Logo: Element

Logo: Element

Higher fuel prices and tire costs increased operating costs for commercial fleets in 2017, according to Element Fleet Management, which released its annual Total Cost of Ownership Index.

The 2017 index score of 88 shows a marked increase in costs, compared to the 2015 and 2016 index that reported relatively flat costs (2015 at 83.8 and 2016 at 83).

Higher fuel prices are the primary driver for the higher index, but an additional contributing factor was tire costs, which increased from 2016 by 17%, according to Element. Companies have been investing in large diameter and seasonal tires after adding cargo and Euro-style vehicles to fleets in recent years, which has increased costs, according to Element.

Fuel prices have been rising, and summer demand should keep prices higher, according to the U.S. Energy Information Administration.

"While there’s no fuel cost relief in sight for 2018, there are other opportunities for businesses to lower their fleet TCO,” said Chad Christensen, Element's senior strategic consultant. “With anticipated interest rate increases through 2018, companies can be proactive and look at ways to lock in fixed-rate financing now."

Element is providing four tips to blunt rising costs:

  • Consider short-cycling vehicles because demand for used vans and pickups remains strong.
  • Look for opportunities to reduce fuel costs, such as drive time, idling or vehicle weight, and make sure routing is up to date to reduce unnecessary vehicle mileage or out-of-scope usage.
  • Replace older vehicles with more fuel-efficient vehicles.
  • Install and leverage telematics to provide insight into fleet data and improve route optimization and vehicle utilization.