SynX Blog

Michelin—one of the oldest and most popular tyre manufacturers in the world—has recently shared some tyre related tips on how to reduce fleet running costs. Combined savings resulting from the implementation of a series of actions on tyres could really make a difference to the bottom line and particularly for big fleets.

Here are some of the tips that Michelin recently shared about the impact of tyres on fleet costs:

#1 – Adjust driving habits. With driving style having such an important impact on fuel consumption, your drivers would be well advised to follow safe practices and keep a close eye on the status of your tyres. According to Michelin, drivers can adjust their habits to keep tyres in good condition for longer. What needs to be avoided is excessive braking or acceleration, or even constant stopping or starting that can lead tyres to wear faster.

#2 – Check tyre pressure. According to Michelin, running tyres even just a few psi below the recommended pressure will reduce fuel efficiency. Wheel alignment and tyre pressure are two must-checks that not only help with efficiency but also with safety. In 2017 it has been estimated that 384 car accidents in Britain were caused by illegal, defective or under-inflated tyres. Checking pressure and alignment also extends the tyre’s life—and yours!

#3 – Road surface. We sometimes cannot avoid travelling on substandard roads that might compromise our tyres, and potholes are unfortunately a constant issue; but an extra level of care when travelling on uneven road surfaces or speed bumps can certainly help increase the lifespan of your tyres.

#4 – Tread depth. Tyre treads also have direct impact on the performance and safety of a vehicle. By law, tyres must have at least 1.6mm of remaining tread depth, measured across the central three-quarters of the tyre and all the way round.

#5 – Replacement intervals. Paying attention to replacement intervals and substituting tyres when necessary can definitely lead to improved efficiency savings. If you have a consistent tyre check programme or check tyres on a regular basis as part of your walkaround checks routine, you will be able to establish when it is time to replace them in a timely manner.

When it comes to fleets, we will never stop talking costs: naturally, they are always too high but they are still a necessary expenditure in order to develop commercial activity, and we are always looking for ways of managing those costs and doing things more wisely. Replacing vehicles is another one on the long list of costs which comes with its own set of challenges.

Vehicles shall be kept in fleets as long as they constitute a measurably reasonable expense. So when fuel and maintenance costs seem excessive for a vehicle, and age and mileage also suggest that a vehicle is probably not as efficient as it was some time ago, it is maybe time to start thinking about a replacement. But these indicators alone do not provide enough data alone to formulate a definite opinion on the matter; there should in fact be clear guidelines for replacement, ideally based on vehicle data obtained from the vehicle itself or from the fleet as a whole.

Replacement policies should detail conditions for disposal and replacement of vehicles in a way that should be widely understood within your organization. They cannot be drafted in isolation, but rather interconnected with fleet management budgets or financial policies and procurement strategies, as a piece in the entire jigsaw. The objective is not to incur excessive cost from mileage, maintenance or aging and to sell the vehicle at the best moment and price possible, to then use this advantage to acquire new assets. In order to guarantee that the remarketing process is carried out successfully, the vehicle needs to be roadworthy and in good condition, so it might need servicing or even have its functionality certified by a third party provider specialised in this type of service.

What then are some of the details companies need to consider when drafting a replacement policy for their fleet? We have outlined some of them, although we need to bear in mind that they are not all necessarily valid for your company or for every sector—as there is no one-size-fits-all approach in fleet management, or business in general—but are still worth checking if you are preparing your own replacement policy:

#1 – Fuel consumption— technology changes mean vehicles today consume less fuel than yesteryear. If your vehicle has been in service for a while, its technology might have been surpassed by a newer vehicle, or wear and tear could just be the cause for an inefficient performance from the point of view of fuel consumption. Emissions too are important, as they start to increase together with the intake of fuel needed for the vehicle to operate after a few years.

#2 – Maintenance expenses—for much the same reasons as fuel consumption: when the level of maintenance is no longer a reasonable expense and vehicles require more and more garage time, it might be time to look into a replacement, so a threshold needs to be established before initiating the process.

#3 – Breakdowns—if you start to experience a certain frequency in this area and the associated costs are no longer sustainable, then it’s time to look for an alternative: again, you should have clear lines on how much you can spend, as a threshold, for every vehicle per month or year, and look into the matter when figures start to significantly surpass your forecasts.

