Automotive Fleet views itself as a facilitator to provide a platform for different voices from the industry to sound-off on today’s challenges. This regular column is designed to encourage discourse for fleet professionals to let their voices be heard to their peers and other industry professionals.
Here is what is top of mind for fleet professionals today:
A Crazy Year
Last year – 2020 – was a crazy year. It has shown us challenges that we haven’t seen before or at least in a very longtime. The greatest challenge that we have seen is the lack of availability of equipment due to the supply chain interruptions caused by the coronavirus. It has been a long time since we have not been able to purchase the amount of equipment that our business requires. This challenge is not only occurring at the OEM level, but also many of the upfitters as well.
The second greatest challenge is an old one that is starting to resurface, and that is the pressure to reduce the carbon footprint of our fleet. This has been an ongoing issue in a handful of states for years but there has never really been mainstream equipment available to support those efforts. Today feels different. We are starting to see more local and state governments with carbon footprint reduction goals and more shareholders/investors asking for carbon footprint reduction plans.
The challenge is still the lack of mainstream equipment to support those requests. The third challenge has been the impact of the coronavirus on our employee base. Trying to run a business where close physical contact occurs every day has been a unique situation for all of us. Not only do we have to deal with the impact of the virus on our workers and their families, but we also must deal with requirement to limit that physical contact through operational changes.
David M. Meisel, executive VP – operations, Quanta Services Inc., Houston, Texas
In the current environment, the COVID-19 pandemic has created a considerable amount of economic uncertainty, business budget constraints and vehicle supply chain unpredictability. Many businesses that are apprehensive of or suffering from revenue loss have frozen or cut their fleet budgets, prohibiting the replacement of aging vehicles that are costing more than they are worth.
Then there are those companies fortunate enough to maintain or increase business, but since they need their fleets to be up and running efficiently and safely at 100% to generate revenue, they are hurt by slowdowns in the production and delivery of new vehicles and upfitting equipment. The unknowns in today’s supply chain make it difficult for those companies to ensure their fleets are keeping up with business demands.
Many of the current factors impacting fleet-dependent businesses are driving how those businesses are planning preparations for what’s next. Do they need a reduction in vehicle volume due to reduced sales and staff? Or maybe a company car reduction makes sense because more employees are working from home.
And how much will reducing vehicle count and delaying the replacement of aging vehicles help or hurt their business? It’s imperative that these companies make these calls accurately. With the right fleet management partner, businesses can figure out how to rightsize their fleets and create a strategic vehicle life cycle plan that lowers their total cost of ownership and enhances their customer service now and for the future.
Even though times are very challenging right now, it’s vital that businesses make decisions about the future of their fleets based on sound data instead of subjective, knee-jerk reactions. Partnering with the right fleet management company can help them easily track their fleet data, analyze it, and find actionable insights that will push their business ahead.
The right fleet management partner can help make their fleet more cost-efficient as well as help them determine if future-forward options like electrification is in their best interest.
Jeff Hart, president, Mike Albert Fleet Solutions, Cincinnati, Ohio
State of Fleet Industry Video
When the pandemic finally ends, everything will go back to normal. Right? Well not necessarily.
In the Jan. 21, 2021 State of the Fleet Industry Spotlight video featuring AF Editor Mike Antich interviewing Dain Giesie, assistant vice president business development for Enterprise Fleet Management, on the challenges fleets will face in a post-pandemic world.
A successful fleet plan will require creativity and as Mike Antich said: “Do your planning now, not while the plane is going down the runway.”
Andrew Wishart, account executive, Enterprise Fleet Management, Vancouver, British Columbia, Canada
Lack of Personal Connection
With the start of a new year, I’m wondering what we all face in fleet management in the immediate future and beyond 2021. I feel economics will challenge fleet managers severely as they try to put together logical repair budgets.
I may be getting too deep into the weeds with this and for some fleets the costs may be a non-issue. However, with the safety components on vehicles to day, with more to come, the electronics, sensors, computers and so much more, the repair cost regarding accident claims is beginning to skyrocket.
A mere five years the average repair cost resided in the low $2,000 range. Now, with the additional equipment required to repair vehicles, plus the accident avoidance and safety components, per and post repair testing, module replacement and more, a $10,000 repair is becoming more and more routine. When a vehicle costs $25,000 or more to acquire, a fleet manager is almost handcuffed into spending the ridiculous amounts that are being estimated today.
