Keeping fleet costs down is an important part of keeping a company’s profits up. Whether transportation is your focus or simply an ancillary issue, commercial auto costs can have a major impact on your bottom dollar. Here’s a look at the factors driving up driving costs.

1. Accident rates are rising.

Car crashes are increasingly common. According to the National Highway Traffic Safety Administration, 37,461 people died in car crashes in 2016, which represents an increase of 5.6 percent compared to 2015.

Commercial vehicles are not exempt from this disturbing trend. According to the Federal Motor Carrier Safety Administration, 4,213 large trucks were involved in fatal crashes in 2016, which is an increase of 3 percent compared to 2015.

The rise of crashes can be blamed on many factors. A healthy economy and low unemployment rate can be correlated to an increase in the amount people drive, which in turn results in more crashes. At the same time, the rise of smartphones is leading to an increase in distracted driving.

Any fleet manager looking to control costs would be wise to focus on safe driving.

2. Insurance premiums are rising, too.

The increase in crashes is hitting auto insurers hard. Combined with a series of natural disasters, this is forced auto insurers to raise premiums.

According to ValuePenguin, eight out of 10 of the country’s biggest car insurers lost money in 2016. This is despite the fact that premiums have been increasing in recent years, a trend that is not expected to reverse anytime soon.

Commercial auto insurers are being impacted, too. Although the trend is impacted pretty much everyone, focusing on safe driving can help keep claims and rates under control. 

3. Technology offers benefits – at a cost.

Modern technology can do wonderful things. With telematics, managers can monitor their fleets and make sure drivers are practicing good habits to increase safety and decrease fuel costs. Other features, like automatic braking systems, can increase safety on their own.

But all these features come at a cost – literally.

In addition to the initial sticker price, repair costs are higher for high-tech features. As a result, insurance costs are higher, too.

The Detroit Free Press offers an illuminating example to highlight the issue. Fixing a bumper on a 2016 model vehicle could cost thousands more than fixing a bumper on a 2014 model vehicle. That’s because the 2016 model has sensors in the bumper, resulting in parts that cost 180 percent more.

4. Drivers are in short supply.

Few people want to get into trucking these days. It might be another negative consequence of the low unemployment rate. Because people can find other, less demanding jobs, many of them decide not to become truck drivers.

According to the Washington Post, this is having a ripple effect on costs. Many businesses struggling to find drivers are increasing the salary offered, and this increase in transportation costs is leading companies to raise prices for consumers. One company in Minnesota, for example, gave truck drivers a 15 percent raise and still has trouble filling positions.

5. Delivery costs can eat up restaurant’s profits.

For restaurants, delivery services can be another major drain on the company’s budget. Restaurants can provide the service themselves or outsource it to companies that specialize in food delivery. Either way, the cost can eat into the restaurant’s profits.

In this interview from Inc., one solution is discussed: by using a catering menu with higher prices for all delivery, restaurants can make up for the extra costs.

Need help with your commercial auto insurance program? Contact BNC Insurance.





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