Fleet Management
Reducing fleet operating costs in the
current economic climate
11 June 2014
Contents
Page
1. Relevance and positioning of fleet management
2. Total fleet cost
3. Maintenance costs
4. Fuel cost trends and impact of transaction authorisation
5. Tolls and costs
6. Innovative fleet solutions
7. Conclusion
8. Questions
Relevance of fleet management
3
Relevance of fleet management
Definition and purpose of fleet management

Definition:
– Fleet management can be defined as the process whereby the operation of and costs
relating to a fleet of vehicles are controlled. It is a specific management discipline with
recognised theory and techniques.

Purpose:
– Organisations face many challenges in managing their fleet expenses and risks effectively.
Such challenges can be serious and require immediate action or they may distract from
business related tasks and activities. Fleet management techniques applied correctly will
take care of challenges and mitigate risks.

Applying fleet management:
– Companies are focussed on cost management to prevent revenue leakage. The fleet owner
needs convenience, sophistication and quick access to information. Fleet management must
provide a full range of custom-made fleet management services that will assist
companies in managing and controlling costs.
–
Various categories of fleet expenses must be managed and invoiced through a single Fleet
Management account. Fleet expense records need to be up-to-date, accurate and easy to
access. For reporting needs, fleet management service providers must provide the
convenience of a range of sophisticated, but easy-to-use tools to manage fleet expenses.
Relevance of fleet management
Positioning of fleet management by fleet card issuers

The four main fleet card issuers Absa, Firstrand (Wesbank), Nedbank and
Standard Bank together have approximately 700 000 fleet cards on issue. A
fleet card can be issued for a variety of services ranging from fuel purchases,
oil, tolls, maintenance and tyres

The fleet card issuers also offer managed maintenance (MM), Full
Maintenance Leasing (FML) and an e-Toll solution
Fleet Products
Standard
Bank
Wesbank
Auto
Absa
Nedbank
Fleet card




Managed
Maintenance




Leasing




Other:
-
Online
reporting tools
StanFleet; FIMS;
FleetSaver
FleetVantage
MyFleet
BI Fleet Solve
-
Transaction
Authorisation
Negative card file
and 27 other
checks; website,
SMS
Negative card file
and some other
checks
Negative card file
Negative card file
-
Carbon
footprint
Per vehicle and
total fleet;
ECO₂Fleet
Per vehicle and
total fleet;
Greenfleet
No
No
6
Challenges
 Lack of awareness of a fleet’s Total Cost of Ownership
 The increased cost of running and maintaining a fleet of vehicles in
the current economic climate
 Issues in reducing running and operating costs for a fleet of
vehicles, vehicle maintenance and productivity strategies
 Availability of information that facilitates managing fleet costs
Total fleet cost
8
Total fleet cost
Total Cost of Ownership (TCO)
o
o
Lack of appreciation of magnitude of cost
Lack of information on and visibility of cost
Acquisition
–
Purchase/Lease
Operating Cost
–
–
–
–
–
–
–
Fuel Cost Management
Maintenance Cost Management
Tyre Cost Management
Fines and Licensing
Accident Management
Training
Tracking
Average cost per vehicle (SBFM Base)
2013 (Q1)
2014 (Q1)
YOY
Increase
0-30
R 3,998
R 4,469
11.76%
31-150
R 3,930
R 4,435
12.86%
151-300
R 3,689
R 3,846
4.26%
301+
R 3,029
R 3,140
3.66%
All
R 3,667
R 3,992
8.86%
Fleet Size
Fleet Size
0-30
31-150
151-300
301+
SBFM Base split
By number of
By number of
Vehicle
Customers
34%
88%
28%
10%
9%
1%
29%
1%
Maintenance costs
10
Maintenance costs
Maintenance costs





Vehicle maintenance costs are challenging to control
Fleet owners have to ensure that vehicles are routinely serviced, tyres replaced on time and
deal with issues impacting on maintenance, e.g. driver behaviour and correct vehicle use
Well maintained vehicles positively impacts vehicle productivity, fuel consumption and vehicle
resale values
Maintenance costs on average increased by approximately 26% from 2010 to 2014
Average value per invoice increased from approximately R2 600 in 2010 to R3 600 in 2014
Fuel cost and transaction authorisation
12
Fuel cost and transaction
authorisation
Fuel costs