#4 – Mileage—following manufacturer recommendation, establish a mileage threshold too and cross-check it with fuel consumption and costs generated by the vehicle to determine if replacement is necessary.

#5 – Vehicle general status—maybe physical appearance is not important in every aspect of life—but with regard to company vehicles and fleets, it definitely matters for your brand image and for your sales fleet. Make sure you include this criteria in your replacement policy terms.

The decision to lease or own a fleet is a well-thought through choice that a transportation owner should make. Usually, the choice depends on the then finances and requirements. But a proper plan is required to gain long-term profitability. Here are few factors to consider before jumping into the leasing vs purchasing decision.

1. Cost: calculate the money that you currently spend on the fleet and estimate how much you will be spending in the future for both the lease and buying options.
2. Flexibility: being flexible is essential for small businesses to save a lot of money. Ask yourself if you will require the same number and type of vehicles in the future as well.
3. Maintenance: maintaining the fleet is critical in the transportation industry and is unavoidable. Analyze if leasing a vehicle or buying one will be more economical.

Though leasing and buying have their own advantages for different transportation businesses, it’s better to know about them to make well-informed decisions.

Leasing a fleet

There are two main types of fleet leasing:

Open-ended leasing: Lease the vehicle for a certain period of time and extend if required. But once the contract period has expired, the vehicle becomes yours to sell. If you sell the vehicle at a higher value than the estimated cost, then the leaser gives you a refund. However, if the vehicles are sold at a lower cost, the business owner will have to pay the difference to the leaser.

Close-ended leasing: In this type, you can lease the vehicles for a specific amount of time and once it expires, the fleet has to be returned to the leaser. This type of leasing is also called, ‘walk-away lease’ as you don’t have anything to commit to after the lease period is over.

Benefits

Works for small capitals: The monthly payments for leasing a vehicle is less than the cost of buying one outright. This is a major reason for small business owners with humble beginnings to incline towards leasing the vehicles.

Lowers maintenance: Maintaining the fleet is an expensive yet essential part of your business. If you are leasing the vehicles, the leaser usually takes care of the maintenance but there is a catch in this cost-wise. If the leaser has a maintenance unit of their own the cost will be low, but if the maintenance is done by another company then costs will go up.

Goes off the balance sheet: Your debt-to-equity ratio takes a hit when the fleet is bought with a major capital expense. This will reflect badly on your company for lenders and investors. Leasing the vehicles balances out this expense over a period of time.

Brings fleet flexibility: Business requirements change from time to time and it is good for a transportation business to be flexible in the fleet that they own. Analyze the trends season-wise, geography-wise, and client-wise to understand what type of vehicles and their quantity is required for your fleet.

Opens gate for new vehicles: It’s not possible for any transportation business to keep updating their vehicle to newer models. But, you can lease the latest models that come with additional features, safety upgrade, lesser maintenance requirements, and more fuel economy.

Buying a fleet

If you are new to the industry, buying a fleet might look like a huge financial step and your capital might not synchronize with your buying plans. But, owning vehicles come with their own set of advantages.

Payments end eventually: The best part of buying your fleet is that the payments in installments too end one day. But, if you want to make an upfront payment you can always turn to small business funding options that might be more advantageous. Also, the fleet will be a way of making a solid investment for your business.

Comes with no limitation: From wear and tears to mileage, you are not answerable to anyone. But, remember that maintenance is billed under your business if you own the vehicles. Hence, educate your drivers on taking care of the vehicles and also devise a plan such that the work is distributed equally among all vehicles.

Offers tax benefits: The value of vehicles depreciate over time and this can actually help your business instead of bringing losses. This depreciation can equalize the offset profit, making you get tax benefits. In leasing the depreciation benefit lies with the leaser.

Provides positive equity: Your fleet adds equity to your business and over the years this will turn into positive equity. Positive equity means the amount your fleet owes for your vehicles becomes lesser than its value and you can reinvest this difference amount back into your company.

Managing a transport business is a challenging task involving many tough decisions and calculated judgments. Leasing or buying of fleet vehicles is one of them. Though the pros and cons of both these options are explained in detail, what suits best for your business should be your decision to make.

