A difficult year in terms of the economic climate lies ahead for South Africa’s fleet management industry, but the good news is that many local fleet operators have not yet begun to use all the modern tools and technologies that can help them navigate this challenging environment, says Standard Bank fleet management head Dr David Molapo.
Typical South African fleet operators, who have been trying to contain costs over the past few years, still have room to manoeuvre by implementing precision-management tools, such as the latest vehicle technology and telematics, as well as management systems and services.
“Fleet managers need to budget for an inflation level of at least the current 6%, but, despite the gloomy outlook, fleet managers can ride out the year and emerge with a stronger, more efficient fleet, provided they fully embrace the systems and methods available on the market,” says Molapo.
For example, by analysing fuel consumption and comparing it with national averages, companies can detect faults in vehicles and driver behaviour. The subsequent incremental savings result in huge efficiencies, giving the fleet a competitive edge in difficult economic circumstances.
Molapo explains that many fleet owners are simply “convenience users” who consider only one advantage – the fact that they no longer have to ensure drivers have cash to fill up. Meanwhile, a huge amount of information in automated reports is available to fleet owners who take the time to access them, and management tools like Standard Bank’s fleet card tend to be vastly underused.
“The range of precision-management tools currently available to fleet managers is unprecedented. On the technological side, telematics can now give detailed analyses of vehicle performance and driver behaviour,” he says.
Fleet managers can also choose from a range of cost-effective outsourcing systems, such as managed maintenance, where knowledgeable agents ensure that fleet managers are not overcharged by mechanical workshops. Another outsourcing option is full maintenance leasing, where the fleet is absolved of maintenance and ownership duties and simply pays for the use of the vehicle.
Advanced financial management systems, such as Standard Bank’s transaction authorisation system, also give fleet managers real-time information about transactions and set crucial parameters to flag suspicious events. Further, Standard Bank’s predictive modelling tool enables fleet managers to make intricate calculations at the touch of a button about the effect of a rise in fuel costs on their operations, for example.
Molapo predicts that those fleet operators who have already updated their fleet technologies are set to increase their competitive edge as South Africa enters a turbulent economic year. South Africa’s recent credit rating downgrade by ratings agency Moody’s Investors Service to Baa2 from Baa1, which was compounded by the end of quantitative easing and the start of rising interest rates in the US, is impacting on local business confidence.
These conditions are negatively affecting key sectors such as manufacturing, and 2015 could possibly see South Africa lose additional vehicle production contracts, among other business contracts, to more competitive manufacturing economies.
Businesses everywhere and, by extension, fleet managers are waiting for the economy to take shape before any new investments are made.
“Under the current economic conditions, fleet managers are given little time to plan for fleet expansions, as new contracts tend to come in sporadically. As a result, mistakes, such as buying the wrong type of vehicle for the job, tend to increase,” says Molapo.
Meanwhile, the recent slight increase in the sales of light delivery vehicles and heavier vehicles is likely the result of fleet operators having to replace ageing vehicles after stretching their replacement cycles to breaking point. Molapo expects the sales of new vehicles to remain quite flat in the coming year.