What We Learned in 2024
December 17, 2024
Toll systems have become integral to transportation infrastructure over the years, with the global electronic toll collection market expected to hit $14.7 billion by 2029. Although these systems help ease traffic congestion, using toll roads can introduce compliance risks. When something goes wrong, fleets may face hefty toll violation costs.
What may seem like a minor administrative oversight can quickly escalate and lead to substantial penalties and fees. Consider the recent crackdown on drivers crossing the Verrazzano-Narrows Bridge in New York City. In just three days, officers pulled over 44 vehicles registered to persistent toll violators who owed nearly $1 million in unpaid tolls and fees.
This incident shows how quickly toll violations can accumulate for commercial fleets. If fleet compliance is not properly managed, you will face not only fines but also the inconvenience of paperwork and other hidden costs of toll violations.
Hidden Costs Breakdown
Your fleet’s profitability and efficiency rely on managing all costs, particularly those that may not be immediately obvious. That’s why understanding and mitigating the hidden costs of toll violations is critical.
Financial Costs
While toll fees are common and considered a cost of doing business, violations lead to additional costs beyond just the initial fees.
Penalties for Toll Violations
Violating toll regulations can result in various penalties that depend on your state, the type of violation and its severity. Typically, toll authorities issue violation notifications when:
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- A vehicle passes through a tolled lane without a proper device, account or a deactivated pass
- The toll account has insufficient funds
- A vehicle in your fleet uses a transponder registered to another vehicle
- An unregistered vehicle uses a toll lane
- Toll fees are not paid on time
- A driver uses a High Occupancy Vehicle (HOV) toll lane designated for tolling without the correct number of occupants or at the wrong time
For example, if you operate a fleet in Southern California, each of the above penalties would incur an additional fee of $57.50 in addition to the toll amount due. If you do not respond to the first violation notice, you will incur an extra $42.50 penalty to cover additional administrative and processing costs. Ignoring the second notice may result in the DMV blocking the vehicle’s registration.
Third-Party Collection Fees
If the toll authority refers unpaid violations to a collection agency, you may face additional costs. When multiple vehicles in your fleet accumulate repeated violations, these penalties can quickly add up, resulting in substantial financial burden for your company.
Payment Errors
Whether caused by human mistakes or system malfunctions, payment errors can lead to unintentional toll violations and unnecessary costs. These errors often happen when a fleet does not properly install or activate the electronic toll transponder and does not have a backup fleet tolling method, resulting in missed toll payments.
Errors can also happen when fleet accounts have insufficient balances.
Legal Fees
If violations result in legal action, costs may include court fees, attorney fees and administrative hearings.
Operational Costs
How do toll violations impact fleet operations? Toll violations can significantly impact fleet operations by introducing a range of operational challenges. These issues may not only have immediate financial consequences, but they can also affect a fleet’s efficiency. The impact ripples through your fleet management process, leading to hidden costs arising from delays, inefficiencies and disruptions that ultimately compromise productivity and profitability.
Administrative Burden
Fleet administrative personnel or fleet managers must create and manage separate tolling accounts, as well as arrange for prefunding. This process often involves handling a large volume of paper mail notifications for tolls and violations, which diverts time and resources from the core management of the fleet.
Fleets that operate across multiple regions and move vehicles frequently may need to acquire transponders or accounts in each of these regions. This leads to the challenge of ensuring that the correct device is in the appropriate vehicle. As a result, all these administrative hurdles can lead to significant costs and inefficiencies for the fleet.
Vehicle Downtime
One of the most significant hidden costs is vehicle downtime due to registration holds caused by unpaid toll violations which may put a vehicle out of service completely until all toll fines are resolved. When a vehicle is unable to operate legally, it results in immediate revenue loss, the potential for losing contracts, and project delays. For fleets that depend on tight schedules and consistent operations, having even a single vehicle out of commission can create a bottleneck.
Scheduling Inefficiencies
When fleet drivers lack an automated toll payment solution, they risk losing access to a fleet vehicle due to toll violations. This situation can disrupt workflow and delay services or deliveries which can be costly and strain client relationships.
