Future Fleet Management Trends

The automotive industry is in the midst of undergoing changes that will greatly impact the future of fleet management as we know it.

While certain developing technological concepts such as autonomous vehicles aren’t anything fleets need to immediately worry over, changes are happening at a rapid pace.

Fleets that lag behind current trends may find themselves scrambling to become relevant in an industry that continues its march forward. Keeping a close eye on incoming innovations, and simply being prepared for industry changes, can help fleets obtain a better sense of what their operations may look like in the future.

Automotive Fleet reached out to several major fleet management companies, including Merchants Fleet Management, Donlen, Enterprise Fleet Management, Mike Albert Fleet Solutions, Element Fleet Management, ARI, EMKAY, and Wheels Inc. to help create a sense of what some aspects of the future of fleet will look like in the coming decade.

Some key ideas mentioned were the evolution of the fleet manager, new methods of mobility, and the continued strength of telematics.

Top 10 Fleet Management Future Trend Takeaways

  1. The fleet manager role has transitioned from utilizing a tactical management style to one that requires a strategic management style.
  2. New Mobility as a Service (MaaS) solutions, such as vehicle sharing, are being developed, which may serve as useful alternatives to standard leasing/buying strategies.
  3. Fleet management may one day be handled by someone who is best defined as an IT professional rather than an automotive professional.
  4. Telematics continues to dominate the current fleet space and is only expected to grow more in the ensuing years.
  5. Cybersecurity will be an ongoing concern for fleets as vehicle connectivity continues to develop in the coming years.
  6. Analyzing Big Data to find actionable insights will continue to gain importance as fleets become more connected and the amount of data produced continues to grow.
  7. Vehicle rightsizing initiatives are poised to remain a particular area of focus for many organizations into 2019.
  8. Accident-prevention features are starting to become more available and less cost prohibitive, fleet managers are looking to these options as a way to invest in their drivers from both a safety and long-term cost perspective.
  9. Several OEMs are shifting away from sedans to focus more on SUVs and pickup trucks, which may impact future fleet portfolios.
  10. The role of the fleet management company is expected to evolve along with other changes to the fleet industry.

The Future Role of the Fleet Manager

The average fleet manager today has a number of duties that need to be juggled on a day-to-day basis. What exactly defines that role is starting to change as it heads into the future.

“The role of the traditional fleet manager is changing,” said John Wuich, VP, strategic consulting services, for Donlen. “It is being influenced by technology and data and analytics; and the mobility revolution and autonomous vehicles loom ahead. In order to be successful given these influences, a fleet manager more than ever must understand and align with company product lines, objectives and culture. In turn, the role must evolve.”

Current fleet ideas are helping forge a new future of fleet management.

“Today’s fleet manager is working in an environment that has successfully outsourced or streamlined the tactical side of managing their fleet,” said Laura Jozwiak, sales and client relations for Wheels Inc. “This has allowed them to expand their scope globally, impact more internal strategic initiatives, leverage the data we produce in fleet to improve productivity, costs and safety, as well as share new ideas that are emerging from mobility as a service (MaaS).”

Processing relevant fleet data and analyzing it critically is no longer a far-fetched idea; fleets are able to do this now. And future fleet management advancements only bolster the capabilities of the industry.

Rob Bradley, sr. strategic consultant for Element, spoke on the topic of data and its place in the future of fleet.

“We have a wealth of data from drivers, and using that data and getting in front of problems before they happen is starting to become more the standard,” said Bradley. “This is particularly noticeable in the safety space. As accident-prevention features are starting to become more available and less cost prohibitive, fleet managers are looking to these options as a way to invest in their drivers from both a safety and long-term cost perspective.”

Due to the continued emphasis on data analytics and being more strategic minded in the future, the fleet manager of tomorrow may be better defined as an IT professional rather than someone in the automotive space. The diligence toward collecting and evaluating data will become more important than ever.

“The increasing amount of data will undoubtedly lead to improved efficiencies, reductions in accidents and safer environments for drivers – all of which will ultimately lower costs for fleet operators. We want to get to place where we can use machine learning to help us amalgamate and interpret raw data,” said Dain Giesie, AVP of business development for Enterprise Fleet Management.

