In transportation, costs are typically analyzed based on known variables: fuel, maintenance, salaries, tolls, and insurance. However, there is another factor that can compromise the profitability of an operation without appearing obviously in the financial statements: the time a vehicle remains out of service .
The impact of downtime doesn’t end when the vehicle stops running. During that period, the company loses capacity to handle new service requests while continuing to absorb costs associated with its assets. It can delay deliveries, disrupt the scheduling of other units, generate extraordinary expenses, and jeopardize commitments made to customers. Thus, downtime ceases to be an isolated issue for the vehicle itself and becomes a variable that influences the productivity and profitability of the entire operation .
The scale of this challenge is significant in an industry crucial to the Mexican economy. According to the preliminary results of the 2024 Economic Census by INEGI (the Mexican National Institute of Statistics and Geography ), 25,773 economic units operated in the transportation, postal, and warehousing sector in 2023. Freight transportation and related services together accounted for 63.7% of these economic units. Behind this structure lies a diverse range of companies that need to keep their assets available to meet a demand that doesn’t always allow for delays.
The challenge arises when fleet decisions are made considering only immediate expenses, without assessing their impact on the overall operation. Thus, a situation that initially appears to represent a one-off cost, such as trying to reduce maintenance times, can extend its effects to other areas of the business and impact both productivity and profitability .
Added to this are the infrastructure conditions. The Mexican Transportation Institute , in its technical publication ” Base Operating Costs of Representative Intercity Transport Vehicles 2024 ,” shows that estimated costs vary according to road and terrain characteristics . In a modeled scenario for an articulated truck, the base operating cost is estimated at 20.48 pesos per vehicle-kilometer, while in a mountainous scenario it reaches 36.76 pesos per vehicle-kilometer. These are technical estimates subject to the model’s assumptions, not universal fares, but they illustrate how the operating context modifies the economics of each trip.
Given this scenario, companies need to broaden their performance indicators. In addition to cost per kilometer, it’s advisable to measure mechanical availability, unit utilization percentage, average downtime, failure frequency, and on-time delivery. These indicators allow companies to identify whether an apparent reduction in spending is generating higher costs elsewhere in the operation.
Imagine a company that detects recurring failures in certain vehicles. If it simply tallies the repair invoices, it will be difficult to determine the full impact. However, by correlating each incident with the kilometers traveled, the deliveries affected, and the downtime, it can identify patterns and assess whether it needs to reorganize routes, adjust vehicle allocation, or reconsider the viability of keeping certain vehicles in service . This example is hypothetical, but it reflects a management practice applicable to operations of varying sizes.
The same logic should guide renewal decisions. It’s not about replacing units solely based on age, but about comparing the cost of keeping them operational with their contribution to productivity, considering their mechanical condition, reliability, and service requirements.
In a sector where margins depend on multiple variables, competitiveness isn’t just about spending less. It’s about making better use of every asset, anticipating risks, and preventing hidden costs from becoming recurring losses.
Because a truly efficient fleet is not necessarily the one with the lowest recorded expenses, but the one that manages to meet its commitments at the lowest possible total cost.
We invite you to read Marcelo’s latest article: How much does it cost to prepare to sell more? The invisible risk of the high season .
*Marcelo Caraveo is currently the Director of Risk and Remarketing at TIP Mexico .
Comment and follow Marcelo on LinkedIn .
Comment and follow us on LinkedIn: @GrupoT21
