In June GE Capital Fleet Services released the results of a survey of fleet manager concerns that it conducted at an industry trade show in May. Findings from the survey include 26% of respondents saying meeting cost-saving goals was their top priority. Improving driver safety was the top priority for 23% of respondents, and increasing workforce productivity was the number one priority for 19%.
Given that fleet managers have these concerns, what are they doing about them? Automotive Fleet spoke with Steve Jastrow and Brandi Stensos from GE Capital Fleet Services to find out what their customers are doing to address these issues.
The core takeaway from the discussion is that fleet management is becoming a discipline where you have to constantly keep your eye on a range of changing metrics. Today, factors such as rapid fuel-economy improvements, changing resale values, advancing technologies, such as telematics, and the emergence of more alternative-fuel vehicles on the market, all make creating an effective fleet strategy a moving target.
To start, one area that GE Capital Fleet Services focuses on is creating cost-effective replacement cycles. Nowadays, though, to maximize a company’s investment in a fleet, replacement cycles require regular review and adjustments due to market conditions, for example to take into account resale values and whether a new model of vehicle can provide a lower total cost of ownership.
“We’re finding that where there used to be a one-size-fits-all replacement solution for many fleets, now it’s much more dynamic, with huge swings in the economy, vast improvements in vehicle fuel economy, and huge swings in the resale market, Jastrow said. “We’ve gone well beyond a replacement cycle that you stick with and never revisit. Those days are behind us now.”
As the market has changed, so have fleet management strategies.
“Fleets are moving to an optimal replacement methodology rather than a ‘replace when it dies’ strategy,” Jastrow said. “Previously, they weren’t replacing because the resale market was down. They were taking a hit on the TRAC lease at the end, so we recommended that they hold on to their vehicles. Now, we’re seeing that the optimal time to replace is at a quicker pace.”
When it comes to productivity as a fleet manager concern, they are addressing this issue in a couple of ways, including the use of telematics and focusing on improving safety.
“From a productivity perspective for service and delivery fleets, drivers use telematics to travel better, more optimized routes, for example a circular pattern rather than a star pattern,” Jastrow said. “As the technology continues to improve and costs are coming down, it’s becoming a more viable solution for many fleets.”
Jastrow said companies are also starting to think about safety in terms of related costs, not just those associated with either replacing or fixing a vehicle.
“The area that seems to get a lot of focus this year has been around accident and safety,” Jastrow said. “So there has been a heightened awareness of that. I’ve done more of an informal survey and found that it was a top item for CFOs as the CFOs’ concerns make their way down to fleet. The accident spend relative to the overall spend is small, but if you add up all the ancillary things, driver downtime, litigation, repairs, that becomes a massive cost to a business.”
This focus on safety has led to improved productivity as well as reduced costs, according to Jastrow.
“To the degree that you’re doing MVR checks so you have safe drivers on the road, and that you’re doing safety training, that will result in improved productivity as well,” Jastrow said. “You don’t have a driver out with an injury or a vehicle with an issue.”
Despite the focus on cost-cutting and control, “green” issues and fleet sustainability are still important to many companies. Also, ancillary benefits of “going green” often include lower fuel costs, which help the bottom line.
“Sustainability continues to be a driver,” GE’s Brandi Stensos said. “Fuel can be one of the top operating costs to a fleet, and can be difficult to budget with price volatility. Companies are looking to alternative fuel vehicles to help manage those costs. Lastly, those businesses who have adopted alternative fuels are talking about it. Drivers are happy with the vehicles; they’re talking about them, and tweeting about their experiences.”
To implement “green” strategies, fleets aren’t just swapping out huge numbers of gasoline- or diesel-fueled vehicles wholesale, they’re taking a calculated approach, Jastrow explained.
“When you get into the alternative fuel market, it gets a lot more complicated. Alternative vehicles aren’t a solution where you can switch the whole fleet out, it’s about finding pockets where it makes sense,” he explained. “We need to get more granular with how we’re thinking about this as opposed to thinking of it as a fleet-wide fix. There might be missed opportunities in segments of the fleet.”
With cost and efficiency the focus of many companies, all the elements of fleet management, from replacement schedules and maintenance to fuel management and safety, have a role in cost containment. Today, more than ever, creating and implementing a strategy that allows for rapid adjustments in many areas of a fleet’s operations is key to getting the best return on the investment that a fleet represents.