TCO TALKS

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 - - FRONT PAGE -

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.

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