Too many fleet managers think about high toll costs as being unavoidable and just a normal part of doing business. But the truth is that these expenses are highly controllable when you have the right system in place. Learning how toll management affects operating costs is the first step to reducing spending and avoiding unnecessary expenses.
With the right strategy, you can reduce toll fees and avoid penalties, which saves money now and in the future. Toll costs are an important line item to track when evaluating the total cost of ownership (TCO).
What Total Cost of Ownership Means in Fleet Management
Every cost related to operating your vehicles contributes to the fleet’s total cost of ownership. It’s no surprise that it costs money to keep the vehicles on the road, which is why fleet managers are proactively looking for ways to reduce these expenses.
Some of the most common line items in your total cost of ownership include:
- Fuel
- Maintenance
- Labor
- Insurance
- Compliance
- Tolls
If there are inefficiencies in any of these necessary costs, then the overall expenses add up over time. These inefficiencies are even more expensive when you consider how much they compound in a large fleet.
Where Toll Costs Fit into Fleet TCO
Look at toll costs in fleet management, and you will see that they are impacting your operating expenses directly. Not only do you have the cost of the toll fee, but there are additional indirect toll costs that can add up and even exceed the actual tolls.
When you are ignoring the tolls and additional fees, then it’s likely cutting into your profit margins. So, the best way to boost the bottom line this year is to ensure that you are keeping up with toll costs and making fleet adjustments to minimize these expenses whenever possible.
Understanding Toll Costs in Daily Fleet Operations
The amount of money that you spend on tolls depends on a variety of factors, such as the truck’s route, which part of the country the driver is in, and the vehicle class. These factors are part of the bigger picture, but you also need to consider other costs that can fluctuate quite a bit, based on the time of day (due to congestion pricing) and any discounts that might have been overlooked.
Toll spending can be predictable with the right system and strategy. But if you aren’t proactive about this line item, then there is a risk that a lack of visibility and management will cause your toll spending to become unpredictable… which makes it hard to manage your fleet’s budget.
Hidden Toll Costs That Inflate Fleet TCO
In many cases, it’s the hidden toll costs that really impact your budget. Not only are you dealing with the toll fee when a vehicle crosses through the tolling point, but there are other expenses that can add up as well:
- Toll violations
- Penalties
- Late fees
Poor routing decisions will cut into your budget, especially when you are spending more on toll fees without saving much time overall.
Plus, if you are still using a manual toll processing system, then it increases administrative burden and costs a lot more money in payroll costs.
How Poor Toll Management Raises Cost per Mile
One of the best ways to manage your cost per mile expenses is by looking at toll cost optimization for fleets. Not only do fuel and maintenance fees contribute to your CPM calculations, but there is a direct impact of tolls on cost per mile (CPM), especially when you have violations and errors coming through consistently.
The more violations you are dealing with, the more your CPM is affected. In fact, an inconsistent system for handling tolling and payments results in skewed analysis for your route and profitability reviews.
How Strategic Toll Management Reduces Fleet TCO
The most important thing that fleet managers need to understand is how toll management affects operating costs. Then, your team can implement a better system to improve toll cost optimization for fleets.
With modern technology, a centralized toll management system is the best solution to avoid manual work and reduce errors overall. You can automate this system and improve visibility at the same time. Plus, these automated systems can be used nationwide, which makes it easier than ever when your drivers are on a variety of routes.
Automated Toll Management Systems: How They Work
With an automated toll management system, you can digitize the toll payments through one centralized system. When drivers pass through the checkpoints, the system automatically captures the toll using a transponder or other form of vehicle identification. Since the payment is going through automatically, it helps to eliminate violations from missed payments.
Not only does this process help to reduce your administrative workload, but the centralized billing system also provides your team with real-time visibility. You are no longer juggling invoices for dozens of toll agencies. Instead, everything shows up in one administrative dashboard online, and you can see all of the relevant data from multiple tolling authorities: spending by vehicle, route, or driver. It becomes much easier to manage your budget and hold team members accountable since all of the data is available in one place.
Real-World Impact of Better Toll Management
The benefits are undeniable. Here are some of the reasons why a centralized toll management system makes sense for fleets of all sizes:
- Avoid unexpected fees and reduce the risk of violations.
- Decrease your administrative and processing expenses.
- Improve predictability of operating expenses for easier budget management.
- Have a clearer picture of the true profitability from each vehicle.
FAQ
Can toll management really reduce fleet costs?
Yes, by implementing tolling automation and improving data visibility, it’s easier to reduce costs because you are avoiding unnecessary toll spending (including violations) and decreasing administrative costs at the same time.
Should toll costs be included in fleet budgeting?
Toll costs add up and should absolutely be included in your budget. With the right system, tolls can be treated as a predictable operating expense.
Lower Fleet TCO Starts with Toll Control
Now that you understand how toll management affects operating costs, it’s easy to see why toll management matters for your budget. Poor toll management results in a higher CPM than necessary and increases your total ownership costs overall.
For effective toll management solutions, talk to our expert team at Innovative Toll Solutions. Contact us today to learn more about available services.