Home Fleetwatch 2020 Opinion Piece: Cost saving is part of the new set of realities...

Opinion Piece: Cost saving is part of the new set of realities for fleets

Derick de Vries, Head of Fleet Management, Standard Bank Group: “While the disciplines and principles of fleet management still hold true under the new normal, it is expected that the increased emphasis on cost reductions will have a big impact on how fleets are operated going forward.”

By Derick De Vries, Head of Fleet Management, Standard Bank Group

The Covid-19 pandemic continues to have a significant impact on fleet businesses and while previously a strong focus on cost savings was a necessity, it may not have been top of mind. Now, however, it is part of the new set of realities that companies face.

Changes brought on by the Covid-19 pandemic have highlighted the need for businesses to manage their fleets more efficiently to ensure that they are not incurring wasteful or unnecessary expenditure.

While the disciplines and principles of fleet management still hold true under the new normal, it is expected that the increased emphasis on cost reductions will have a big impact on how fleets are operated going forward.

Fleets must be managed in a way that allows for businesses to achieve efficiencies and cost savings while protecting their two most important assets – their people and their fleet.

This is possible but requires the exploration of all opportunities available to reduce operational costs elsewhere within the business, especially in the case of owning large fleets.

The use of certain tools and techniques can help businesses to stay in control of their fleets, manage them more efficiently and ultimately achieve savings on their total cost of ownership.

Fuel management planning

Although the Covid-19 health pandemic initially resulted in cheaper diesel prices, the cost of fuel will continue to rise as the fuel price gains due to increased demand based on the return of consumption globally.

Our weakened local exchange rate will also impact on the cost of parts and by virtue of inflation, overall transport costs will increase. One way for businesses to control some of these costs, however, is through the services of a fleet management service provider.

The pandemic has forced every one of us to adopt digital technology in the way we communicate, consume and conduct business. For businesses with fleets, it is now prudent to think differently and consider how to best leverage technology like data and analytics to efficiently control their vehicles expenses.

Access to rich, real-time data can help businesses to become more responsive and adapt faster. The insights derived from the analysis of this data empower business owners to make informed decisions that ultimately work to boost efficiency and reduce costs.

A fuel card or a cloud-based RFID fleet payment capability offers a secure way to view and approve fuel transactions online in real time. This ensures that only authorised vehicles are able to fill up and authorise transactions and helps to prevent any unnecessary fraud from taking place.

Standard Bank became one of the first companies to develop an RFID Fleet payments capability which offers enhanced security features and seamless forecourt payment to ensure reduced risk. This enhanced payment mechanism is contactless and allows drivers to pay for fuel using a RFID tag that looks like a license disk which is then attached to the vehicles windscreen. This windscreen tag is tamper proof and ensures that only the permitted vehicle is allowed to refuel. It is also the first fleet payment method to introduce a ‘tap and pay’ contactless capability. The ability for fleets to tap-and-pay is an important consideration in this time of social distancing.

The other aspect of the fuel management component is being able to access diesel rebates. Typically, a diesel programme would require pumping a determined threshold to receive a diesel rebate from an oil company.

Through Standard Bank’s relationship with leading fuel companies – and the extension of our diesel rebate programme – we have managed to reduce the entry point for diesel rebates via fuel card or RFID payment mechanisms so that small to medium  fleets are able to access tangible savings on their diesel metres. Every cent counts!

Standard Bank recently acquired a 40% stake in Payment24 to further support fleet owners with digital technology solutions that work to eliminate risk and inefficiencies. The Payment24 platform aims to eliminate the hassle of managing, monitoring and controlling fleet fuelling transactions using real time, cardless RFID, mobile and cloud technologies.

Buying vs leasing

As consumers become increasingly reliant on home delivery services, businesses will have to gear up to provide home delivery – or beef up existing fleets – as it is expected to play a crucial role in the future. However, as a result of not being able to trade for three months, a fleet of trucks or delivery vehicles will likely be out of reach for a start-up or even for those who want to scale existing ones

One way around this is Full Maintenance Rental (FMR) which provides a way for companies to pay only for the use of the vehicle. The vehicle is maintained by the bank, or Standard Bank Fleet Management, throughout the asset’s lifecycle – including or excluding tyres – and is disposed of at the end of the contract term.

The “renter”, or business, is able to add those asset/s to – and strengthen – its balance sheet while protecting themselves against the risk of potential drops in retail vehicle pricing and consequent shortfalls that could build up over time.

Essentially, the discipline of fleet management is taking an asset and using it in the most efficient and cost effective manner possible during its life. To do this requires the correct products and services to help manage this. It also requires the discipline to ensure that this part of the business is operating correctly and spikes in expenses are immediately addressed and corrective action taken.

If you fail to understand your total cost of ownership and do not manage assets correctly, you are likely incurring an unnecessary and additional cost that puts you at a disadvantage in the market.

Telematics and fines management

By collecting data about the location, performance, usage and status of vehicles and drivers, fleet operators obtain meaningful, real-world information about the inner workings of their organisation.

Standard Bank has partnerships with some of the best telematics providers to leverage data capabilities on vehicle and driver behaviour. If a vehicle is stolen, we know exactly where it is, and where it may be filling up. Also, through the use of a telematics solution, drivers are alerted to shorter route distances which are based on the potential fuel savings.

Often a fleet can, without noticing, grow past the point where it is more efficient to outsource the administration of fines and licenses. These specialist services exist and are used by most corporates as they do not have control over that expense due to a lack of visibility as to how many fines are outstanding. In some instances, the cumulative amount could almost stop their business from continuing. You cannot be sure about how much you owe until running the exercise.

Standard Bank has a comprehensive fines and license management solution which helps fleets identify fines and facilitates the redirection and payment of these fines. We also proactively notify owners when vehicles licenses are due and are able to facilitate the payment of these to avoid any penalties.

From a group perspective, we are armed with a strong balance sheet that is well-positioned to support customers through these challenging times. We have already demonstrated this by holding out on annual increases on products and services over the next six months to provide our clients with breathing room.

Standard Bank remains committed to providing solutions to customers that are accessible to all businesses – from SMEs to corporates – to help improve efficiencies during challenging times so that they can focus on and retain what matters most. These efforts form part of Standard Bank’s vision of becoming the leading analytics, data, and digitally led fleet management solutions provider in Africa.

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