Fleet size is not fleet efficiency

Fleet size is not fleet efficiency

There is a persistent belief in fleet management that the solution to delivery pressure is more vehicles.

Route getting congested? Add a vehicle. Customer demanding faster service? Add a vehicle. Driver complaining of overload? Add a vehicle.

The result, documented consistently across growing fleet operations, is a fleet that is larger than it needs to be — and therefore more expensive than it needs to be — while still failing to meet the service demands that prompted the expansion.

The measure that exposes this

Vehicle utilisation rate: the percentage of available vehicle-hours that are spent doing productive work (moving, loaded, in service) versus being available but idle (parked at depot, waiting for load, in administrative downtime).

Research by fleet consultancy Frost & Sullivan found that the average commercial fleet in emerging markets is 20–30% larger than required to meet its operational demands — because utilisation has never been measured and fleet additions have been made on the basis of perception rather than data.

A fleet of 60 vehicles operating at 45% utilisation is delivering the same output as a well-managed fleet of 40–45 vehicles operating at 75%.

What those extra vehicles cost

The 15–20 extra vehicles represent:

• Insurance premiums on assets doing nothing.
• Depreciation on assets not generating revenue.
• Maintenance on assets accumulating passive wear.
• Parking, administration, and compliance costs for vehicles that are not, in operational terms, needed.

On typical fleet cost structures, those 15 unnecessary vehicles represent $800,000–$1,200,000 in annual cost for a mid-size operation.

Three questions before adding any vehicle

1. What is the current utilisation rate of the existing fleet?
2. Is the capacity shortfall occurring across the fleet, or in a specific vehicle type, route, or time window?
3. Could scheduling optimisation, route redesign, or driver shift adjustment recover the needed capacity from existing assets?

In documented fleet rationalisation programmes reviewed by the Fleet Management Association of Southern Africa, 60% of fleets that measured utilisation for the first time found they could meet existing operational demands with fewer vehicles, not more.

Measurement comes first. Purchasing decisions come second.

Sources

Frost & Sullivan Emerging Market Fleet Management Research (2023); Fleet Management Association of Southern Africa Utilisation Study (2022); Geotab vehicle utilisation benchmarking dataset.