Cost-Effective Fleet Operations: Tips for Reducing Expenses in 2025

From newer tech such as telematics and AI, to more traditional tools like driver training and fuel cards, there are many ways to enhance fleet expense management...

Controlling expenses is one of the primary goals and responsibilities of the modern fleet manager. If these costs spiral out of control, there can be a serious impact on the firm’s bottom line - and unwanted scrutiny from upper management and other stakeholders.

No matter what the size of your operation, expense management is a critical and ongoing task. But the challenge is especially significant for larger fleets, where keeping tabs on multiple vehicles means processing potential huge amounts of data quickly and accurately.

Cost of business

And just as the cost of living is a very real phenomenon right now, so too is the cost of doing business.

High inflation has impacted all manner of services and supplies that are critical for carrying out day-today fleet operations, including labour, fuel and maintenance.

The right tools for the job

Thankfully, today’s fleet manager has an array of processes, techniques, and above all, technologies to help them manage their fleet expenses.

Here we explore the most effective ways to reign in costs for your fleet.

What are the biggest costs of running a fleet?

Fuel is one of the largest fleet expenses, alongside driver wages and overtime and SMR (servicing, maintenance and repair).

Energy is also a major expense, particularly for fleets that operate electric vehicles.

Other significant expenses include Insurance and vehicle replacement.

1. Improve fuel efficiency

Excessive fuel consumption is arguably the number one bug bear of the modern fleet manager. Here’s how to get it under control:

• Regular Vehicle Maintenance: Keeping your fleet’s vehicles well-maintained is crucial for optimising fuel efficiency. Regular oil changes, air filter replacements and ensuring optimum tyre pressure (in line with the manufacturers’ guidelines) can all help improve fuel economy. It is estimated that under-inflated tyres increase fuel consumption by around 3%.
• Adopt Fuel-Efficient Vehicles: If your fleet includes older, less efficient vehicles, consider upgrading to models with better fuel economy or hybrid and electric options. While there is an upfront investment, this long-termist approach should deliver notable savings over the vehicle’s lifecycle.
• Driver Training: Eco-driving techniques, such as smooth acceleration, gentle braking and avoiding idling, can all help improve fuel efficiency. While driver training represents a not-insubstantial expense, once your team learns these eco-driving techniques, your fleet may be able to save up to 20% on fuel consumption - making it one of the most effective (not to mention cost-effective) ways to cut fuel costs.

2. Harness telematics and fleet management software

Telematics systems and fleet management software have become indispensable tools for fleet managers looking to optimise operations and improve their expense management. Indeed, working without them puts a fleet at a significant disadvantage to its peers.

These systems can provide valuable insights into vehicle performance, driver behaviour, route optimisation, maintenance schedules, and much else besides.

• Monitor driver behaviour: Telematics systems can track driving habits such as speeding, heavy braking, and excessive idling, all of which contribute to higher fuel costs, as well as premature vehicle wear-and-tear. Once you’ve discovered an issue via your telematics/fleet analytics systems, you can implement driver training programs to help eliminate this costly - and in some cases dangerous - behaviour.
• Route optimisation: With real-time data and GPS tracking, fleet management software can help optimise routes in order to reduce unnecessary mileage, avoid traffic congestion, and improve delivery times. Alongside happier customers, you’ll be saving money on fuel and premature vehicle repairs.
• Predictive maintenance: Telematics/fleet analytics systems can monitor vehicle health in real-time, alerting managers to potential issues before they become major, on-the-road This proactive approach to maintenance reduces the risk of costly breakdowns, and the downtime and delays they cause. Predictive maintenance should also extend the lifespan of fleet vehicles. The cost of installing and implementing a telematics system is likely to be dwarfed by the savings it helps achieve.
• Artificial intelligence: AI is being integrated into many cutting edge telematics and fleet analytics systems, offering even faster access to key data. The ability of AI to answer operational questions in mere seconds is likely to make the fleet manager's job much easier. However, a recent report by Fleet News suggests UK fleet managers are much more wary about adopting AI technology compared to their EU peers.

3. Stay one step ahead: Proactive maintenance practices

Ongoing maintenance is a core aspect of fleet management, while reactive, unscheduled repairs can be a drain on resources and cause unexpected downtime and delays - ultimately harming the all-important customer experience. But by implementing a structured and preventative maintenance program, you can help reduce downtime and overall repair costs.

• Scheduled maintenance plans: Implement a preventative maintenance schedule based on mileage, engine hours, and time intervals to ensure that each vehicle in the fleet is operating at optimum efficiency. As ever, prevention is the cure: Regular servicing prevents minor issues from escalating into expensive repairs.
• Invest in quality parts and fluids: The old adage ‘you get what you pay for’ applies here. Opt for high-quality parts and fluids that are designed for durability and efficiency (and that ideally have been recommended by the manufacturer). While cheaper alternatives may seem appealing, they can lead to more frequent repairs and replacements, driving up costs over the long term. Once again, a long termist attitude is key.
• In-house vs. outsourced maintenance: Is it cheaper to use your in-house maintenance team? Or to outsource work to a third-party provider? There is no one-size-fits-all answer here - it really depends on the particulars of your fleet. For example, larger fleets may benefit from having an in-house mechanic team, while smaller fleets could find outsourcing more affordable and efficient - especially for more complex repairs.

