Fleet utilization compares how much your fleet is used versus how much it could be used at peak capacity. In other words, vehicle utilization is the ratio of the actual time that a vehicle is used for productive purposes to the total time that it is available.
It reflects how well you’re using your fleet resources and how efficiently you’re meeting your customer demand — all with the goal of saving money and keeping operations running smoothly and efficiently.
Technology plays a big role in making this possible and in helping you understand how many vehicles you need and the class of vehicle that works best for fleet activities.
Fleet management software, telematics, smart fuel card technology, and other digital tools make it possible for fleet managers to get a granular understanding of their fleet utilization, down to the minute or cent.
In this article, we discuss why fleet utilization is so important for the success of your fleet and how you can use technology to improve the way you use your vehicles.
Why Is Fleet Utilization Important?
A high vehicle utilization rate means you’re maximizing your fleet capacity and minimizing idle time, while a low vehicle utilization rate means you’re wasting fuel, maintenance, and labor costs on underused vehicles.
Here’s how your vehicle utilization rate affects various aspects of your operation.
Operating Costs
Poor vehicle utilization generates unnecessary expenses (e.g., depreciation, insurance, and maintenance) without generating revenue. Analyzing fleet utilization helps you identify those vehicles that aren’t “pulling their weight,” so to speak.
When you know exactly how many vehicles you need to maintain 100% activity, you can eliminate seldom-used vehicles from your roster, reduce unnecessary expenses, and right-size your fleet so that all assets are contributing to your bottom line.
Productivity
Fleet utilization also impacts productivity by allowing for better scheduling and route planning. Better scheduling and route planning allow your operation to fit more deliveries/services in a single workday.
And, ultimately, more deliveries/services in a single workday means more income available to keep your business running efficiently.
Asset Management
Taking the time to examine fleet utilization can also help you identify the types of vehicles that work best for your business and the ways that you can manage those assets better.
For example, you may discover that you could save money by using a sedan or a minivan on certain types of calls instead of sending a full-size pickup truck or work van. In some cases, those savings may well pay for the purchase or lease of the smaller, more fuel-efficient vehicle.
Sustainability
Whether you run an all-electric fleet, a gas or diesel fleet, or some combination of the two, analyzing the way you use your vehicles can help you control fuel consumption and emissions for better environmental sustainability.
As new government mandates begin to take effect, your fleet’s environmental impact may become less a matter of choice and more of a “must do now.”
Be ready — or get ahead of the game — by examining your fleet utilization and implementing strategies to maintain and improve sustainability.
How To Maximize Fleet Utilization
Fleet utilization can be based on any number of metrics, including the three most common: time (i.e. vehicle hours), distance, and capacity. Of course, you choose which variables are most relevant to your business, but here’s how to maximize fleet utilization using those metrics.
Examine Vehicle Hours
Vehicle hours is a key metric of fleet utilization and can be used to tighten up operational activity so you can get the most out of every minute that your assets are running.
The formula for vehicle hours is:
Total vehicle hours x 100% / total available vehicle hours
So, if you run a delivery van eight hours a day, five days a week, the total available vehicle hours would be 40 (8 hours x 5 days). But if the total hours for that vehicle only amount to 35, you’re only using it to 87.5% of its capacity ((35 x 100%) / 40).
Could you reduce idle time or some other variable in order to get full use out of that vehicle?
Control Distance
Another metric you can examine is distance traveled for each vehicle and the entire fleet. There are several different ways to look at distance, but here’s the formula for one of the most common:
Total distance driven / average distance per vehicle
Use the results of this calculation to take the temperature of your business climate and identify seasonal and regional trends, create budget forecasts, schedule downtime, and reduce costs.
Maximize Capacity
Every fleet has a maximum capacity. If your fleet reaches (or exceeds) this number, it may be time to add more vehicles to the operation.
