Fleet ManagementReducing fleet operating costs in the
current economic climate11 June 2014
Contents
Relevance of fleet management
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Relevance of fleet management
Definition and purpose of fleet management
Definition:– Fleet management can be defined as the process whereby the operation of and costs
relating to a fleet of vehicles are controlled. It is a specific management discipline with recognised theory and techniques.
Purpose:– Organisations face many challenges in managing their fleet expenses and risks effectively.
Such challenges can be serious and require immediate action or they may distract from business related tasks and activities. Fleet management techniques applied correctly will take care of challenges and mitigate risks.
Applying fleet management:– Companies are focussed on cost management to prevent revenue leakage. The fleet owner
needs convenience, sophistication and quick access to information. Fleet management must provide a full range of custom-made fleet management services that will assist companies in managing and controlling costs.
– Various categories of fleet expenses must be managed and invoiced through a single Fleet Management account. Fleet expense records need to be up-to-date, accurate and easy to access. For reporting needs, fleet management service providers must provide the convenience of a range of sophisticated, but easy-to-use tools to manage fleet expenses.
Relevance of fleet management
Positioning of fleet management by fleet card issuers
The four main fleet card issuers Absa, Firstrand (Wesbank), Nedbank and Standard Bank together have approximately 700 000 fleet cards on issue. A fleet card can be issued for a variety of services ranging from fuel purchases, oil, tolls, maintenance and tyres
The fleet card issuers also offer managed maintenance (MM), Full Maintenance Leasing (FML) and an e-Toll solution
Fleet Products
Standard Bank
Wesbank Auto
Absa Nedbank
Fleet card
Managed Maintenance
Leasing
Other:- Online
reporting toolsStanFleet; FIMS; FleetSaver
FleetVantage MyFleet BI Fleet Solve
- Transaction Authorisation
Negative card file and 27 other checks; website, SMS
Negative card file and some other checks
Negative card file Negative card file
- Carbon footprint
Per vehicle and total fleet; ECO₂Fleet
Per vehicle and total fleet; Greenfleet
No No
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Challenges
Lack of awareness of a fleet’s Total Cost of Ownership
The increased cost of running and maintaining a fleet of vehicles in the current economic climate
Issues in reducing running and operating costs for a fleet of vehicles, vehicle maintenance and productivity strategies
Availability of information that facilitates managing fleet costs
Total fleet cost
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Total Cost of Ownership (TCO)o Lack of appreciation of magnitude of costo Lack of information on and visibility of cost
Acquisition – Purchase/Lease
Operating Cost– Fuel Cost Management– Maintenance Cost Management– Tyre Cost Management– Fines and Licensing– Accident Management– Training– Tracking
Average cost per vehicle (SBFM Base)
Total fleet cost
Fleet Size 2013 (Q1) 2014 (Q1)YOY
Increase
0-30 R 3,998 R 4,469 11.76%
31-150 R 3,930 R 4,435 12.86%
151-300 R 3,689 R 3,846 4.26%
301+ R 3,029 R 3,140 3.66%
All R 3,667 R 3,992 8.86%
SBFM Base split
Fleet SizeBy number of
VehicleBy number of
Customers0-30 34% 88%31-150 28% 10%151-300 9% 1%301+ 29% 1%
Maintenance costs
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Maintenance costs
Maintenance costsVehicle maintenance costs are challenging to controlFleet owners have to ensure that vehicles are routinely serviced, tyres replaced on time and deal with issues impacting on maintenance, e.g. driver behaviour and correct vehicle useWell maintained vehicles positively impacts vehicle productivity, fuel consumption and vehicle resale valuesMaintenance costs on average increased by approximately 26% from 2010 to 2014Average value per invoice increased from approximately R2 600 in 2010 to R3 600 in 2014
Fuel cost and transaction authorisation
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Fuel cost and transaction authorisation