From the smallest to the biggest fleets, getting a vehicle stolen is something that can have a dramatic impact on your budget and workload. Just as a vehicle is taken off the road due to a maintenance problem or after an accident, when a vehicle is stolen we unfortunately cannot only worry about its market value, but are forced to assess all of the financial implications associated with losing such an asset: the need for a replacement (whether permanent or transitional), the need for a quick solution right after the crisis to securing a replacement and, in some cases, having to worry about the items that were inside the vehicle.

Vehicle theft is still a significant issue. In Ireland, it has been calculated that in 2015 the vehicle theft rate amounted to an average of 137.6 cases for every 100,000 of the population. According to data shared covering the period 2017/2018, there were over 106,000 vehicle thefts in England and Wales, showing an increase of almost 15,000 cases when compared with the previous year—an eight year high for this type of crime. The number of motor theft claims paid by insurers in the first quarter of this year in the UK were at their highest for any quarter since 2012.

We’d like to share ten top tips to minimise the risks connected with vehicle theft.

#1 – Nothing is too obvious. Lock the vehicle’s doors, windows and then double-check. Precautions are never too fussy. You would be surprised at just how many times negligence or inattention can lead to theft.

#2 – Maintain your vehicles. Locking systems are part of the maintenance of a vehicle. If you regularly take care of your assets, you can minimise the possibility of a theft.

#3 – Do not leave any belongings in the vehicle. Electronic devices (laptops and tablets) top the ranking of the most robbed items from a vehicle. The simple fact of leaving something visibly in your company car might tempt opportunistic thieves.

#4 – Do the same for your working tools whenever possible. If this isn’t practical, ensure that the method you use for storing tools in your vehicle is some kind of secure locker with a number combination that is sturdy enough to discourage all but the most determined thieves.

#5 – Use some permanent marking on your belongings. You should consider using an invisible identifiable marker on your tools and equipment that is visible under ultra-violet light—it can make them much easier to trace and their ownership indisputable, should they be stolen.

#6 – Consider investing in an alarm. Particularly noisy and sensitive alarms can be a great deterrent to thieves.

#7 – Low budget? Maybe even just an alarm sticker is worth a try. Display that on your vehicles; it might surprise you how effective it can be...

#8 – Look into installing a dashcam. They not only offer a viewpoint of the external environment so you can easily check for any suspicious activity around your vehicle by prospective thieves, but they could also help in the event of an accident and also help improve safety for your drivers.

#9 – Check out telematics. If you haven’t already done so—and you might be one of the very last ones!— check out the installation of vehicle tracking and telematics to locate your vehicles at any given time, 365 days a year. You can even get started with our free trial.

#10 – Park your vehicles in a secure area (assuming they aren’t in the depot) that is busy during the day and preferably well-lit and as busy as possible at night.

If you are serious about saving fuel and cutting your operating costs, you must have at least considered how your fleet drivers can avoid idling on the roads. Despite it looking like a trivial strategy at first glance, the upside is it is actually something very positive to achieve at literally zero cost. You can do something as simple as communicating to your drivers the necessity of avoiding idling or draft an ad-hoc idling policy, and, if they fully commit to the proposals, you will see the results for yourself soon enough.

But what may very well be on the horizon is the prospect of an idling law, or, in other words, because of environmental concerns and emissions targets at a European and global level, idling may soon be sanctioned by police and local authorities with costly financial penalties. The UK environment secretary Michael Gove recently said he supported calls from some councils to introduce stronger measures to tackle idling engines, which can cause even more pollution than a moving car. The government, as a consequence, is evaluating proposals to give more power to police and local authorities to impose penalties on drivers who idle. As is stands, the only penalties in force are a £20 or £80 fine, which is triggered only if drivers ignore their initial warning and idle for an additional minute.

As Fleet News revealed, attitudes toward idling seems to vary according to county in the UK: the Westminster Council leader thinks authorities need to send a strong message in the event of persistent idling, and considers a successful deterrent for company vehicles caught idling ought to be somewhere in the region of a four-figure fine. Camden Council warned a total of 400 drivers for idling, but issued no fines despite enforcement officers invested with the power to do so in March last year. Eighteen local authorities in London have allegedly noted idling incidents and have engaged with drivers in order to ask them to switch their engine off when stationary. Islington council have also been taking anti-idling action, too, stating that 80% of drivers asked to switch off their engine actually did so if requested to in a friendly way.