For example, if your delivery company has 10 vehicles that can carry 26,000 pounds every day for a five-day workweek and you find that your operation is doing just that (it’s at max capacity), you may choose to add another vehicle or two to handle more business.
Reduce Unnecessary Idling
The time that a vehicle’s engine is running but the vehicle isn’t moving forward is money down the drain because it puts unnecessary wear and tear on that vehicle, meaning you may need to replace it sooner.
Use telematics to find situations where a vehicle is idling unnecessarily and take steps to eliminate those situations. That may require optimizing routes, training drivers, or altering company policies.
Even reducing unnecessary idling by 50% can help your company save money on fuel and vehicle wear and tear.
Focus On Driver Productivity
We touched on productivity earlier in this article, but here’s a way you can use it to maximize fleet utilization.
Find the number of deliveries/service calls that a driver or technician makes in a single day and divide that by the theoretical maximum possible. For example, if one technician completes 7 service calls in one day but they could complete 10, then that technician is only running at 70%.
Work to discover what’s preventing them from making the other three calls, and change the way they work so they can get more done in a day.
Keep Up With Preventative Maintenance
Keeping up with preventative maintenance can help you keep small issues from becoming major problems that sideline vehicles and cut into your fleet utilization potential.
You can figure out your preventative maintenance completion rate with the following formula:
(Number of Vehicles with Completed Preventative Maintenance / Total # of Vehicles) * 100
So, for example, if eight of your vehicles have gone through a round of preventative maintenance, but you have 12 vehicles total, your completion rate is 67%. What do you need to do to push that number higher?
Implement GPS And Telematics
If you want to take your fleet utilization to the next level, consider using GPS and telematics to monitor the condition and location of your vehicles.
Analyzing the data from GPS and telematics can help you identify ways to improve the efficiency of your fleet operations in areas like fuel consumption, vehicle maintenance, routing and dispatch, time in transit, and driver behavior.
In some cases, you can even use GPS to find the lowest price for gas wherever your vehicles may be at the time.
Fulfill Peak Demand Without Buying Or Leasing
If an analysis of your fleet utilization reveals that your operation is just on the verge of maximum capacity, you’ll eventually have to decide if you want to add a new vehicle to the mix.
You can, of course, buy or lease a vehicle, but you may also want to consider renting. Renting allows you to fulfill peak demand without committing to a long-term payment schedule.
Consider Allowing Drivers To Use Their Personal Vehicles
Another way to maximize fleet utilization without committing to years of payments is to allow drivers to use their personal vehicles.
For more information on how this choice may impact your operation, check out these articles from the Coast blog:
- Mileage Reimbursement: A Guide For Fleet Owners
- Personal Conveyance: A Complete Guide For Fleet Managers
Manage Fleet Utilization With Coast
Managing and maximizing fleet utilization involves manipulating a wide variety of variables, including things such as driver spending, fuel expenses, and vehicle maintenance.
Coast is the all-in-one smart fuel card designed to help you in that regard and support all of your fleet utilization strategies.
- Track vehicle information: Coast gives you access to accurate MPG and fuel consumption information for all your vehicles.
- Get a granular view of vehicle activity: Coast provides accurate fuel and efficiency data even when your drivers share vehicles.
- Enrich your telematics data: Telematics can provide a wealth of data about your vehicles, but it may not go deep enough into important variables like fuel use. For that, you need a smart fuel card like Coast.
- Control spending: Coast lets you set spending limits (by driver, vehicle, location, department, sub-fleet, etc.) in order to ensure that your business is spending every dollar as wisely as possible.
- Maintain security: With Coast, you can restrict card use to specific categories — like fuel or maintenance — and even block transactions at unauthorized merchants, reducing unnecessary expenses and preventing fraud.
Coast gives you the tools you need to maximize fleet utilization, streamline operations, save time, reduce costs, and keep your fleet running smoothly and efficiently.
To learn more about how Coast can help make fleet management easier, visit CoastPay.com today.