Having these IT skills to review fleet data are not only aimed to help improve vehicle utilization, it may also help in areas related to security, a growing concern as the world becomes more connected digitally. As data breaches continue to be problematic for numerous industries, the automotive industry and fleet in turn will need to prepare itself for ways to be protected from hacking as vehicles become more closely bound to personal data and fleets continue to collect more data on their drivers.

“Integrating technology into vehicles is no new endeavor,” said Mark Donahue, manager of fleet analytics for EMKAY. “What is new is the level at which vehicles are connected to our mobile devices, houses, and other personal items. As technology continues to be integrated into the automotive industry, it’s clear that increased security measures need to do the same. As a hard-to-believe reference point, a recent report found that there are over 100 million software lines of code in modern automobiles. The reality is that no software product of this size and complexity can be expected to run free of error or security flaws. And when those flaws could result in data breaches as well as public safety issues, it’s imperative to mitigate any risks.”

Hardesty of Mike Albert Fleet Solutions echoed the significance of data privacy and security as the technology continues to evolve.

“IT security and data security is going to be important, as more and more information needs to change hands, you have to make sure it’s secure, the privacy aspect surrounding it, you have to make sure that stuff doesn’t fall into the wrong hands,” said Hardesty. “I think that’s the direction in general you’re going to see a lot of things happen in fleet. It’s all going to be about the data and protecting it, understanding IT and accessing that data, I think that’s really the wave of the future.”

Recent developments in Europe have already impacted how fleets in North America manage data for their multinational operations. Recently, Europe implemented the General Data Protection Regulation (GDPR) to help eliminate issues that relate to user privacy. The GDPR is a European Union regulation that requires organizations to inform users of its services regarding the personal data that it gathers of them and what the information will be used for. For multinational fleets, this has meant properly managing user data of its drivers in fleets who operate in Europe.

Hardesty said developments ongoing in Europe may offer clues as to the direction that certain segments of the industry may head.

“As history has told us, what happens in Europe will eventually happen in the U.S.,” said Hardesty. “Europe is already altering driver behavior within large cities. For example, license plates ending in even numbers are allowed in the city on specific day and odd numbers other days. Ride sharing, no drive zones are all starting to limit driver access. This is causing fleet management to look at fleet differently.”

Evolving Fleet Portfolios

The sweeping interest of SUVs that continues to dominate the automotive industry isn’t new, but it helps provide details about the direction it is headed. Trends like these ultimately have an effect on fleet, and impact concepts like rightsizing and vehicle selection.

“As vehicle costs and interest rates continue to rise, rightsizing becomes more and more important,” said Giesie of Enterprise Fleet Management. “The trend toward fewer manufacturers offering sedans combined with improved engine technology in small SUVs will make the decision for fleets to switch easier since they likely won’t see much of an increase in operating expenses for small SUVs. As a result, I expect a majority of sedan fleets to transition to SUVs. The decision to phase out sedans by some OEMs wasn’t made to force a new habit; it was based on customer preference and demand.”

Fleets who are making moves toward SUVs are rightsizing not only for effective utilization, considering TCO, current gas prices, etc., but also because major OEMs, including GM and Ford, have expressed a desire to shift away from sedan production. Because of this, certain fleets will be susceptible to shifts in asset portfolio.

“Rightsizing initiatives are poised to remain a particular area of focus for many organizations as we look toward 2019 and beyond,” Mike Bryan, department head of ARI’s business intelligence and analytics team. “Whether it is through comprehensive spec’ing strategies aimed at optimizing a vehicle for a certain task or through larger initiatives designed to ensure you have the ideal amount of vehicles to support operational demands, fleet rightsizing is critical to helping companies achieve their ultimate goal of operating in the most efficient, cost-effective way possible.”

Making major asset portfolio shifts going forward is something fleets should consider on a case-by-case notice, as moving to strictly SUVs for fleets is certainly not applicable for every industry, for example, oil and gas services.

“Fleets should regularly evaluate if their vehicles are meeting their needs, especially as job requirements or product specs change,” said Bradley of Element. “While SUVs typically offer more space and comfort, that benefit comes with a financial cost. So companies should continue to evaluate if that incremental space (and, potentially, revenue per trip) is worth the incremental cost, especially as fuel costs continue to rise.”

