Managing a fleet’s operating costs requires a closer look at both fixed and indirect costs. These indirect, or soft, costs can often have the most significant impact on fleet operations, because they’re often hidden from cost-containment planning.

These hidden costs stem from a vehicle’s depreciation, fuel spend, and the driver’s behavior. While depreciation depends largely on how a vehicle is driven and fuel use is also variable, it’s the last category that can matter most.

Most fleets can count on 20% of their vehicles being involved in an accident each year, and about 40% of those accidents considered preventable. The cost of accidents usually makes up about 14% of a fleet’s total costs, according to trade publication Automotive Fleet.

As such, lowering the number of these preventable collisions is the most effective way to improve accident management initiatives and lower your operating expenses.

Use a Holistic Approach

Each accident involving a fleet vehicle causes two kinds of costs – the hard cost of the collision repair and the soft cost of the loss of productivity caused by downtime.

Lowering the number of these collisions requires a fleet manager to use an approach that addresses all aspects of the situation and brings a multitude tools to bear to establish a safety culture. Organizations must balance worker productivity and driver safety, so a comprehensive approach is the best way forward.

It’s also important to establish a written safety policy that delineates the rules and policies that must be followed. In larger organizations, fleet managers will need the support of senior managers so drivers don’t receive mixed messages about what’s important to the organization.

Incremental progress pays off.

Achieving only a minimal improvement in the accident rate can bring significant cost savings. A fleet manager with 500 units who reduces their accident rate by 3% (to 85 from 100) at $3,500 in repair costs per crash would save $52,500 per year. When you then factor in downtime, lost productivity, potential workers comp and liability that number significantly increases.

Let’s look at three ways to reduce preventable crashes:

  1. Conduct regular motor vehicle record (MVR) checks.
  2. Use telematics to identify risky drivers.
  3. Offer coaching and training for higher-risk drivers.

Lower Liability with MVR Monitoring

Regular screening of the MVRs of drivers can lower liability risk and protect an organization from negligent entrustment or vicarious liability.

Negligent entrustment is a legal concept that holds organizations liable for the actions of their drivers. When a fleet manager assigns a vehicle, he is entrusting the employee to use it in a safe way. Vicarious liability means that an employer can be liable for the negligent actions of its employees.

A driver with recent violations is more likely to be involved in a crash in the next 180 days that a driver with a clean driving record, studies have shown. Other factors also come into play.

A driver’s experience and age can also be included in a risk profile. For example, a driver with less than a year of experience of driving a commercial vehicle who’s 55 or older has the highest risk, according to the Virginia Tech Transportation Institute.

Monitoring a drivers MVR data several times a year can help reduce risk, because individual situations are fluid. A driver who’s considered safe one year may move to an elevated risk category based on behavior changes and that is where MVR data can help identify potential risks as part of a holistic approach.

Telematics as a Safety Tool

Implementing a fleet management solution that gathers data about driver behavior can be a valuable tool to a pro-active safety approach. 

Telematics solutions track three kinds of data, including a vehicle’s location, diagnostics around engine idling or maintenance, and sensors or cameras that record driver behaviors such as speeding or hard cornering.

These systems usually include hardware such as a “black box” module that’s hardwired into a vehicle’s electronic control module (ECM) and cloud-based software that organizes the data for analysis.

Data collection is the first step, making it actionable is a crucial next step. Reduce white noise and data overload by setting clear targets about specific driver behavior you’d like to improve.

If you’d like to reduce speeding, set up your telematics alerts to look at weekly trends for drivers who most often exceed posted limits or pre-set speeds. Don’t worry about the one employee who drove 50 mph in a 45 mph on a Wednesday morning. Add it up.

Safety Training Brings Accountability

Once you implement a telematics system, you’ll need to build risk profiles for each of your drivers. Set up baskets of low, medium, and higher risk based on a scoring system you set up with your telematics provider.

By one estimate, 10% of the drivers can account for 40% of a fleet’s collision-related costs.

Once you identify the highest-risk drivers, you’ll need to implement training so they can improve. It’s also worth considering implementing a rewards program for your lowest-risk drivers. Give them perks such as satellite radio, a higher-trim vehicle, or a more advantageous work schedule.

Online video-based training modules should be sent as clickable links to drivers that need extra training. These clips usually run up to 10 minutes and address the skill you’re trying to improve.

You’ll also need a system of accountability that lets the fleet manager know when training has been delivered and completed. Unfortunately, there are those drivers who can’t or won’t improve, so you’ll need to document efforts before terminating them.

An open line of communication with a positive tone with your drivers will be the best way to achieve change. These drivers may not be aware that their driving is considered higher risk, so approach them in a professional way.

Take Action, Don’t Delay

Analyzing the data of drivers in an enterprise organization can be a daunting challenge, especially if a fleet manager is in charge of 5,000 or more vehicles. Avoid paralysis by analysis and take the first step toward your goal. The sooner you take action, the sooner you’ll see improved results. It won’t be long until you see your accident costs begin to fall.

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