Fuel costsFuel is a critical fleet expense and critical to manage and controlFuel price increases have a major impact on fleet cost – indicated in fuel price versus fleet card fuel transaction values since 2010Fuel price increases resulted in average fuel cost per transaction of Standard Bank Fleet customers to increase from R515 in January 2010 to R890 in April 2014 (73%)Vehicle condition and driver behavior are contributing factors that impact on fuel costs and must be managed (ultimately also impacts the value of the vehicle at replacement)Costs can be controlled and managed by exception with fleet reporting that indicate fuel efficiency against national averages
Fuel cost and transaction authorisation
Transaction authorisationsFleet Management System performs close to 30 validations before a transaction is approvedProtection against fraud and abuse
Industry losses: 2013 2014 YTD
SBFM Losses as a % of industry 7.10% 1.50%
SBFM counterfeit card transactions as a % of industry 12.89% 15.44%
Fuel cost and transaction authorisation (continued)
Transaction authorisationsStandard Bank’s authorisation methodology is highly effectiveWith the second largest fleet card base, losses are well contained
Source – Fleet card losses: SABRIC
Toll costs
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Toll costs
Toll costsToll spend equates to approximately 9% of total fleet card spendE-tolling will see total toll spend increase even further
– Table indicates e-toll cost for an approximate 3 000 vehicle fleet based mainly in Gauteng
Detailed reporting required to manage cost
– Monitor spend
– Private vs Business mileageRoute planning
– Toll cost vs fuel spend
Month Toll Fees e-Tag Toll Fees
Jun-13 R 2 408 573 R 0
Jul-13 R 1 982 710 R 0
Aug-13 R 1 955 570 R 0
Sep-13 R 2 360 878 R 0
Oct-13 R 2 054 202 R 0
Nov-13 R 2 543 719 R 0
Dec-13 R 2 410 324 R 404 947
Jan-14 R 1 942 209 R 461 769
Feb-14 R 1 571 750 R 431 368
Mar-14 R 1 362 460 R 418 282
Apr-14 R 1 569 228 R 502 805
ORT Registered
Fleet SizeBy number of
VehicleBy number of
Customers
0-30 32% 29%
31-150 59% 56%
101-300 70% 70%
301+ 85% 84%
All 59% 32%
Innovative fleet solutions
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Fleet solutions
Transaction authorisations – Real-time reporting
Website Access approved and declined
transactions in real time via the web
Transaction Authorisations App Currently in development Will allow fleet managers to
approve/override declined transactions
SMS facility Receive SMS’s for all approved and/or
declined transactions
Breakfast reports Daily reporting of declined transactions
Utilisation
2 958 customers (56% year-on-year) 90 000 vehicles
Fleet solutions
Carbon footprint reporting
With the looming introduction of carbon tax in 2016 on Scope 1 emissions resulting mainly from fuel combustion, businesses should prepare themselves.Developed ECO2Fleet, a web-based fleet management data collection and reporting service that measures the carbon emissions of vehicles and is aligned to the principles of the Greenhouse Gas (GHG) Protocol, a globally recognised accounting tool used to measure carbon emissions.Companies need tools to manage, track and report their carbon footprint that can also facilitate the implementation and management of a strategy to reduce their carbon footprint.
Utilisation: 529 customers (8.8% year-on-year) 54 000 vehicles
Fleet solutions
Predictive modellingUsing their own fleet transactional and operational data, companies can view the impact of variables on fleet expenses, including fuel price changes, interest rate changes, tyre price increases, more fleet vehicles
Variables that can be adjusted:
Example of fuel price change (Petrol R13.79 and Diesel R13.55):
Type Average - last 3 months New monthly averages
Number of Vehicles 76 76
Value of fuel transactions R 163,637.01 R 158,917.34
Value of petrol transactions R 160,397.81 R 155,880.78
Value of diesel transactions R 3,240.16 R 3,036.56
Petrol price R 14.19 R 13.79
Diesel price R 14.46 R 13.55
Conclusion
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Conclusion
Understanding the make-up and magnitude of fleet costs and the various factors that impact these costs will ensure that fleet owners understand the importance of managing all elements of fleet costs
Availability of information is critical for fleet managers to identify and interpret exceptions and trends in an environment of ever increasing costs
New and sophisticated tools are available that were developed to assist fleet owners in managing and controlling fleet expenses and risks
Fleet costs have a major impact on overall business profitability, hence the use of management tools and reporting becomes important to control the impact of these costs.
Questions?
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Thank you