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How Can Fleet Downtime Negatively Affect Your Logistics Business

Fleet Downtime Negatively Affect Your Logistics Business
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Fleets typically spend between $850 and $1,000 per day on each out-of-service vehicle, which can result in total downtime costs that are eight times higher than expected.

What’s in the article:

  • Introduction to fleet downtime
  • What is fleet downtime?
  • Why does fleet downtime occur?
  • What are the repercussions of fleet downtime?
  • Conclusion

The COVID-19 pandemic saw e-commerce and other businesses scramble to supply various goods as demand increased through 2020-21. But now, in the last quarter of 2022, demand has nosedived, giving a reprieve to the overwhelmed supply chains globally. While it sounds like good news for most, falling demand is also indicative of a wake-up call to shippers, fleet owner-operators, and other stakeholders involved in logistics and ferrying goods. One of the major reasons for declining demand is rising inflation, forcing householders to curtail expenditures. 

For logistics companies and fleet owner-operators, this translates into reduced productivity and a possible loss of revenues as the number of idle vehicles increases and fleet downtime becomes more common. 

Unprecedented levels of uncertainty saw consumer confidence fall for the fifth consecutive quarter to its lowest level on record in Q3 2022, pushing the Deloitte Consumer Confidence Index to a new record low at -20%, twice as low as it was a year ago. As demand drops, retailers and companies are looking to sell excess inventory this holiday season. As a result, fleet owners and operators face uncertainty when it comes to the typical flow of goods during the holidays, increasing the chances of fleet downtime as well. 

While fleet downtime is inevitable for any fleet operation to function smoothly, it also means lost revenue and opportunities. We discuss fleet downtime and the repercussions it may have on fleet owner-operators in this article.

What is Fleet Downtime?

When vehicles in your fleet require maintenance or repairs, those vehicles will sit idle. With more and more vehicles facing downtime, fleets tend to lose operational efficiency. As a result, customers may be unhappy with your services, employees may not enjoy working with you, and your toplines and bottom lines suffer.  

Even if it’s just one truck that’s out of commission, any downtime for a fleet vehicle represents lost revenue for your business. This might not only put pressure on your company to find ways to get your vehicles up and running fast, but it can also affect client satisfaction because slower or less frequent service results in fewer vehicles.

Why Does Fleet Downtime Occur?

When most people think of fleet downtime, they think of maintenance or repairs after accidents. But downtime may also occur for other reasons. For instance, thanks to Hurricane Ian, many vehicles had to take alternate routes or stay parked while the storm did its thing. Similarly, bad weather, licensing woes, driver and staff troubles, or even traffic can hamper your fleet’s productivity, resulting in increased downtime. 

Here are a few challenges and situations that may lead to increased downtime for vehicles in your fleet:

1. Inability to Manually Manage Fluctuating Fuel Prices

Fuel is a substantial cost for your fleet, even when prices are low. It is challenging to anticipate with any degree of accuracy how much fuel will cost for your fleet at any particular time due to fluctuating fuel prices. Fleet managers need to be on top of anticipating and predicting the cost of fuel required for their fleet. But with the notoriously volatile fuel prices, it is a challenge for fleet operators and owners to accurately estimate fuel expenditure. As a result, with inaccurate predictions, the chances of loss are greater, leading to higher downtime for your fleet.

2. Inability to Anticipate Vehicle Maintenance Costs

Vehicle maintenance is an important part of every fleet owner-operator’s responsibilities. One of fleet managers’ largest difficulties is scheduling regular and timely vehicle maintenance. Additionally, it keeps your fleet operational. Unexpected vehicle breakdowns will result in delays and lost production. Additionally, neglected automobiles may have excessive wear and tear over time, necessitating larger, more costly repairs.

Even seemingly insignificant things like failing to check your tires’ air pressure can add up because low tire pressure over time will increase fuel consumption. However, keeping track of your fleet’s maintenance plan might consume a lot of time, which you might not have, given the other top priorities on your list. It can also be difficult keeping track of the condition of vehicles after maintenance as well. All these uncertainties may lead to increased fleet downtime, as the efficiency of planning and tracking maintenance schedules manually may be really difficult.

3. Driver Troubles

Reaching your drivers when they are on the road can be difficult and impact how productive your fleet is because you can’t contact, text, or email them. You can spend hours attempting to contact them without any luck. Miscommunication is frequent, and it frequently results in broken schedules, which reduces productivity and may increase downtime for drivers and fleets.

Another important difficulty for fleet managers is driver productivity. The safety of drivers is a major concern. Their driving habits and road safety can help to mitigate this cost. For instance, excessive fuel consumption and engine performance can be attributed to excessive vehicle idling, a widespread practice throughout the industry. Not only does this increase fuel costs, but it also adds to fleet downtime, as a vehicle may need higher maintenance. Driver behaviors like excessive speeding, hard braking, and sudden acceleration can all lead to a vehicle in higher need of repairs and wear and tear, increasing possible downtime.

How Can Fleet Downtime Negatively Affect Your Logistics

What are the Repercussions of Fleet Downtime?

When a vehicle in your fleet is off the road and needs maintenance, it can affect your fleet operations in many ways.

1. You May Incur Increased Expenses on Repairs:

The cost incurred to get the vehicle back on the road is the most visible consequence of downtime. The cost of repairs and maintenance may be allocated annually, but unplanned breakdowns result in additional costs. Given that they involve towing fees and emergency repair rates, these costs also frequently exceed those associated with routine repair and maintenance operations. This also includes the cost of a rental vehicle, which your company might need while the fleet car is being repaired.

2. Your Feet may Become Less Productive

Downtime also has a detrimental impact on productivity. When one vehicle is out of service, the other cars must pick up the slack, which puts more strain on those assets. If the vehicle has special equipment for a specialist service, such services might not be readily available. Additionally, your office may receive a barrage of complaints about delays, leaving staff members less able to assist clients who are phoning in for service.

3. You May Incur a loss of Revenues

Customer discontent might result from failing to deliver goods or services within the set time frame. Unhappy clients hurt your organization’s bottom line because they might cease doing business with you and take their prospective recommendations with them.

Fleets typically spend between $850 and $1,000 per day on each out-of-service vehicle, which can result in total downtime costs that are eight times higher than expected. Smaller firms are particularly susceptible to revenue loss, so it’s crucial for them to understand how to prevent downtime efficiently. 

45% of 1,200 US fleet managers, executives, and other mobile-business professionals achieved positive ROI in 11 months or less with fleet management solutions, increasing by 18.4% up from previous years, according to a study. Clearly, investing in telematics and fleet management solutions is the need of the hour for fleet owners to deal with downtime. But according to research, 60% of fleet and logistics companies aren’t aware of the possibilities for fleets to improve operations with the use of rich data and management software. 

Ultimately, fleet owner-operators need to invest in tech solutions and telematics in the future to ensure that fleet downtime does not encroach on business opportunities and helps increase productivity.

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