PMV Middle East brings Tristar Group, Swaidan Trading Company and Goodyear Middle East & Africa together to discuss the pain points of fleet operators in the Middle East and how manufacturers and dealers in the commercial vehicle business are addressing t
PMV Middle East brings Tristar Group, Swaidan Trading Company and Goodyear Middle East & Africa together to discuss the pain points of fleet operators in the Middle East
Total Cost of Ownership (TCO) is always on top of the minds of fleet owners and operators because it affects their net profits. As a financial estimate, TCO can be broken down into fixed costs such as financing, purchase, registration, insurance, VAT, depreciation, and driver salaries, and operating costs such as fuel, tyres, lubricants and greases, maintenance, repair, and driving training. Fleet operators will be able to calculate TCO accurately only if they have a comprehensive view of all the costs that appear and accumulate during the uptime and downtime of their vehicles. This is easier said than done. Hidden costs tend to creep in due to downtime or driver behaviour, both of which cannot be projected accurately. Furthermore, there other factors beyond the control of fleet operators, such as fuel prices, taxes, emission regulations, road bans, fees for permits and certifications for access to sites.
To explore such pain points of fleet operators in the Middle East and find out how manufacturers and dealers in the commercial vehicle business are addressing their concerns, PMV Middle East organized a roundtable in October 2018 in collaboration with Goodyear Middle East, Swaidan Trading Company and Tristar Group. Having established that it’s becoming expensive to operate fleets in the region, the participants shared their views on how to counter the increasing costs through fleet optimisation, choice of vehicles and parts, and driver training.
As a reference point, the discussion was centred on the immediate concerns of Uaebased integrated liquid logistics solutions provider Tristar Group, which has a fleet of 1500 trucks offering fuel transport services.
Tristar’s suppliers and customers vouch that the company is one of the most organised fleet operators in the UAE. As road transport of petroleum products is a key vertical for the company, Tristar follows international best practices in vehicle and driver management. The company monitors fuel consumption very closely on its trucks when they’re running or idling with the help of advanced telematics. Furthermore, about 60% of Tristar’s fleet is below the age of five years.
Tristar faces a pressing problem currently. The price of diesel in the UAE in October
2018 was AED2.7 per litre, the highest it has been in recent years. This has had a significant impact on the company’s operating costs because fuel comprises almost 30% of its freight costs.
Shivananda Baikady, general manager-road transport and warehousing, Tristar Group, says: “We estimate the price of diesel to increase to AED3 per litre during 2019. We are forced to absorb this increase in cost because we generally sign fixed-price contracts for
4–5 years. It could take at least six months to negotiate with customers and convince them to share the burden of increase in fuel price. To counter this effect, we face the challenge of optimising the fuel consumption of our existing fleet, adopting more efficient processes and improving driver behaviour.”
Participants in the ruondtable about total cost of ownership, organised by PMV Middle East in October 2018.