As legislation, policy and technology bring the viability of fleet management schemes into question, those responsible need to be ever more vigilant. Kevin Stanley reports.
05 February 2018 | Kevin Stanley
Against a backdrop of economic uncertainty, facilities managers looking after fleets in 2018 need to control and even reduce costs while making sure that safety and environmental standards are maintained.
But there are three key tenets of sound fleet management that FMs need to adhere to - good data, sound policy and strong controls.
Peter Golding, managing director of FleetCheck, a fleet management software provider, outlines the fundamentals: "Fleet policy covers vehicle choice, carbon dioxide (CO2) limits, legal responsibilities, accident management and driver behaviour. This will define what you want to achieve and ensure that you have accurate information to measure those objectives and controls to ensure that policy decisions are being implemented."
High up the list of environmental considerations is fuel choice. Diesel has been the mainstay of fleets for years, but its reputed emissions shortcomings have many fleet managers considering alternatives. As a result, new diesel vehicle sales are falling. Golding, however, believes the diesel debate has been ill-informed.
"A new Euro 6 diesel remains the best all-round option for most fleet drivers, especially those covering high miles when a balanced view of costs, the environment and taxation is taken into account," he says. "Petrol is the obvious alternative, but delivers worse fuel consumption and CO2. The real-world performance of many hybrids compared to their official MPG and CO2 figures is questionable, while electric vehicles remain a niche choice. Our advice is not to make any rash decisions but to take expert advice before making any policy decisions."
In its bid to cut emissions, increase the adoption of ultra low emission vehicles (ULEVs) and protect revenue, the government has created several challenges for businesses, which include the new long-term approach to benefit in kind.
"Transport and fleet management is perhaps the most heavily legislated sector in UK business. In April, we'll see a change to the emissions level at which the 18 per cent writing down allowance (WDA) is applicable, taking it from 130g of CO2 per kilometre to 110g per kilometre. In addition to impacting the WDA it will also impact lease rental restriction (LRR) and the tax cost borne by businesses," says Ashley Barnett, head of fleet consultancy at Lex Autolease.
"Our recommendation is not to remove non-compliant vehicles from the choice list altogether, but to pass on the tax implications to employees who choose a higher emissions option. Choice is an important element of reward strategy so the key is to avoid employees using their own cars for work or taking the cash alternatives, by incentivising the use of low emissions vehicles but ultimately giving them the flexibility to choose a car that they want."
Financial reporting will be more complex when the new IFRS 16 Lease Accounting Standards come into effect on 1 January 2019. Elements of General Data Protection Regulation law are also set to change how fleet managers assess the make-up and scope of their fleet. "By understanding the potential impact now, fleet managers and finance departments can manage risk and reduce costs by resolving any issues in advance," says Barnett.
Far more data will be required, which poses storage and management implications. Fleet operators will need to ensure that they have quality management information from leasing suppliers if they are to be compliant. Such is the complexity brought about by both legislative and government policy changes that the viability of some schemes is likely to be compromised.
More change in the pipeline.
Barnett says: "The majority of fleets that plan in three-year cycles or longer will need to start preparing for 2020, which will see the introduction of the Worldwide Harmonised Light vehicle Testing Procedure (WLTP) and the launch of clean air zones in five cities. The WLTP has potential implications for both the tax regime and emissions reporting and older, more polluting vehicles will face charges to enter cities, and may even be excluded altogether."
Businesses are already shifting towards ULEVs to support their low-emissions strategies and to maximise tax efficiency. The introduction of the Real Driving Emissions (RDE) 2 test and WLTP is likely to accelerate this change.
"For light commercial vehicles and high-mileage fleets, new, cleaner diesel will still be the most practical option," says Barnett, "whereas for shorter distances in urban areas, there is a small but increasing number of electric vans and an increasing range of EVs and plug-in hybrid electric vehicles (PHEVs) We recommend a consultative approach to assessing fitness for purpose and adopting a whole-life cost approach to assess the viability and merits of each vehicle fuel technology."
Telematics for the people
While the continuing freeze on fuel duty is good news, recent pump price jumps have had an unwelcome impact on costs. (Fuel is the second-highest cost in fleet management.)
Enter telematics, which is allowing fleet managers to see in real time what drivers are doing and file more accurate mileage claims and manage tax more effectively.
"We're expecting to see businesses using data more strategically to improve driver safety, enhance operational efficiency, reduce maintenance costs and improve fuel efficiency," says Ashley Barnett. "Tracking journey times means more efficient routes can be plotted, and employees can be warned about using expensive petrol stations or displaying bad driving habits. To keep costs down, it should be mandatory to use 'eco' mode for vehicles that have it - something that can now be monitored through the driving data collected by telematics systems."
Jen Yaxley, occupational road risk manager at Amey, says that although the transport sector was initially slow to react, there is now a real push towards doing things electronically.
"Everything that was once paper-based is now increasingly managed electronically - defect checks are now done on an app, while risk assessments, DVLA licence checks and repair details are now all done online and use images for clarity and simplicity," says Yaxley.
As mentioned, the preferred option of fuel is diesel and this is the case for Amey, although the company is working towards alternatives.
"Some of our company cars are hybrid or electric but we are trialling hydrogen vehicles in Sheffield. The mileage range is quite low but this isn't a problem because the vehicles only work on a small radius around the city centre," says Yaxley.
"Using telematics in vehicles makes it simple to track and trace vehicles. I can access driving data, driving licences, defect checks, hire rates and journey planning for every vehicle in our fleet on my laptop, all of which drastically reduces my need to travel, reducing my risk and carbon emissions. Apps allow me to predict traffic and journey conditions and make me far more effective at my job."
Amey has been working with fleet management auditing consultant Applied Driving Techniques, which provides Amey with electronic licence checks, online risk assessments and driver training (classroom and in-vehicle) and special training on pieces of kit such as trailers.
Josh Lacey, a business development manager for Matrix Telematics, says we have yet to see the full ramifications of the telematics revolution, and fleet managers should have a better appreciation of the data analysis demands on organisations that telematics bring.
"Introducing vehicle telematics will not breed safer, more responsible, drivers. It will not save you money on operating costs. It won't save you gallons of fuel. It won't stop your drivers delivering pizza in your vehicle after hours. Telematics is a complete waste of money - unless you use it properly.
"Data provided by your telematics is powerful and gives great insight into the overall risk of both the fleet and individual drivers. This data must, therefore, be acted upon, using the reports to engage drivers and improve their behaviour. Simply running reports in the background and doing nothing with the data will not see many benefits."
It's a familiar refrain. "Who has time to engage with countless graphs and tables, interpret the data and then feed this back to supervisors and drivers alike? At this point telematics can be somewhat counterproductive because the harvesting of data reduces operational efficiency," says Lacey.
The argument is that better proprietary front-ends to telematics solutions from those who supply them will better link to the analysis demands of specific fleet management professionals.
Yaxley is seeing the benefits of these advances. "All the required information is collated in one easy-to-use online portal. We have 75 transport managers across the Amey network who all log onto the same system and can see all of the drivers relevant to them."
As government and technology keep redrawing the fleet management viability map, the problem of dedicating enough resources to keep vehicles on the road is set to grow.