Credit: vlad - stock.adobe.com

4. Plastic fantastic: Fuel cards

Fuel cards offer a simple way to manage fuel expenses and bring down costs. These cards allow fleet managers to monitor and control fuel purchases, track spending, and even receive discounts at partnered fuel stations.

• Track fuel usage: Fuel cards provide detailed reports on fuel consumption, allowing managers to spot any discrepancies or abnormal usage patterns, which could indicate fuel theft. No one wants to believe one of their drivers would steal from them, but unfortunately it does happen. However, it's important to note that higher-than-expected fuel consumption might also be down to inefficient driving habits - which would also need tackling robustly.
• Cost control: Many fuel cards allow for spending limits to be set per driver or vehicle, helping prevent unauthorised purchases. Additionally, fuel cards often come with discounts on fuel, which can translate to significant savings across the fleet. In short, fuel cards are the fleet equivalent of supermarket loyalty cards: they are non-negotiable if you’re serious about cutting costs.

Popular UK fleet fuel cards include Key Fuels, Shell Fleet, UK Fuels and Esso. Certain cards are better for smaller fleets, while others are more advantageous for larger fleets.

5. Optimise fleet size and vehicle type

Maintaining the right fleet size is essential for cost-effective operations. An oversized fleet can lead to unnecessary costs in vehicle maintenance, insurance, and depreciation, while an undersized fleet can put a strain on resources and lead to inefficiencies and delays. However, it's not easy to maintain an optimal-sized fleet - since workloads may vary seasonally, or with the ebb and flow of economic and market conditions.

• Do a fleet use review: Assess your current fleet use to determine if all vehicles are necessary. If some vehicles are consistently underutilised, consider selling them to reduce costs (and claw back some of the initial outlay). Very old vehicles, meanwhile, may simply need to be scrapped.
• Invest in vehicles of the right size and type: Ensure that each vehicle in your fleet is the right size and type for the tasks it performs. For example, using a heavy-duty lorry for light loads increases fuel costs unnecessarily. Consider adopting smaller, more fuel-efficient vehicles where possible and appropriate.
  
  

6. Reduce insurance costs

Insurance is another major cost for fleet operators, but there are ways to minimise premiums while maintaining more-than-adequate coverage.

• Review coverage annually: Regularly review your fleet insurance policy to ensure that you’re not paying for coverage you don’t need. It’s also worth shopping around for better rates or negotiating with your current provider. Due to the large annual premiums involved, your custom is likely to be highly valued, so asking for a better deal each year is something of a no-brainer (and don't be afraid to walk away if the answer is ‘no’).
• Driver safety programmes: Implementing comprehensive driver safety programmes can lead to lower accident rates, which can help reduce insurance premiums over time. Many insurance providers offer discounts to fleets that prioritise driver safety and have fewer claims. Additionally, a better safety record helps eliminate the chances of costly legal actions in certain circumstances.
• Consider self-insurance for larger fleets: If you manage a large fleet, self-insuring certain risks could lead to significant savings. By setting aside funds to cover potential losses, businesses can avoid high premiums while still covering their risks. However, if your fleet experiences a major loss, the resulting expense could be extremely detrimental to the firm’s bottom line. With this in mind, self-insurance might be considered something of a gamble, while regular insurance is a fixed cost that you can manage more easily.

7. Go green with electric and hybrid vehicles

Electric and hybrid vehicles are becoming more viable for fleet operations due to advancements in technology, the expansion of charging infrastructure, and steadily falling purchase prices. And while the outlay may still be higher than traditional, combustion-engine vehicles, the long-term savings on fuel, maintenance and taxes could be substantial. Once more, this is a long-termist strategy, especially since sales of new petrol and diesel vehicles will be banned in the UK from 2035.

• Lower operating costs: Electric vehicles (EVs) have lower operating costs compared to traditional petrol or diesel vehicles. They require less maintenance (no oil changes and less regular engine repairs due to fewer moving parts), while the cost-per-mile is significantly lower with electricity than with fuel.
• Government incentives: The UK government offers a range of incentives to encourage businesses to switch to EVs or hybrids, including The Workplace Charging Scheme and the Plug-In Grant. These incentives can offset the initial costs, making EVs a more cost-effective choice.
• Sustainability goals: Beyond cost savings, adopting EVs can help companies meet their sustainability goals, improving their corporate social responsibility profile and appealing to environmentally-conscious customers.

Find out more on the pros and cons of transitioning to an electric fleet.

8. Outsource non-core activities

Adam Smith’s ‘division of labour’ principle holds true for fleets as much as any other business type. With this in mind, by outsourcing non-core activities, such as logistics management, fleet leasing, or maintenance, you can focus on your primary operations while, crucially, reducing fleet management costs.

• Leasing vs. owning: Leasing vehicles can free up capital, reduce maintenance concerns, and provide flexibility in scaling your fleet up or down as needed. With leasing, you also avoid the depreciation costs associated with vehicle ownership. It also means you’ll always have modern vehicles, with better tech and fuel efficiency. Newer, cutting edge vehicles will also enhance your image with existing and potential customers. Find out more on the pros and cons if leasing v's buying fleet vehicles.
• Third-party logistics (3PL): For businesses that rely heavily on transportation, partnering with a third-party logistics provider to complete some tasks might reduce overheads, especially when it comes to managing delivery routes, fuel and vehicle upkeep. However, the usefulness of 3PL very much depends on the nature of your fleet’s operations.