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Managing Commercial Vehicle Operating Costs

The operating costs of heavy-duty commercial vehicles can be divided into fixed and variable costs, which must be monitored and controlled in order to lower total overall operating costs.

In today’s highly competitive road-transport market, the steep increase in the price of new and used vehicles, as well as the cost of parts and maintenance, need to be managed as closely as possible.

Many road-transport operators and logistics companies measure and control variable vehicle cost factors like fuel, tyres, maintenance and repairs, but fail to manage the fixed vehicle operating costs, which directly affect the overall cost of operating a commercial vehicle.

Vehicle financing is by far the biggest fixed-cost factor and is directly related to the purchase price of the truck. Therefore, it is critical that a detailed study is undertaken to ensure that the right vehicle for the job is selected, as it can have a major effect on the fixed operating cost.

The truck dealer can assist in this process by calculating a cost estimate that will illustrate all the operating cost factors and provide a fairly accurate vehicle operating report. (It is important to enter all the correct information during the establishment of the report.)

The next step is to check the viability of the contract by comparing the estimated vehicle operating cost per kilometre with the income that will be generated by transporting the goods.

To ensure that the truck can legally carry the load, ask for a vehicle mass distribution report that will illustrate the legal payload of the vehicle. Check that the vehicle can carry the required payload and that it will be fully utilised to its designed capacity at all times.

The fixed vehicle operating costs are also known as standing costs. This term is derived from the fact that, should the vehicle become unavailable to operate for any reason, all the fixed costs will still have to be paid while no revenue will be received. Therefore, control of all the factors that could render the vehicle unavailable must be well managed.

Vehicle insurance is the next fixed cost that needs attention. Good vehicle insurance tariffs can be obtained if an operator has a good history.

It is important to ensure that a vehicle is always operated in a safe and roadworthy condition, so that the insurance company will not reject insurance claims. If a vehicle has smooth or damaged tyres, or there is proof that the driver was talking on a cellphone at the time that an accident occurred, the insurance company will have the right to reject a claim.

The next fixed cost to be managed is that of the driver and the crew. Drivers are the key factor in operating the vehicle in a professional manner and reducing the overall fixed and variable costs of operating the vehicle. Therefore, driver selection and continuous training are paramount.

A daily vehicle pre-trip inspection report that is properly completed by the driver is a major tool in ensuring that the vehicle is always fit for use and properly maintained. However, this report will only be effective if the vehicle faults that are highlighted by the driver are attended to immediately.

The fixed costs of operational overheads need to be managed and controlled to ensure that the costs remain within the budget limits and are not abused.

The timeous renewal of vehicle licences, driving licences and professional driving permits should be monitored and controlled.

Daily management of both the fixed and variable vehicle operating costs will lower total vehicle operating expenses and ensure that a vehicle is reliable, safe on the road and always available.

Article Source: Focus On Transport

View original article here.

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