Environment secretary Michael Gove told The Times that instant fines for repeated offenders should be considered a viable solution to the problem and this involves increasing the power of enforcement for local authorities so long as it is applied correctly.

This action taken by the Government is certainly going to have an impact and help ensure drivers turn off their engine when it is not necessary to keep them running, such as when parked, for example. Some of the fines proposed for repeat offenders, of around £1000, will become a major concern for companies and couriers.

If you haven’t looked into eliminating idling yet, you probably need to start. Not only because it is likely to become a legal requirement fairly soon, but for the sake of the environment and for the difference it can make to your fuel bills. If you don’t know where to start or do not have an effective and coherent strategy, contact us and we will show you how idling can become one less headache.

Fuel prices have been on the rise leading up to Easter in both the UK and Ireland.

Fuel price data shared by the AA for UK consumers revealed that over the Easter period, the cost of fuel at the pumps reached a five-year seasonal high. Average UK retail petrol prices were 125.41p per litre, up 5.41p from last year, while diesel was 131.97ppl, up 1.65ppl in a month.

Regarding Ireland, while prices at the pumps dropped 1.4% between February and March 2018, they rose 1% in the same period this year and drivers faced higher prices at the pumps last month and Consumer Prices Index (CPI) rate of inflation was up 2% last month.

According to experts, CPI inflation is expected to be at or above the 2% target in all but two of the remaining months this year and is seen as one of the causes of the rise. Other global events that might have impacted fuel prices include the civil war in Libya and sanctions on Venezuela and Iran, but also better weather conditions in UK and Ireland may have stimulated the trading conditions of fuel and hence increased demand. Any sharp slowdown in demand that might have happened in March has changed in April, after the latest Brexit deadline was extended until October—reassuring consumers as to concerns about a Brexit summer cut-off and therefore encouraging them to spend (including on fuel).

With fuel prices on the rise, the onus is on fleet managers to find ways to spend less money on fuel and have the right fuel purchasing policy. With fuel being the lifeblood of any fleet, a number of possible saving opportunities are already available, like the optimisation of fleet journeys, training for safer and more efficient driving techniques which are focussed on anticipating hazards and reducing unnecessary fuel consumption.

With the clock ticking inexorably toward the March 29 deadline, the question everywhere seems to concern the future of the UK and Europe with regards to Brexit. Almost two years have passed since the June 2016 referendum in which 16,788,672 leave votes secured a small majority and technically cleared the way for the UK to leave the European Union, but since then the actual outcome is anything but clear.

The possibility of a no-deal Brexit seems at the time of writing the most likely outcome as the UK and the EU have so far been unable to reach an agreement, and everyone is starting to imagine some of the possible post-Brexit scenarios as the eleventh hour approaches. What would be the consequences of a no-deal Brexit for the transport, logistics and hauliers sector?

Back in the beginning of January, some influential transport and logistics trade associations such as the FTA and the FTAI have urged companies and hauliers to start preparing for the no-deal eventuality. The FTAI in particular has advised hauliers to take immediate action and advance their preparations, or expect delays, red tape and costs after March 29.

The General Manager of FTAI, Aidan Flynn, has stated that "Whatever the outcome of the Brexit negotiations—deal or no deal—it will have a seismic impact on the UK's trading environment and in turn, the freight distribution and logistics sector on both sides of the Irish Sea. By leaving the Customs Union and the Single Market, the UK will trigger notable friction in the supply chain. There will inevitably be multi-agency checks at ports and the administrative burden placed on the logistics industry—particularly road haulage—will hinder business development and, in some cases, cripple the small to medium enterprise sector.”

If a no-deal Brexit is reached, the island of Ireland will be particularly impacted by the reinstatement of a hard border between the Republic and Northern Ireland—the Irish land border would become a frontier of the EU and there would be pressure to enforce similar customs and immigration controls to those that exist between the EU and any non-EU country.

