Even larger growth expected
Why the transport function should be given to specialists
RESEARCH ON FLEET management standards conducted by KA Smart for Autonews at year-end 2006 indicated that fleet management within companies is often done very inefficiently.
It was shown that in the previous 12 months the staff of more than 40% of fleet owners had received no relevant training. Of the managers responsible for fleet management – most of whom had “inherited” that function – considerably more (73,3%) hadn’t received any training related to fleet management over the previous year.
What makes those figures disturbing is that many fleet managers, in both private and public companies, are working with a division that usually involves the second-largest expenditure after staff remuneration.
Sarel Visagie, head of the Fleet Management School at Lyceum College, says it’s been shown that businesses can cut their transport-related costs by as much as 12% by simply outsourcing their fleet management function to competent fleet management specialists.
Says Visagie: “Fleet management in any organisation demands a professional approach and that includes the staff and the decision-makers involved. Unfortunately, many people still regard fleet management as an administrative function and only realise their mistake when fleet expenses get out of hand. Then they turn to fleet management specialists.”
The SA fleet management industry is a young, dynamic industry that has established itself firmly in SA’s transport economy over the past 20 years. After experiencing a good deal of restructuring over the past two or so years the industry is geared to share in the general revival, especially over the next few years in the run-up to the 2010 Soccer World Cup and at the same time to help other role players so that they don’t earn a average growth for retailers also means more goods have to be transported and delivered, resulting in a greater demand for vehicles. And the more vehicles there are on the roads, the more important their management and control becomes. In order to get everything ready for 2010, smaller share of the profit as a result of poor transport management.
Though fleet management means different things to the different role players it’s fairly widely defined today as the cost-effective running and administration of all the functions related to transport. Buying and financing, fuel and maintenance, tracking and even training so as to ensure as many accident-free kilometres as possible are all part of that cost-saving function.
Various factors make the further growth of the industry inevitable. • The growing trend of outsourcing while companies concentrate on their core business suits the fleet management industry perfectly. Figures from FleetAfrica, one of SA’s largest fleet management specialists, indicate cost savings of 15% to 20% for companies that have signed contracts with fleet managers. Decision-makers are aware of that and are therefore increasingly prepared to leave the running of their vehicle fleet to specialists. The transport industry is one that benefits most from SA’s current economic boom, as the double-digit growth in car, truck and bus sales shows. Above
Fleet management in any organisation demands a professional approach and that includes the staff and
the decision-makers involved.
building and construction is currently lively and transport is responsible for a large percentage of that industry’s costs. Fleet management specialists can keep those costs down and are increasingly being called on. The growing incidence of crime in SA – including vehicle theft and hijacking – is making the role of vehicle tracking increasingly important. And tracking is an important element of fleet management. Huge growth potential. According to industry figures, less than 20% of SA’s financed vehicle market is currently part of some or other fleet management function, which is significantly less than in developed markets where the concept has been established for much longer. Paul Pauwen, new president of the Southern African Vehicle Rental & Leasing Association (Savrala), shares that optimism concerning the industry. “With 2010 just around the corner – and the important role played by the sectors that Savrala serves, which includes presenting a positive image of SA – we must make sure that we fulfil our
role to the maximum.”
Savrala was formed in the Seventies to provide guidance for the fleet management industry, to promote its interests, establish industry standards and ensure that it had a positive image. With around 90% of SA’s leading fleet management groups being Savrala members, and with important associate members (such as motor vehicle manufacturers), it plays a vital role in the industry.
Training in order to transfer new skills to the industry and improve its service levels is one of the aspects that’s considered very important by Savrala. Pauwen says he and the association plan to concentrate even more on good training and responsible driving this year, as repair costs are increasing and already the highest single expenditure item for the industry.
Savrala is working closely with Lyceum’s Fleet Management School to improve the level of training for its members. It also has a good relationship with universities that offer fleet management as a training direction for certificates, diplomas and degrees.
“The association also intends to extend its already good relations with Business Against Crime to lower the risk of fraud and theft,” Pauwen says.
At a recent meeting of SA’s Institute for Road Transport Engineers (IRTE) in Johannesburg, serious concerns were expressed about SA’s road safety against the background of the growing number of vehicles on the roads and increasing accident figures. The disturbingly high figures of 70% to 80% of accidents caused because of negligence by drivers and 15% because of unroadworthy vehicles were mentioned.
It’s important for SA’s fleet managers to keep costs down, fleet management expert Hugh Sutherland wrote in a recent report in Truck & Bus. “This requires competent drivers (resulting in less damage) and other cost savings, such as lower fuel consumption.”
Sutherland said an efficient fleet manager will have a whole file of information to determine the performance of any of his fleet vehicles (and its drivers) in a few minutes. It’s a challenge to a business to be the best in its field, which includes the management of its fleet.
Outsourcing its fleet management function to a specialist in that field is therefore increasingly being chosen.
Just remember that in the fleet management industry there’s tough competition and margins are low. Consequently, only the best survive. Select yours carefully.
Optimistic about industry. Paul Pauwen