Small fleets may not have the same logistics ‘muscles’ as their bigger counterparts, but they still play a big role in the supply chain. And much like fleets of any size, small fleet management has its own share of big challenges.
Since small fleets have limited resources, they are more prone to disruptions brought by payment cycles, rising costs of fuel, compliance, and the list goes on.
So, for this post, we’ll discuss these challenges and provide tips on how small fleet managers and operators can navigate these hurdles. Keep reading to see how it can also help your own trucking business!
7 challenges of small fleet management
If you’re a trucking business owner, you already know the struggles that come with its operation. Specifically, you’ve probably encountered these fleet management challenges many times over:
1. Rising fuel costs
The soaring fuel prices aren’t news to truckers like you. It’s been a lingering problem in the logistics sector, and small fleets often bear the brunt of every price hike.
Due to the rising costs of fuel, small fleets will have a smaller profit margin from each delivered load. While the increase in fuel costs also boosts spot rates, it’s still not enough for small fleets to keep up with their fuel expenses.
Unfortunately, it’s not an easy task for truckers to pass the additional fuel costs to their shippers or brokers. While you can negotiate a higher rate, it’s always at the mercy of your customer if you’ll get a reasonable profit after all the expenses – including fuel – have been deducted.
Still, there’s a silver lining to this problem. A factoring for trucking company like Factoring Express offers fuel advances, so you’ll have enough gas money to deliver your haul.
2. Fleet maintenance costs
Aside from fuel prices, the fleet management industry is also hounded by the fluctuating cost of spare parts and vehicle maintenance.
To be specific, overstocking on spare parts leads small fleets to tie up their capital to the materials left sitting on their shelves. On the other hand, understocking can lead to delays in maintenance. And when maintenance is delayed, your truck can’t keep making money for your business.
Aside from that, many small fleets cut corners on preventive maintenance to stretch their working capital to cover other expenses. For example, they may cut back on vehicle maintenance to sustain their fuel expenses or provide salary increases to retain drivers.
3. Hiring and retaining drivers
Speaking of drivers, small fleets also struggle to hire and retain reliable drivers. This is mainly due to the driver shortage the trucking industry continues to face. Also, the job market is so competitive, and most experienced drivers will seek employment from bigger fleets.
In fact, the turnover rate among truck drivers is always at a soaring 90% range. Surprisingly, even generous benefits aren’t enough to keep drivers on the road as some are already aging while others opt for a career with a more predictable schedule.
4. Driver safety and accountability
One of the fleet management risks small trucking businesses have to deal with is their driver’s safety and accountability. Small fleets have to come up with ways to boost their drivers’ training to reduce the cost of insurance premiums in the long run.
Aside from that, involving your drivers in the maintenance process will help in the timely inspections and repairs of your fleet. With this, you can avoid roadside breakdowns that lead to delays and profit losses. Your drivers can also help in making each trip more fuel-efficient and cost-effective.
5. Long payment cycles
If there’s one gives small fleets the biggest blow, it’s the long payment cycles in the trucking industry. It’s normal for shippers to take 30, 60, or even 90 days to pay after their load has been delivered.
For small fleets, this long waiting time translates to lack of steady cash flow and potentially another bad debt in the works. Many small-time truckers have to dig into their personal funds just to keep their fleet on the road, which stalls the business’ growth.
The good thing is that truckers like you can partner with a factoring company to bridge the long payment cycles. You can simply sell your accounts receivables to a factor and receive instant cash advances of up to 97% of the total invoice amount.
After that, the factor will collect the invoice from your customer and settle the remaining balance with a small fee already deducted. This way, you can release the capital tied to your pending invoices within hours instead of waiting for weeks. And with the steady cash flow, you’ll have better chances of growing your small fleet.
6. Minimizing deadhead miles
Deadhead miles or empty miles are one of the biggest enemies of small fleets. This is when you don’t have a load to deliver on your return trip, which means you’re burning fuel money without earning anything back.
Aside from that, an empty rig is riskier to the driver than a fully loaded cargo. This puts drivers at a greater risk of accidents during inclement weather or sudden breaking situations.
In this case, small fleets have to double their effort in route planning and finding backhauls to maximize their revenue. Also, small fleets should utilize fleet management systems to ensure that their trucks are loaded each time they hit the road.
7. Regulatory compliance
Lastly, compliance can be a challenge for small fleets. After all, emission tests, vehicle inspections, and vehicle upgrades all cost money, something that small fleets don’t have the luxury of.
Also, the penalties due to non-compliance will only bring further financial constraints to your trucking business.
Tips for more effective small business fleet management
As with any business, managing a small fleet will always have its challenges. Still, the following fleet management tips can help in minimizing the challenges’ impact on your revenue:
1. Consider partnering with a factoring company
If your small fleet is always struggling with delayed payments, partnering with a factoring trucking company would be a smart move.
You can choose to sell the invoices from your slow-paying shippers and retain the rest under your own collections team. This way, you’ll have a steady flow of income to cover the costs of fuel, maintenance, and driver salaries.
For example, here at Factoring Express, we let you choose which invoice you want to factor in whenever you want to. We never impose long-term contracts or monthly minimums. Above all, you can turn your invoices into cash in as little as 24 hours once your account is approved.
Aside from factoring trucking invoices, we also offer fuel advances to cover the cost of transporting your haul. This will be a portion of our upcoming invoice, which we will deduct once you’ve delivered the cargo and collected the payment.
Overall, factoring services can be a great addition to your small fleet management solutions. It can also help you survive seasonal fluctuations and slow months in the business.
2. Take advantage of fuel cards
Fuel cards let you enjoy discounts on various fuel stops across the country. It also has additional perks like discounts on maintenance parts and more. All these will help cut your expenses, so you can save more money that you can allocate on other areas of your operations.
If you’re interested in getting one, feel free to contact us at Factoring Express. We provide fuel cards that you can use in more than 1,500 in-network stops nationwide with savings of up to 42 cents per gallon!
3. Diversify your cargo
You should also consider diversifying the type of loads you deliver. For example, you can use last-mile delivery with specialty freight, so you’ll have different revenue streams. This way, when one type of cargo suffers from disruption, your small fleet won’t take a huge blow.
Aside from that, you should review your routes and see how you can calibrate them to save on gas and other per-mile expenses.
4. Invest in comprehensive driver training
As we’ve mentioned earlier, it’s important to get your drivers involved for the smooth sailing operation of your fleet.
You should provide them with comprehensive driver training as well as briefing on regulatory changes. This way, your drivers can reduce the risk of accidents and delays in their deliveries.
Grow your trucking fleet with the help of Factoring Express!
Small fleets often experience big problems – most of which involve their cash flow. If you’re struggling with the same challenge, Factoring Express is here to help.
We are a trucking factoring company in Florida that provides fast and hassle-free funding for your pending accounts receivable. This way, your small fleet won’t have to suffer from long payment cycles. With us, you’ll get the working capital you need so you can keep your trucks on the road – delivering more loads and earning more revenue!
If you want to know more about our factoring services, feel free to contact our team! You’ll enjoy same-day approval and a 1-week free trial when you sign up with us today!
