Is Your Fleet Breaking the Bank?
Owning and operating a fleet is a significant ongoing expense, and for some companies it’s a worthwhile investment. But for others, the past year has been riddled with uncertainties, and the last thing they need is more unpredictability that comes from the hidden costs of operating a fleet. Check out these five costs that could be affecting your fleet’s bottom line and find out how you can gain more stability for your operation.
1. Cost of drivers
Adding drivers to your payroll is probably not an unexpected cost. But in today’s shortage of qualified drivers, simply finding and hiring drivers is costly in terms of time and resources. Did you know it can take nearly 30 phone calls to hire one driver? Many companies even carry extra drivers on their payroll to cover sick leave and vacation time. Because insurance companies tend to classify drivers as higher-risk employees, providing benefits is another overlooked cost that tends to raise health insurance premiums for the entire company. Then you factor in the cost of driver turnover, and suddenly drivers become a significant hidden cost to your company.
2. Cost of equipment
You have the initial investment of purchasing or leasing your tractors, trailers and other special equipment. Over time, this equipment will need repairs, whether from normal wear and tear, driver misuse or accidents. Even when these repairs are minor, they can add up quickly depending on the size of your fleet. And as with all assets, your equipment depreciates over time and loses its value. Tractors and trailers also must be licensed and registered, which is another frequently overlooked cost associated with equipment. Furthermore, many forget to figure in the cost of equipment that sits idly on your lot when it’s not being used.
3. Cost of maintenance
Equipment is costly and you want it to last—which means you’ve got to implement a routine maintenance schedule. That means oil changes, brake checks and all the other usual line items. We’ve found some of the most overlooked costs here tend to be tires, fuel and shop expenses. Replacing tires on 18-wheelers is not cheap, and fuel prices can add up fast if your trucks have long routes or spend large amounts of time idling. Additionally, the garage to do all those repairs (and the garage utilities) is an important cost that’s often overlooked. But perhaps the most forgotten cost of all in this category is the cost of down equipment. How do you make up for lost capacity when your equipment is in the shop? If you go to the spot market, you’re not only paying for that extra capacity, but you still have to pay the driver of the down truck in the shop.
4. Cost of insurance
You’re required to insure your tractor trailers and drivers, but are you aware of the skyrocketing rate increases for fleets? Unfortunately, these rate increases are becoming unaffordable for some companies. Furthermore, when individuals are on your payroll who are considered “high risk” by insurance companies, such as drivers, it can drive up premiums and deductibles across the entire company. The risk of paying out for collision claims and workers’ comp is much higher when your company employs drivers, and these can be high expense line items. Removing such individuals from your payroll by outsourcing your fleet can lower your overall insurance costs.
5. Cost of accidents and litigation
With the rise of nuclear verdicts, accidents can pose a significant risk of costly legal and defense fees, not to mention possible exposure to punitive damages, which typically aren’t covered by insurance. Not only do you have the cost of down equipment and damaged or undelivered freight, you can also experience the fall out from negative publicity if one of your branded trucks is involved in an accident.
When you account for all these hidden costs, you can gain more clarity on the difficulty of remaining profitable when owning and operating a fleet. Having an accurate cost-benefit analysis helps you make educated decisions when it comes to transportation solutions for your company.
Outsourcing your fleet to a stable, dedicated provider like J.B. Hunt gives you visibility into these costs up front so that they’re no longer hidden. We invest in, purchase and maintain the right equipment for your fleet so you don’t have to. Likewise, we take care of hiring and training the drivers for your account, maintaining insurance coverage and helping manage your risk in case of accidents or litigation. You don’t have to worry about being surprised by costs you weren’t expecting and can plan for your business accordingly.
Don’t let hidden costs affect your bottom line. J.B. Hunt Dedicated is here to help with customized fleet solutions for your company. Contact us to begin your consultation.