Reducing mileage, or at least limiting its growth, is a straightforward way to reduce transport costs and emissions, and can be achieved without affecting your business.
Why manage mileage?
For example, reducing the mileage of a driver covering 12,000 business miles a year by 10% would save around £150 on fuel costs and release around 30 hours for productive work. At a payroll cost of £30 per hour, this is effectively an annual saving of £900 per employee.
Having an early, open discussion with drivers and managers about managing mileage is important. As they know their daily routines best, they are likely to have useful, innovative ideas about how to reduce their driving distance and time, and improve productivity.
Why collect mileage data?
Mileage and fuel data underpin good fleet management and allow accurate expenses and taxation reporting. Organisations should aim to have comprehensive, accurate data about vehicles and drivers that is accessible and up-to-date.
Establishing or improving the data collection on mileage and fuel use often significantly reduces costs, as it tends to reduce the incidence of error, fraud and waste. For example, people often round-up to the nearest 10 when claiming mileage reimbursement, inflating costs.
Establishing a mileage capture system can also generate indirect cost savings, including reduced administration and improved vehicle performance tracking. It can also help improve compliance with HMRC guidelines and duty of care obligations. Having good data also informs decisions, such as introducing electric vehicles for example, as well as enabling accurate carbon footprinting.
Undertaking a mileage audit
A mileage audit will establish a baseline of your current situation, which allows you to monitor progress. It will help identify high-mileage departments and drivers, underutilised vehicles and the most frequent business trips. Monitoring mileage goes hand-in-hand with monitoring fuel consumption. The best way to capture mileage and fuel data will depend on the size and complexity of your fleet.
Ideally, the mileages of company cars, company vans, private cars (cash allowance or grey fleet users) and pool cars across the organisation should all be included. If tackling mileage across the whole fleet is too large a task, focus on gathering data for the vehicles that contribute the most mileage, or where there is significant potential for savings, such as grey fleet.
Data should be collected on:
- total annual mileage for your organisation
- departmental mileage, if appropriate
- individual vehicle and driver mileage
- where possible, the length and purpose of individual journeys
Data can be gathered from a variety of sources, including:
- fuel card reports
- manual mileage entry into a software system, ie mileage capture software or expense systems
- telematics systems or ‘trackers’
See our guide Mileage management: a guide for fleet managers.
Telematics systems include mobile apps or in-vehicle ‘dongles’, which can be used in pool cars and company cars.
Each provider or platform has its merits in terms of cost, accuracy, degree of real-time reporting and automation. Vehicle-based systems often have a switch to enable the driver to select business or private mileage to address privacy concerns.
Telematics systems can provide information such as location, driving style and distance travelled, and can help automate time-consuming processes, such as data input and timesheets. These systems can automatically log vehicle use, locations and the start and end of the working day. The information can be imported into payroll systems and generate automatic reports for managers with business and private mileages, allowing accurate records and repayments to be made.
For more information about telematics systems, their uses and advantages, see our guide How fleets can use technology to manage driver behaviour and vehicle efficiency.
Strategies for reducing mileage
Every organisation is unique, but here are some popular ways to reduce mileage.
Encouraging video conferencing and use of public transport
Deciding whether to travel or not is the first decision in any travel hierarchy, and explained in more detail in our information around reducing grey fleet.
Some journeys can be avoided through phone or video conferencing, which are increasingly reliable, popular and an acceptable alternative to face-to-face meetings.
It’s also worth considering using public transport and car-sharing. Some practical steps could include:
- mandating the use of public transport for certain journeys, where it is practical and cost-effective. You could also consider not paying car mileage expenses for these journeys
- purchasing season tickets for staff making regular trips to the same destination, or within a certain area. For example, most major conurbations have a ‘Metro card’ or similar
- setting up a simple journey-matching service, such as an online calendar, showing who is travelling, when and where
- paying 5p per mile to staff who carry a passenger, and considering a payment to the passenger
- paying up to 20p per mile tax-free (AMAP rate) for staff who use their own bicycle for business trips
- making pool cycles available, including fold-up bikes that can be taken on trains
Removing incentives to drive
In some organisations, fleet and other policies can motivate travel. For example, grey fleet drivers may be entitled to an annual lump sum above a given mileage threshold. Alternatively, sales colleagues may have activity-based targets (ie number of home visits or external client meetings) rather than results-based targets, encouraging travel.
Mileage reimbursement rates shouldn’t make it profitable for employees to cover more miles. If you are using mileage rates above approved mileage allowance payments (AMAP) for grey fleet, drivers may be benefiting financially by covering additional miles.
Using telematics to optimise routes
As well as providing accurate mileage data, some telematics systems allow the analysis of vehicle routes, both in real-time and retrospectively. This enables better routing and scheduling to minimise mileage and unnecessary detours. Real-time vehicle location may also enable the more efficient deployment of staff and services for some roles.
Our guide How fleets can use technology to manage driver behaviour and vehicle efficiency explains more about the different types of telematics systems and their features, and how to use the data effectively.
Mileage reduction targets
Setting mileage targets for teams and individual drivers is an effective means of devolving accountability throughout your organisation. Updates should be provided to managers and drivers to show progress.
High-mileage drivers should be a particular focus. For example, personal targets could be part of the annual performance appraisal, with achievement of targets contributing towards any KPI-based payments.
Consider publishing quarterly league tables of high-mileage drivers or departments, or those with the greatest variance. This would allow line managers to investigate the reasons for especially high grey fleet mileage. The aim wouldn’t be to prevent staff from doing their jobs, but to help them work in a safer and cost effective way.
Possible key performance indicators (KPIs) include:
- total business mileage
- total mileage per employee
- department / team mileage
- total miles per £1,000 of turnover
- number of video conferencing meetings and estimated mileage and time saved
- miles per client / site visited.
Reducing mileage by 5% each year for three consecutive years would be realistic – although specific operational requirements should also be considered.
Once mileage reduction targets have been agreed, travel budgets should be reduced accordingly. For grey fleet this is straightforward: it’s the mileage reimbursement rate multiplied by the reduction target.
It is slightly harder to calculate for a wider fleet budget reduction, as mileage reductions may lead to fewer fleet vehicles being needed. To be cost-effective, all vehicles should be fully utilised. It is good practice to monitor both mileage covered and hours booked.
For any mileage management measures to succeed, you should seek to embed them into your organisation’s working practices and culture.
This can be achieved by:
- developing travel-related polices and communicating their key messages
- setting mileage-related targets and monitoring progress
- incorporating actions into CSR / sustainability reporting
More detail on these areas and a list of common barriers or concerns and possible responses can be found on p10-13 of Mileage management: a guide for fleet managers.
Carbon footprinting is often undertaken for emission reporting purposes, but can also be an opportunity to review the performance of the fleet and processes for collecting mileage and fuel data.
The fleet health check tool can generate a straightforward carbon footprint for your fleet. The accuracy of the footprint will depend on the type of data you have available.
For more information, including on methodologies and how to collect relevant data, see Carbon footprinting: a guide for fleet managers.
This guide explains the principle benefits for managing mileage, helps you to understand how to gather the required data, and sets out the steps to start cutting costs and carbon emissions.Mileage management: a guide for fleet managers
This guide provides managers with an overview of telematics technology and its applications, along with tips for effective implementation and overcoming barriers.How fleets can use technology to manage driver behaviour and vehicle efficiency
This guide explains why understanding your fleet’s carbon emissions is important and how robust data management can help you to run a greener fleet.Carbon footprinting: a guide for fleet managers
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