I have been in the fleet management industry for a while now. I’ve seen the industry develop from the acceptance of leasing as way to financing a company’s fleet, through the efficacy of partnering with a Fleet Management Company. When I first began as a fleet manager, very few businesses knew about applying the leverage of a lease to help accommodate their company’s growth. Today, most mid to large size companies finance their fleet with operating or capital leases. Additionally, most allow professional Fleet Management Companies to manage that portion of their business.
Past and present landscape of fleet management in the region
The affordability factor for the customer becomes key in driving the number of vehicle requests, and this has largely shaped the fleet management industry. Adding vehicles to expand your company becomes less of a cash demand, simply due to the nature of a lease. Today, across, not only my region (Florida, Georgia, and South Carolina), but across the globe, most companies have adopted the finance lease, and use a professional fleet management company.
With increased fleet sizes comes increase transactional volume, and the need to monitor and manage costs. At 15,000 annual miles, the cost to operate a vehicle can run anywhere from 45 cents to 75 cents per mile, depending on the type of vehicle. A professionally managed fleet can save upward to 5 cents per mile per vehicle, by managing these cost through better acquisition pricing and end of term sales pricing (depreciation), fuel and maintenance cost controls.
Companies today require data to track their fleets’ expenses, always seeking ways to be more efficient and save money by lessening their operational costs. Additionally, this information needs to be analyzed and disseminated into a manageable format. A professional fleet management company can turn a fire hose of data into a drinking fountain. Data that can be used real time to immediately impact fleet costs. Experience and personalized care from your fleet manager and fleet management company is necessary to interpret and then communicate how to utilize this available data in a way that is useful for each of their customers.
Some of the challenges customers face in the region
Given all the choices available for customers, finding the right vehicle for the job requirement is always a challenge. Today companies are much more willing to listen to their employees when it comes to vehicle selection. In the past, it was mostly leadership that dictated the vehicle selection, which might have made the process a little simpler, but not necessarily correct. Today, however, I believe the employee has become more centric within companies. As opposed to just having the types of vehicles employees would receive dictated to them, employees today have more of a say—and this has been an overall cultural change within the work environment.
So, to summarize, the challenges for some customers is having the right vehicle, controlling costs, choosing the right fleet for their employees to best perform their jobs, and disseminating a library of data into usable form. I would be remiss if I failed to mention the need to monitor employee honesty. Transactional reporting and using exception filters are great tools to monitor deception. Additionally, utilizing global positioning systems not only track vehicle locations, but can help plan route efficiencies.
Future landscape of fleet management: self-driving cars and ride sharing
There is about to be a dramatic impact as we begin to accept the shift from owned assets to a service use on demand. Many areas will be affected, such as, increased driver productivity, increased safety, energy savings, and urban development.
While some argue the self-driving vehicle trend will take shape as soon as 2020, others note that this won’t happen for many years. I’ll bet on sooner than later, simply because of quickly advancing technology. Businesses will continue to look for ways to cut costs, and this often leads to reducing the number of employees. Self-driving cars are just another phase of cutting those costs. The idea of car ownership will also be impacted as ride sharing will become more prominent.
The first fleets likely to be impacted will be the delivery companies simply because it’s a cyber transaction and can be accomplished without a human at the wheel. Imagine self-driving cars delivering food at your curbside.
Everything within the fleet management industry is moving towards efficiency, which is exciting in one sense, but also concerning. Fleet Management Companies will need to get ahead of changes or risk becoming obsolete. Staying in tune with how technology effects culture will be important for Union Leasing to continue to be an industry leader.
Edward Latorre will be attending the CFMA Annual Conference in Miami from June 23-27, so be on the lookout for him if you’re attending!