Fuel is a critical fleet expense and critical to manage and control
Fuel price increases have a major impact on fleet cost – indicated in fuel price versus fleet
card fuel transaction values since 2010
Fuel price increases resulted in average fuel cost per transaction of Standard Bank Fleet
customers to increase from R515 in January 2010 to R890 in April 2014 (73%)
Vehicle condition and driver behavior are contributing factors that impact on fuel costs and
must be managed (ultimately also impacts the value of the vehicle at replacement)
Costs can be controlled and managed by exception with fleet reporting that indicate fuel
efficiency against national averages
Fuel cost and transaction
authorisation
Transaction authorisations


Fleet Management System performs close to 30 validations before a transaction is
approved
Protection against fraud and abuse
Industry losses:
2013
2014 YTD
SBFM Losses as a % of industry
7.10%
1.50%
SBFM counterfeit card transactions as a % of industry
12.89%
15.44%
Fuel cost and transaction
authorisation (continued)
Transaction authorisations


Standard Bank’s authorisation methodology is highly effective
With the second largest fleet card base, losses are well contained
Source – Fleet card losses: SABRIC
Toll costs
16
Toll costs
Toll costs




Toll spend equates to approximately 9%
of total fleet card spend
E-tolling will see total toll spend increase
even further
– Table indicates e-toll cost for an
approximate 3 000 vehicle fleet
based mainly in Gauteng
Detailed reporting required to manage
cost
– Monitor spend
– Private vs Business mileage
Route planning
– Toll cost vs fuel spend
Month
Toll Fees
e-Tag Toll Fees
Jun-13
R 2 408 573
R0
Jul-13
R 1 982 710
R0
Aug-13
R 1 955 570
R0
Sep-13
R 2 360 878
R0
Oct-13
R 2 054 202
R0
Nov-13
R 2 543 719
R0
Dec-13
R 2 410 324
R 404 947
Jan-14
R 1 942 209
R 461 769
Feb-14
R 1 571 750
R 431 368
Mar-14
R 1 362 460
R 418 282
Apr-14
R 1 569 228
R 502 805
ORT Registered
Fleet Size
By number of By number of
Vehicle
Customers
0-30
32%
29%
31-150
59%
56%
101-300
70%
70%
301+
85%
84%
All
59%
32%
Innovative fleet solutions
18
Fleet solutions
Transaction authorisations – Real-time
reporting

Website
 Access approved and declined
transactions in real time via the web

Transaction Authorisations App
 Currently in development
 Will allow fleet managers to
approve/override declined transactions

SMS facility
 Receive SMS’s for all approved and/or
declined transactions

Breakfast reports
 Daily reporting of declined transactions
Utilisation


2 958 customers (56%  year-on-year)
90 000 vehicles
Fleet solutions
Carbon footprint reporting



With the looming introduction of carbon
tax in 2016 on Scope 1 emissions
resulting mainly from fuel combustion,
businesses should prepare themselves.
Developed ECO2Fleet, a web-based fleet
management data collection and reporting
service that measures the carbon emissions
of vehicles and is aligned to the principles of
the Greenhouse Gas (GHG) Protocol, a
globally recognised accounting tool used to
measure carbon emissions.
Companies need tools to manage, track
and report their carbon footprint that can
also facilitate the implementation and
management of a strategy to reduce their
carbon footprint.
Utilisation:
 529 customers (8.8%  year-on-year)
 54 000 vehicles
Fleet solutions
Predictive modelling

Using their own fleet transactional and operational data, companies can view
the impact of variables on fleet expenses, including fuel price changes,
interest rate changes, tyre price increases, more fleet vehicles

Variables that can be adjusted:

Example of fuel price change (Petrol R13.79 and Diesel R13.55):
Type
Number of Vehicles
Average - last 3 months
New monthly averages
76
76
Value of fuel transactions
R 163,637.01
R 158,917.34
Value of petrol transactions
R 160,397.81
R 155,880.78
Value of diesel transactions
R 3,240.16
R 3,036.56
Petrol price
R 14.19
R 13.79
Diesel price
R 14.46
R 13.55
Conclusion
23
Conclusion
 Understanding the make-up and magnitude of fleet costs and the various
factors that impact these costs will ensure that fleet owners understand
the importance of managing all elements of fleet costs
 Availability of information is critical for fleet managers to identify and
interpret exceptions and trends in an environment of ever increasing costs
 New and sophisticated tools are available that were developed to assist
fleet owners in managing and controlling fleet expenses and risks
 Fleet costs have a major impact on overall business profitability, hence
the use of management tools and reporting becomes important to control
the impact of these costs.
Questions?
25
Thank you