Wayne, economists say the Great Recession ended six years ago, and that the economy is growing again, but weakly. From CEI’s perspective, what is the state of the fleet industry and automotive-based businesses?
I think that the fleet industry is healthy, but it is pretty volatile. We have seen through the recession de-fleeting all across the board. Now that we have come out of the recession we see re-fleeting, but we still see pharmaceutical fleets de-fleeting as they run into trouble with their expenses and weak pipelines for new drug discoveries. I do believe there is tremendous opportunity in the fleet industry until today.
The volatility also comes from the fact that we have seen fleet management companies change ownership. We have seen, in the past, a rental car company buying a fleet management company. We see a Canadian financial organization buying the second largest fleet management company in North America. Now we see two more fleet management companies’ owners trying to dispose of their assets. We are probably going to see two different owners in the fleet management world.
Plus, there have been a lot of new faces that have shown up in our industry and with that a lot of different thought management that changes the vision for fleet. I think it is pretty exciting. For suppliers, I think it has become challenging and it is going to test us all, but it should be very exciting to get through those challenges.
For fleets themselves, with all of the new thought management that has gone into this category, I think you are going to find a different vision being adopted for how these fleets should be strategically positioned in their organizations.
With continued growth of eCommerce on the Internet, teleconferencing and remote workers, and as US manufacturing continues to shrink, is the fleet industry destined to become smaller?
I think it is going to get bigger. I read an article that the UK saw its commercial vehicle market increase by 11 percent year-over-year. So, I think you are going to see more logistics fleets, and higher fleet counts.
Our energy business is booming now. I think you are going to see more vehicle fleets dispatched into the oil patch and I think vocational fleets are going to continue to grow, and service fleets as well. I think there are going to be significant gains as the economy continues to improve. Manufacturing, yes, is down but manufacturing is being replaced in our economy by service, and we’re becoming more of a service economy.
What are the market segments where CEI sees growth opportunities?
We see the vocational fleet market as a very good opportunity. We have done very well with logistics fleets and we are trying to move further into trucking fleets.
What are the overriding concerns of fleets within each segment of the fleet market?
To answer that, you have to identify the business purpose of each of these kinds of fleets. Fleet organizations, whether they are institutional, non-profit or commercial aren’t in the business of driving vehicles. They are in the business of getting work done.
As a provider of fleet services – in our case accident management, risk management and fleet safety, when you develop a fleet management program you have to focus on how the fleet defines “work done.” We have to understand that we cannot get in the way of them getting their work done. So, we will remodel our accident management and fleet safety to reflect the unique needs of passenger and sales fleets, truck fleets, vocational and service fleets in the unique way that they need to be.
What is the vision for global fleets and how have multi-national fleet operators positioned themselves for the opportunities and challenges they face?
The vision, at least in the U.S., is they need a global fleet program. They are hard to implement, so therefore there is a lot of frustration.
I would say that the two target areas are probably leveraging OEM spend globally and improving fleet driver safety. Between the two, leveraging their OEM spend is probably going to be easier to accomplish than most other fleet management services. You just have to get around the hurdle of how you ask the Italian market not to drive an Italian car and the German market not to drive German cars and the French the same thing.
With respect to fleet driver safety programs, implementing a global program is pretty challenging. How do you develop one solid program that can be implemented across 30 thousand drivers in 123 countries? That is a tall order.
To accomplish that, I suspect a “train the trainer” program has to be developed that is based on the same core program, so that every fleet driver in the company gets the same kind of training; but then you need to develop data and metrics to understand how that actually does improve driver training. Simply delivering driver training isn’t enough because someone is going to ask the question: did it make a difference?
How is CEI positioned to meet the needs of fleet customers of all kinds?
We just finished a strategic planning process and our goal is to double the size of our company in five years. We decided to focus on what we consider our “strategic core competency,” which is fleet driver management. When I say “fleet driver management,” it is all of the things we do, the services as well as the solutions. What we really want to do is create safer fleets.
We want to help significantly reduce the cost of fleet operations as well an organization’s insurance expenses. When you have fewer accidents you can drive down fleet costs, but you can also substantially drive down, at an even higher rate, the insurance costs that employers actually spend as a result of insuring the driver and paying for third party claims, worker compensation benefits and medical care. We have probably about nine case studies in which we demonstrate significant cost reductions.
Case studies show that we can save between $100 and $407 per vehicle, per year with adequate fleet safety program and that the same savings on insurance are a factor of about three or four or five times that amount every year. It is very, very significant. We believe our job is to help clients have safer fleets, protect their drivers and drive down the cost of both the fleet budget as well as the insurance budget.
The post CEI’s Wayne Smolda: Fleet Safety Programs Return Substantial Savings appeared first on Fleet Management Weekly.
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