Trade and immigration are two other major influences on the transport and logistics sectors. In the event of a no-deal Brexit, the UK would have to revert to World Trade Organisation rules on trade; it wouldn’t be bound by EU rules but would be subject to the EU’s external tariffs. The price of goods in shops for Britons could rise sharply as businesses would have to have to pass on the cost of tariffs on goods imported from the EU. With regards to free movement, the UK would be free to set its own controls on immigration from EU countries. However, the EU could respond in kind for Britons and this could lead to delays at borders not only for expats but the situation for workers in the logistics and transport sector is also unclear.

The Loadstar, an online news resource for the logistics industry, makes two uncomfortable observations on what could happen after a no-deal Brexit: the time EU trucks spend in the UK on average is 1.9 days; a timescale that would inevitably change in the event of a no-deal Brexit. This could force hauliers to look for business opportunities outside of the UK when it becomes a much less efficient, more expensive and time-consuming country with which to trade. Another potential problem, is the massive presence of EU vehicles on the Dover-Calais route—it has been estimated that 85% of the trucks there are from the EU, posing considerable logistical challenges for both exporters and importers.

The anxiety concerning potentially huge delays at the border has already been considered by many businesses, but let’s focus on the healthcare sector for a moment: in the news just a few days ago, was a pharmaceutical company that saw fit to stockpile vital emergency equipment as the more stringent custom checks possible after a no-deal Brexit could potentially delay the delivery to patients in emergency situations. The head of NHS England, Simon Stevens, has admitted that getting logistics right is crucial to guaranteeing the flow of medical supplies.

“Missed savings” is one word-pair that should never appear in the fleet manager’s vocabulary as well as “missing opportunity”, but as we all know, sometimes we talk the talk but don’t walk the walk.

It is a fact that costs caused by fleet management or by the use of vehicles are often managed in a very inaccurate way. It might seem surprising, as vehicles that are partly or totally relied upon by companies, in order to develop their business, generate huge costs, accounting for a large proportion of a company’s total expenditure. The good news is that this can be reduced. The not-so-good news is that this cannot happen until your mentality changes and your fleets start to be managed wisely.

So, who is responsible for that? First of all, let’s not point our finger at the fleet manager himself. Fleet managers per se very often do not exist. And herein lies the problem: in most businesses fleets are supporting the business but are not part of its core activity, though vehicle use is essential at some point in the business cycle (but not necessarily seen as part of it). The consequence is that fleet management itself often does not have the necessary resources, and is something relegated to “spare time” in any busy schedule.

When we talk about fleet managers not actually existing, we are certainly not saying vehicles automatically manage themselves, but rather that the role of a fleet manager solely dedicated to vehicle operations is uncommon. It is more like the opposite: people in the organigram of a specific company normally have the additional responsibility of managing the costs of a fleet, which depends on whatever time is left over after completing their principal job.

If you have originally been hired for a specific position and incidentally have started taking care of your fleet, or if you are the business owner or financial director and have progressively acquired the responsibilities that come under the remit of fleet manager, you probably don’t really have the expertise required for the role or maybe the resources or the knowledge needed in order to manage vehicles professionally. Nothing personal: managing a fleet demands tools and experience and not having them might lead to management inefficiencies and, therefore, missed savings or opportunities: you might easily be unaware of which measures to adopt in order to prevent vehicle damage, minimise wear and tear or decrease accidents (to mention just a few).

The consequence of a lack of experience and expertise in fleet management often means that a fleet is not managed using the adequate tools, or the optimal processes and global fleet data is not recorded on a regular basis. If anyone willing to make decisions on the fleet does not have such data handy or if the management is not furnished with adequate data, then how could you possibly detect opportunities for savings and business?

We know that these problems can be solved: we can offer the expertise needed to guide you and properly manage your fleet and its costs, providing you with savings and business opportunities. We can help you determine what the real costs impacting on your fleet are and how they can be influenced: there are a lot of potential savings waiting for you!

It would be difficult not to immediately associate the letter F in our A-Z of fleet management series with the word “fleet”. But fleet is our overarching theme, so we need to find another topic of focus associated with the letter F, one that is a major expense for anyone operating vehicles commercially, at least for the time being—fuel.