For the insured fleet, the premiums are going up steeply to cover these newer higher prices. On the back end, insurance companies are arbitrarily deducting whatever expenses they can, not to reimburse for damages the legitimately owe. A small fleet of 500 vehicles may face some 85-115 incidents per year. At $170,000 to $230,000 not considering subrogation returns; a fleet manager can easily budget that expense.
Today, the same accident count can generate over $700,000 to possibly $1 million or more in repairs costs. How does a fleet manager explain this to his bosses? The explanation “the cost of doing business” can only go so far.
Another concern I have is the lack of knowledge in general. I know every service provider and lessor company will fight with me over this comment, but it is truthful as I am still “in the trenches” everyday talking to veteran clients and newbies. There is a sharp contrast to what a veteran will outsource as well as their expectations. Compared to a newbie, the expectations are like night and day. When companies outsource their fleet services thinking the problem will go away, they are just “kicking the can down the road” as many of the individuals employed by the service provider that are making decisions are not accountable.
They are insulated from wrong doing, lack of judgment, lack of experience and other liability concerns simply because the party doing the outsourcing has no idea what they are “giving away.” The individual thinks outsourcing the services is as simple as turning on a switch and everything will work properly. When the ‘switch” does not work, they do not even know that it is not working.
COVID has changed the way companies do business. Prior to COVID, everything had to be done ASAP – yesterday was too late. Now, with less staffing and less people overseeing daily operations, business has slowed.
No one is in a hurry any more as personal safety has taken hold of many people. While that is a very good concern, taking personal safety to extremes has a negative effect. Video conferencing can go only so far – people are becoming distant and less attached. Newer relationships are becoming harder to develop. Calling a manufacturer or a leasing contact or a fleet manager that you never met for assistance is answered days later – if answered at all – when it used to be same day. How can anyone work in that environment for an extended period of time without feeling frustrated? I can go on and on with issues that I see are different. I am not sure my opinion and perspective matters to the newer generations.
I do know it matters to me and the veteran personnel I deal with. We all feel the lack of personal connection is unfavorable, but it is unfortunately a new way of life today.
Bob Martines, president/CEO, Corporate Claims Management, Ivyland, Pa
Domino Impact on Fleet
With COVID lock down and subsequent factory shut down, it resulted in some delays with the OEM orders and new model year bid process.
All these have had a domino impact on our fleet – delayed replacement could potentially result in higher-cost repairs. We are also running into some challenging build out schedule with multiple OEMs this year.
We really need to reassess our OEM mix (import vs. domestic), factory-order vs. out-of-stock vs. pool, etc. The traditional way of managing our fleet replacement cycle and selectors might need to be revisited.
Jen VrMeer, senior manager, operations support / sales operations, BD (Becton Dickinson), San Diego, Calif.
Post-COVID Fleet Challenges
The top challenge that I see for fleet managers is the transition of fleet becoming more and more of a purchasing and procurement role, rather than a stand-alone position. As we see some folks retiring or companies reorganizing in response to COVID, the fleet manager needs to also have some other key corporate responsibilities beyond fleet in order to stay a key role at their company.
Another challenge post COVID is just getting their drivers back on the road. COVID has made in-person interactions less and less accepted and virtual meetings are the only way to meet new prospects and grow existing sales relationships. All of this leads to less miles on the road and more time at a desk for a sales “fleet.” Most companies still have restriction on guests at their office – or are 100% virtual so having a sales call would need to be off-site.
The main opportunity is that now is the time to leverage technology. If there’s anything 2020 has done – it’s accelerated the acceptance of technology at home and at work. In both business and personal lives, we now video chat, review data, check stats and use apps to stay more connected than ever before.
This is the time to put technology in vehicles and finds ways to use it to meet business goals. Companies are investing in ways to stay connected to their employees and this can be an advantage for fleets that have wanting telematics or other ways to better monitor their vehicle usage.
There are definitely other fleets that due to the nature of their business had the busiest year ever – telecommunications and some food distributions/producers had round the clock shifts for employees or had to run a multi-shift fleet operations – which was something that they never had to do before.
Author wished to be anonymous.