining momentum: a “total transportation solution.” A total transportation solution begins with right-sizing the vehicles that your company operates and paying only for vehicles needed on a regular basis. Additional vehicles can be rented by the day, week or month for short-term jobs, seasonal peaks or other demands like filling a gap until a new truck arrives.
Working with a collaborative team of locally based fleet-management and commercial-truck professionals on a regular basis can ensure the smoothest implementation of a total transportation solution and result in preferred rates.
Savings can be substantial. In addition to avoiding use of credit to pay for surplus trucks that might be needed only a few times a year, fewer trucks in a contractor’s fleet means lower costs for maintenance, repairs, insurance, title registration, licensing and inspections for a depreciating asset. In addition, renting the right size truck for your short-term needs to fit a particular job can yield further savings in terms of fuel economy.
A smaller fleet of vehicles can be more cost-effective, particularly if some vehicles will be used for seasonal needs, projects or peak demand. In fact, fleet management professionals suggest that, in most cases, it is not cost-effective to own trucks used less than 75 percent of the time.
When choosing a fleet management professional, look for those who have the experience and expertise to evaluate future capacity needs, return on investment, vehicle mileage, market value, vehicle warranties, maintenance trends, fuel economy and insurance and downtime costs. In addition, some offer a customized vehicle replacement program, often called “cycling,” whereby vehicles can be acquired at the best possible price and replaced at appropriate intervals to achieve optimum performance and the best resale value.
A good example is Warco Construction, a Charlotte, N.C.-based subcontractor that specializes in sprayed fireproofing and commercial interiors for construction projects located throughout the Carolinas, Virginia and Georgia. “Whether it’s to cover a surge in business or to replace one of our trucks while it’s in the repair shop, being able to rent trucks that fit our specifications on short notice as we need them on a weekly, monthly or longer-term basis enables us to minimize overhead and keep capital costs low,” says Hans Warren, president of Warco Construction. Warren uses truck rentals to supplement his existing fleet of approximately 40 leased vehicles.
For Warren, having a relationship with one company for all his fleet management and truck rental needs creates a seamless process. “It’s all about having a great relationship with a well-trained team of local professionals who know our business, and working with a company that works hard to ensure customer satisfaction with quality products,” he says. “We know our drivers will be driving quality vehicles that are in great condition every time.”
Look at Option Packages
Not all rental trucks and truck rental companies are the same. Some of the best companies include options to fit a company’s unique needs, such as trucks with ladder racks, vans with bulkhead and bin packages, the ability to display brand signage on the vehicle, and trucks that are fully equipped for commercial use with automatic transmission and require no commercial driver’s license.
Top truck rental companies also have the flexibility and resources to develop customized solutions for individual business needs, including short-, mid- and long-term rental programs.
Do the Math
Sometimes it helps to do a little math, such as a simple cost analysis that considers factors such as the cost-per-mile, depreciation and the operational expenses of managing company vehicles. Using direct-cost figures, it is possible to compare the cost to rent a truck per-day or per-month to the costs for ongoing maintenance and repairs for a vehicle that is part of your fleet. Keep in mind that rental payments can be deducted as an operating expense.
Fleet Management Is Key
Even as the economy improves, businesses must continue to use their resources wisely to protect or increase profits. Outsourcing can alleviate many of the expensive and time-consuming aspects of using in-house personnel to manage company vehicles, especially for businesses that have medium-size fleets.
A maintenance management program that includes everything from replacing wiper blades to rebuilding transmissions for one monthly rate can not only help a contractor better manage expenses but also ensure that all vehicles are operating at peak performance, reducing the expense of downtime when a vehicle is out of service. Working with service advisors who are ASE (Automotive Service Excellence) certified can ensure the most economical, timely and high-quality repairs as well as the maximum warranty benefits, rebates, price breaks and other opportunities to minimize expenses.
With ever-fluctuating fuel prices, outsourcing to a professional fleet management company may provide access to a fuel card program, in which each driver is assigned a separate ID number that is immediately recorded electronically at the point of fuel purchase. At the end of the month, the driver’s company receives one report tracing all fuel purchases. Detailed information about each driver and vehicle, as well as exception reports that help pinpoint unauthorized purchases, help the company monitor costs while giving drivers maximum convenience.
Last but not least, establishing a separate line of credit through the fleet management company may be a better strategy than using your company’s available operating capital or tapping its line of credit at the bank to purchase vehicles that depreciate quickly.
The Bottom Line
Perhaps the best reason for implementing a total transportation solution is that it can be good for your business. Instead of spending time and money on tasks such as buying and selling trucks, managing maintenance and repair bills and monitoring fuel purchase receipts, you can focus on running your business. Outsourcing to a team of fleet management and commercial truck rental professionals can help you use your time, personnel and resources to achieve strategic goals and objectives to increase profits.