Being an essential element for vehicles to run, fuel is at least for now, in fact, the largest contributor to fleet operating costs and for this reason subject to the most attention. With regards to fuel and fleets, fuel management relates to methods, tools, strategies and also best practices to use in order to maintain, control and monitor fuel consumption. Being the most essential element for vehicles to run means fuel consumption is unavoidable and something that is accepted unquestioningly, but on the other hand that doesn’t mean some serious thought cannot go into putting strategies in place to reduce consumption and, consequently, the sometimes frightening levels of expenditure.

When considering these strategies, there are different approaches regarding fuel itself:

How much do fleets pay for the fuel? This vital element in a fleet operation is not stable but depends on constant market fluctuations and trends that often cannot be predicted and alternate between periods of ups and downs, peaks and uncertainty. This has led to the investigation, by fleets, of a tool called ‘fuel hedging’, which is a contractual instrument used to reduce exposure to higher fuel costs by allowing a company to establish a fixed or capped cost, similar to the concept of hedging in currency and commodity markets where investment risks are managed.

How do fleets pay for the fuel? Though it might seem rudimentary, not all companies have switched to alternative payment methods such as fuel cards, but instead use, for example, cash or personal credit cards that is later reimbursed by way of an expense report, or they use company-provided purchasing or other credit card options, reconciled via an expense report. While these latter methods enable drivers to purchase fuel when it is needed, they will not really help the control and management of fuel by the fleet manager as they do not record mileage, place of purchase and other key data of interest. Fuel cards would help better manage fuel expense, especially if connected to a global fleet management system able to provide real time data on journeys and safety.

How is fuel consumed and how can consumption be reduced? It’s worth pointing out that often quite shocking levels of fuel consumption result from trips that aren’t strictly necessary. If you start tracking your fleet, you will quite likely discover unnecessary journeys or detours have been taken, or that more fuel efficient routes are available. How you drive also has a considerable impact as speeding and dangerous driving are closely correlated with global fuel consumption. Fuel theft, probably not the first thought that pops into the mind of trusting fleet managers, can also, unfortunately, become a factor that impacts on the bottom line. Monitoring the use of fuel via a digitalised system that integrates your fuel card and provides information on idling and dangerous driving patterns is a way for your business to be aware of how every drop of fuel is spent and act directly on the sources of fuel cost to cut consumption.

When dealing with fleet costs, it is never enough to say that cutting costs is the consistent focus of the exercise. Some businesses are centred on lowering the price of their fleet suppliers, others have already understood the potential that a great maintenance and safety approach can offer in driving fleet costs down, or the help that telematics offers in disclosing spend decrease opportunities.

But after examining all of these, we can safely say that there are still ways for a fleet director to make savings. Curious to learn what they are? Read on and see how the pieces of the puzzle can be rearranged!

#1 - Break your fleet costs down—chances are that you have an agreement with a fleet management company for a flat fee that does not divide repair and labour costs. In the same way, you might have a fleet maintenance provider and might not know the differences between labour costs and spare parts. If you are able to break down costs, you can surely find opportunities to save money on some of those items.

#2 - Make sure the vehicle is appropriate—when you are managing a fleet it is very important to choose the most suitable vehicle that fits your company’s needs and tasks. This might mean you plan to use the same vehicle features and types. This should work in your favour as you can approach manufacturers, make bulk purchases and benefit from the discounts that usually come with it. Choosing the right vehicle also means saving on parts and optional extras that might not come as standard or are easily available (and are therefore more expensive).

#3 - Hire the best drivers—even if you have the best vehicles, it isn’t such an advantage if you do not have responsible drivers. The key here is improving your hiring process, retaining the best talent and training drivers regularly—the effort and investment surely pays off to the benefit of every single aspect of the fleet and business.

#4 – Cut out avoidable journeys—we are talking about the business ones of course but also those that are totally avoidable and about making sure everyone knows how and when they can use the vehicles. If you do not set up rules, you cannot expect anyone to automatically avoid these kinds of journeys.

#5 - Review every aspect on a regular basis—providers, rules, compliance, nothing is ever the same and being too late on a review might cost you money when you miss adopting the most appropriate measures for your fleet—a potential waste.

#6 - Getting valuable expertise—it doesn’t have to be extremely expensive; and it often makes sense to seek it out before taking an important decision on your fleet if you feel you do not have enough experience. Asking for the intervention of an expert might save you a lot.