2015 was a big year for fleet. From autonomous cars hitting Australian shores to the sad news that manufacturers Holden, Ford and Toyota would soon be ceasing local operations, the industry has experienced a period of significant change.

intouch spoke to a panel of fleet experts about the trends, opportunities and challenges they believe will be down the road in 2016.

Managing costs

Predictably, keeping the budget in the black will continue to dominate local government fleet management, Dubbo City Council Manager, Fleet Management Services Steve Colliver says.

“The pressures to save money from year to year are persistent,” Colliver says.

“In NSW we are experiencing Fit for the Future, which will bring additional financial pressures. This will see councils extending ownership life cycles on light vehicles and plant, in an attempt to reduce whole of life costs.

“Planning for these extended life-cycles is critical, particularly for in-house servicing – the correct training, tooling etc will be vital, as the longer life-cycles will bring additional maintenance requirements and downtime factors.”

Colliver points to the upcoming NSW council amalgamations as something with the potential to shape the fleet industry throughout the state.

“The impending amalgamations in NSW brings considerable challenges,” he says. “Hopefully, decisions made by fleet managers in the past regarding systems and capacity have been with future growth in mind, and a reasonably seamless transition can be made if and when these amalgamations take place.”

Uniqco Group of Companies Managing Director Grant Andrews agrees, saying local government fleet teams will continue to tighten their belts, particularly those subject to rate capping.

“With the focus on costs, the financial teams are looking for every dollar of savings – plant and fleet are going to be in the spotlight to make savings,” he says.

Andrews says organisations need to re-think who is given a light fleet vehicle, and how long those vehicles are retained.

“I think for too long senior managers in local government have seen that a new car is a justified perk of the job,” he says.  “But the cost of renewing executive cars every couple of years is prohibitive and the elected members are soon going to put pressure on organisations to change this.

“The innovations on new cars and the pricing structure being highly competitive has had a significant impact on the resale value of cars. The large drop in resale means owners have to hold on to their cars for longer to lessen the impact of high depreciation in the first couple of years.”

Continued drive for improved efficiency

4C Management Solutions Director Robert Wilson says a drive for improved efficiency will continue at both the administration and operational levels, and may result in the need to up-skill employees.

“At the administration level, organisations will continue to restructure their fleet operations to provide more efficient organisational arrangement leading to rationalisation of roles and responsibilities, and in some cases outsourcing,” Wilson says.

“This can change the skills set those managing the fleet may require. For example, if certain fleet functions move from a fleet department to the purchasing department, those involved may well need to learn fleet related skills. Similarly, if a fleet operation is outsourced, the organisation’s fleet staff may need to develop skills in contract management.


“At an operational level, the drive for improved efficiency will focus on doing more with less and a number of trends and technologies will support this.

“IVMS/GPS based systems support better utilisation of the fleet, potentially enabling reduction in fleet size. Ownership and operating costs will continue to be under scrutiny with a view to reducing whole of life operating costs.”

The impact of the ‘sharing economy’

 

The rise of the “sharing economy” is not limited to services such as accommodation. Car sharing companies are becoming increasingly common, and with popular offerings including options specifically tailored for businesses, Wilson believes they could prove disruptive to traditional fleet models.

“Options to provide alternate fleet structures will continue to grow, with providers such as carpooling company GoGet, Flexicar and others provide some new and interesting options,” he says.

Just five years ago, GoGet celebrated hitting 5,000 users. Today, the company has more than 65,000 users and 1,800 cars across Melbourne, Sydney, Adelaide, and Brisbane.

Car rental giant Hertz Australia purchased Melbourne-based Flexicar in 2010, signalling its intention to expand the car-sharing section of its operations.

In August 2015, the NSW Government announced it would be moving to a new fleet management model, with the hope of slashing $1 billion during the next four years. The existing StateFleet model includes more than 22,000 passenger and light commercial vehicles, at an annual cost to taxpayers of around $240 million.

Rather than a single government-owned fleet, the new model will see a fleet manager engaged by each agency who will deal directly with a separate panel of vehicle leasing companies. The existing fleet will be wound down over time.

