Outsourcing Fleet Management

North Star Energy & Construction LLC, based in Buffalo, Wyo., serves the oil and gas, heavy construction and underground utilities industries. The company has 82 vehicles, comprised mostly of pickup trucks and passenger vans. A detailed cost analysis provided North Star Energy & Construction evidence that outsourcing maintenance management and cycling vehicles would produce measurable results.

Alex Mantle, president of North Star Energy & Construction, says that his company adopted a long-term fleet management strategy almost seven years ago. According to him, it also helped the company make it through the recession. “In addition to obtaining vehicles at the best possible prices with the features and aftermarket equipment we require,” he says, “we’re maximizing resale value and minimizing maintenance and repair expenses across the board.” He adds that outsourcing fleet management to a professional fleet management company also enables North Star Energy & Construction’s employees to focus more of the their time and energy on activities that help produce revenue for the company instead of managing a depreciating asset like the company’s fleet of vehicles.

For Kroeschell Inc., a provider of mechanical and electrical engineering solutions, having a long-term fleet management strategy is equally significant. “By replacing vehicles every 32 to 36 months and taking better care of our vehicles with maintenance management and controlling fuel expenses with a fuel card program, we have been able to effectively lower the total cost of our fleet,” says Gary Finigan, chief financial officer for Kroeschell.

Managed maintenance programs help companies monitor and ensure regular service checks, scrutinize invoices and arrange repairs for fleet vehicles. This includes arranging maximum warranty benefits, rebates, price breaks and other opportunities to minimize expenses. Additionally, fuel card programs automatically monitor fuel purchases and mileage for each vehicle while giving drivers access to the most convenient fueling stations.

There are six major cost elements to managing a fleet: depreciation, interest, fuel, maintenance, risk management and taxes. Not surprisingly, the ever-increasing cost of fuel is beginning to rival some of the other elements, including depreciation.

The good news is that now is a great time to begin to manage fuel expenses. Not only are many 2013 model year vehicles designed for maximum fuel efficiency, but record low interest rates and an unusually high resale market for used vehicles present an opportunity for businesses with medium-size fleets to take advantage of the opportunity to lower expenses.

However, without a long-term fleet management strategy, getting the most value could still be a challenge. A long-term strategy can help project financial targets for three, four and five years on everything from acquiring and disposing of vehicles to managing maintenance, risk management, warranties, mileage and the wear and tear that will be inflicted on vehicles.

A good place to start is to work with a fleet management company that has access to a wide range of cars, light- and medium-duty trucks and service vehicles and that has the ability to identify the best ways to meet the needs of your business. In addition, a fleet management company may have the ability to forecast and analyze long-term cost structures to help the business hit specific financial targets.

Because a fleet of vehicles can represent a major initial and ongoing investment, it is important that businesses with vehicle fleets have long-term strategies to manage them. In many cases, it makes sense to outsource that responsibility to a dedicated fleet management company. Doing so can allow your workers to focus on what they do best, ultimately increasing not only the efficiency of your fleet but the efficiency of your company.