Drivers might also need to reroute and bypass toll roads to avoid further violations or delays. This rerouting can result in:
- Increased fuel costs due to longer routes
- Longer travel times limit the number of trips a driver can make
- Greater wear and tear as a result of added vehicle miles leads to increased maintenance frequency and costs
- Driver fatigue caused by longer drives necessitating more rest or impacting compliance with driving hours regulations
Toll violations can interfere with route optimization, disrupt delivery schedules, and add to operational complexities. Fleets may need to reallocate resources to cover vehicles that are out-of-service reroute deliveries, which can put additional strain on other aspects of operations such as driver assignments and maintenance schedules.
Service Disruption
Delays caused by toll violations can result in missed deadlines, which impact customer trust and satisfaction. In industries where timing is crucial — such as perishable goods or just-in-time manufacturing, even minor delays have significant consequences. If your company experiences repeated service disruptions, you risk reputational damage, which can impact future business opportunities.
TOLL MANAGEMENT CASE STUDY
Discover how a mid-sized fleet significantly reduced compliance risks and saved 20% on toll management costs by using Verra Mobility. Learn how our Toll Management solution helped this fleet eliminate toll violations, decrease administrative time and expenses, and ensure compliance for its fleet vehicles.
Compliance Costs
Toll violations can attract compliance expenses that may be less obvious but can greatly affect your fleet’s operations, financial stability and the integrity of your company.
Regulatory Fines
Toll violations can lead to regulatory consequences. For instance, if toll violations result in vehicle registration suspension, you may face not only the initial toll fines but also penalties for failing to comply with vehicle registration laws.
Reputation Management
Frequent toll violations can damage your brand’s reputation. A tarnished reputation can result in lost business, increased scrutiny from regulatory bodies or difficulties securing new contracts, especially if your industry has strict compliance standards. Efforts to manage or repair your reputation can involve significant resources for public relations initiatives, further adding to the overall cost of toll compliance for large fleets.
Impact Across Fleets
The consequences of toll violations extend beyond individual vehicles or drivers, affecting a fleet's entire organizational structure across various industries.
Fleet Managers
If you’re a fleet manager, managing toll violations can increase your workload as you must navigate the complex tasks of tracking, disputing and resolving toll issues. Managing toll violations for fleets involves considerable administrative overhead, including:
- Maintaining accurate records
- Communicating with toll authorities
- Ensuring timely payment of fines
These tasks distract from other essential management responsibilities and complicate fleet oversight. The challenge is further heightened by the need to educate drivers, address transponder issues and ensure timely payments to avoid increased fines.
CFOs
For CFOs, toll violations can lead to unforeseen expenses that can disrupt carefully planned budgets. These costs are often unpredictable and can quickly accumulate, impacting the fleet's financial strategy. This unpredictability makes it challenging to create financial forecasts, which may result in cash flow issues or the need to reallocate funds from growth and innovation to cover compliance costs.
Operational Managers
Operational managers are responsible for managing the tangible operational disruptions caused by toll violations. These violations can lead to delays in service delivery and scheduling inefficiencies. As an operational manager, you will need to address the consequences of these toll violations while ensuring that the fleet maintains its reputation for reliability and efficiency.
Minimize Fleet Impact with External Toll and Violation Management
Are hidden toll violation costs draining your fleet budget? The complexities and hidden costs associated with toll violations can negatively affect your fleet's operational efficiency and financial health. However, partnering with an external toll and violation management provider can transform these challenges into opportunities.
At Verra Mobility, we offer full-service toll management solutions for both small, medium and enterprise fleet operators to automate payments, manage disputes and ensure compliance across various jurisdictions. Our solutions minimize your fleet’s workload and financial risks so that you can keep your vehicles on the road and comply with all regulations.
Contact us today to learn how we can help you improve your fleet operation efficiency and create strategies to avoid toll violations.
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Verra Mobility
Corporate Office, Customer Service
Ph: (480) 443-7000
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