Heavy economic storm clouds lie ahead for the South African fleet industry in the coming year, but the good news is that many local fleet operators have not yet begun to fully utilise the modern tools and technologies that can help them to weather the storm, says Dr David Molapo, Head of Fleet Management at Standard Bank.
The typical South African fleet that has been trying to contain costs over the last few difficult years still has lots of room to manoeuvre by implementing precision-management tools; not only the latest vehicular technology and telematics, but management systems and services as well.
Those that have already done so are set to increase their competitive edge as South Africa enters a turbulent economic year. South Africa’s recent credit rating downgrade by Moody’s to Baa2 from Baa1, combined with the end of quantitative easing, and the start of rising interest rates in the United States, is pushing down local business confidence, says Dr Molapo.
These conditions are doing key sectors such as manufacturing no favours, and 2015 could possibly see South Africa lose further vehicle production contracts, among others, to more competitive manufacturing economies.
Businesses everywhere, and by extension fleet managers, are huddling down to wait and see before any bold investments are made. Even those fleets that do expand find it uncomfortable.
“Under current economic conditions, fleet managers are given little time to plan for expanding their fleets because new contracts tend to come in sporadically,” says Dr Molapo. “As a result, mistakes, such as buying the wrong type of vehicle for the job, tend to increase.”
The recent slight increase in the sales of light delivery vehicles and even heavier vehicles is most likely the result of fleets simply having to replace ageing vehicles after stretching their replacement cycles to breaking point. Dr Molapo expects sales of new vehicles to remain quite flat in the coming year.
“Fleet managers need to budget for an inflation level of at least the current six percent” he advises. “But despite the gloomy outlook, fleet managers can ride out the year and emerge with a stronger, more efficient fleet provided they fully embrace the systems and methods available on the market.”
Management tools such as Standard Bank’s fleet card tend to be vastly underutilised. Many fleet owners are simply “convenience users” who implement only one advantage – the fact that they no longer have to give cash to drivers to fill up. Meanwhile, a huge amount of information in automated reports is available to fleet owners who take the time to access them.
Dr Molapo
By analysing fuel consumption and comparing it to national averages, for example, faults in vehicles as well as driver behaviour can be picked up. The resulting incremental savings result in huge efficiencies which give the fleet a competitive edge in difficult economic circumstances.
“The range of precision-management tools available to fleet managers is unprecedented,” says Dr Molapo. “On the technological side, telematics can now give detailed analysis of vehicle performance and driver behaviour.”
Fleet managers can also choose from a range of cost-effective outsourcing systems such as managed maintenance, where knowledgeable agents make sure that fleet managers are not overcharged by mechanical workshops. Another is full maintenance leasing, where the fleet is absolved from maintenance and ownership, and simply pays for the use of the vehicle.
Advanced financial management systems, such as Standard Bank’s transaction authorisation system, give fleet managers real-time information about transactions as they happen, and set crucial parameters to flag suspicious events. And Standard Bank’s predictive modelling tool allows fleet managers to make intricate calculations at the touch of a button about the effect of a rise in fuel costs on their operations, for example.
Despite the negative forecast, 2015 can turn out to be a good year for fleet managers who are open to doing things differently.
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