The end of an era for Aussie car manufacturing

The Australian automotive industry is less than a year from shutting up shop for good, ending a 90-year history of assembling and building automobiles. Ford, Holden and Toyota have each announced they will cease manufacturing in Australia. Ford will be the first to shut its doors in October 2016, while Holden and Toyota will cease manufacturing at the end of 2017.

The companies have cited the high cost of manufacturing, a highly competitive and fragmented domestic market and changing consumer preferences as reasons for why they will no longer manufacture vehicles in Australia.

Wilson believes this will have a direct impact on fleet professionals, particularly those in Australia. “There will considerable work undertaken in the area of car specifications as fleets look for alternatives to the Australian made products they have been using,” he says. “While in most cases this will mean assessing alternatives for fitness for purpose, there will be some immediate gaps around the passenger car derived ute segment.

“There is also some significant evolution at a regulatory level, with developments in heavy vehicle roadworthiness and Chain of Responsibility obligations.

“There is also a review of the Motor Vehicles Standards Act 1989. All these developments have the potential to affect how organisations manage and operate their fleets – fleet managers will need to be vigilant in monitoring the implementation of change.”

Tightening compliance

Colliver believes existing compliance obligations will continue to be tightened in 2016.

“Compliance will continue to be an ever-present obligation,” he says. “The trend seems to be that the regulators are consistently tightening the reins and systems must be in place to ensure all obligations are met.”

On the IPWEA’s Ask Your Mates forum, compliance relating to issues such as truck mounted cranes, lifting sling inspections, overhead workshop cranes, air conditioning, the due diligence associated with roller brake metre calibration and hoist inspections all sparked recent conversation.

The need for management systems

Colliver believes the biggest challenge for fleet in 2016 and beyond will be the development of systems that can keep pace with industry demands.

“In my opinion, the biggest challenge in moving forward is the integration of all these systems into a workable platform that allows work health and safety compliance, fleet management, contract management etc to be accessed easily by all stakeholder, managers, mechanics, operators and suppliers.

“We will soon see mechanics with tablets accessing service manuals, operators doing pre-start checks and defect, emailing them to the workshop.

“Suppliers will be accessing our databases, referencing plant details to for fill parts order etc and managers placing demands on IT to supply integrated work health and safety systems and direct financial integration to accounting systems.

“These things are extremely important – as more demands are placed on all of us, the system need to be developed for us to work quicker and smarter.”

Use of contractors and outsourcing 

 

Bundaberg Regional Council (BRC) Fleet Manager Andrew Railz says a growing trend within councils is the use of contractors to perform large-scale projects, which would traditionally be undertaken “in-house”.

“Contracting is a hot topic, and many perceive it as a threat to their employment, but I don’t see it as such,” Railz says. “I see it as an opportunity to ensure that we remain competitive with external contractors.

“BRC has seen significant benefits in outsourcing construction work, including a transfer of risk allocation and lower construction costs. The idea of outsourcing is now beginning to flow into fleet workshops.

“The increased use of contractors has had a direct effect on the utilisation of BRC’s fleet assets, and has led to the disposal of multiple pieces of yellow plant due to them not achieving minimum utilisation targets.”

Railz says the use of contractors at BRC was driven by staffing shortages. “At BRC our fleet workshops have faced staffing challenges for the last 12 – 18 months due to staff being on leave and staff leaving Council’s employment,” he says. “As a result, we have utilised contractors to cover our peak workloads, as well as offering staff increased overtime.

“When servicing is sent out to a contractor, it doesn’t mean all the work goes with it.”

Railz says the council uses contractors under the following conditions:

1. Covering ‘peak’ workloads
2. When they don’t have the in-house technical ability or tooling to complete the work required
3. Completing any large, time-intensive repairs such as an engine rebuild, which tend to leave the workshop thin on the ground, making it difficult to meet core objectives
4. Completing a robust preventative maintenance program
5. Ensuring the council has adequate coverage for “essential service” fleet assets such as garbage trucks.

Andrews says local governments are increasingly re-thinking their plant and heavy vehicle ownership models, in a bid to find savings.

“Most local government plant and heavy vehicle fleets provide a valuable service to the community, but ownership of these assets is rarely challenged because historically that is the way government has provided services,” he says.

“Ownership ties up valuable capital that will be in short supply in the future. External funding of plant and heavy fleet assets, or total outsourcing of either service or fleet supply is something every fleet manager will have to contend with.”