Tom Coffey, sr. VP of sales for Merchants Fleet Management, added to the idea of rightsizing as it relates to fleets finding the best vehicle suited for a job, and needing to consider the OEMs decisions to drift away from utilizing sedans.

“Picking the right vehicle for the job (rightsizing) is only one piece of the equation,” said Coffey. “OEMs are streamlining their vehicle model options and fleets need to adjust and consider the impact to their fleet overall. As OEMs discontinue models, much like where Ford and GM announced this year with their sedans, it impacts resale values, replacement costs, maintenance variances, and fuel economy. When models are discontinued new car sales can experience a decline. However, the average wholesale resale price does not necessarily experience the same dramatic decrease.”

Several OEMs have also proposed big investments toward producing more zero-emission vehicles, including GM which recently proposed a national mandate that would require 25% of the vehicles sold by manufacturers in 2030 to be zero-emission vehicles. LeasePlan Corp. also announced its goal of achieving net zero emissions from its total fleet by 2030.

The impact this will have on fleet is remains to be seen, but is another aspect that fleets should not ignore moving forward.

“The number of EV models and the availability of those models is limited; though we know the automakers are investing millions in the future development of electric vehicles,” said Tim Cengel, manager, manufacturer relations for Wheels Inc. “As the number of available models grows, the battery technology improves and charging infrastructure grows, we expect to see demand for electric vehicles grow. In addition, many of our customers have green initiatives that include goals for fuel economy or emissions across their fleet which we expect will drive them to consider electric vehicles.”

Alternate Modes of Mobility

As asset selection changes for fleets in the future, the traditional ideas of leasing or owning vehicles may also be phased out as new modes of mobility become feasible options for some fleets.

“In terms of ride sharing and mobility as a service, companies will need to determine if their drivers need a fleet vehicle or simply a ride,” said Don Woods, director of client information systems for ARI. “We’re working closely with our customers to help them answer this question with their specific needs in mind. Together, we’re leveraging their fleet data to align their employee’s job functions with the most appropriate method of transportation.”

Some fleets have implemented alternative methods of vehicle utilization and utilized their fleet management company as a means of support.

“The subscription-based model continues to gain traction across our portfolio,” said Coffey of Merchants. “We are seeing the most traction where customers are launching new locations or entering new markets and the exact needs is not yet known. Another area where the subscription-based model is working is with organizations with seasonal or project-based needs.”

Coffey said that his team mainly observed this trend in the short-term truck rental space, which resulted in Merchants developing a new truck rental offering to meet the demand.

“A year ago, our subscription-based customers were exclusively closed circuit meaning one company using a pool of vehicles,” Coffey added. “However, we are beginning to see that circuit open slightly where like organizations that are in tight metros areas may share the same pool. The fleet space is slowly blending the line between open and closed-circuit sharing. We anticipate the fleet space will continue to shift toward a model that looks more and more like the consumer model we know today, we are not there yet but we are moving in that direction.”

Hardesty of Mike Albert Fleet Solutions also suggested that fleet managers of the future may be given a budget for aspects of mobility, transitioning from analyzing total cost of ownership (TCO) and instead factoring mobility funds.

Considering future vehicle application, Hardesty said operating with a sedan-heavy fleet may be viewed as an antiquated form of transportation in a vehicle sharing fleet, as the vehicle would need to service multiple duties, depending on the fleet.

“If you’re going to go to a vehicle sharing system, you’re going to have vehicles serving all kinds of purposes, you’re going to have to get an all-purpose vehicle,” said Hardesty. “The idea of having a sedan when multiple people are going to use it for multiple functions just doesn’t make sense, but you’re going to get the most versatile vehicle you can to be in your pool so anybody who needs to use it can use if for what they need it for not just the sales person.”

Because of these shifts, the role of the fleet management company is also expected to evolve in the future, which will mean FMCs need to stay current and adapt to the changes along with fleet managers.

“I believe that the relationship between fleet and the FMC will always be there just not as we view it today,” said Hardesty. “Only the progressive, advanced thinking FMCs will survive the future. All FMCs may not be able to do all things for all people but they better be thinking about what phase of the ‘new future’ they can focus on and be the expert in. As fleets go to a ‘pay-only-when-you-need-it’ model, FMCs will have to figure out how to adapt to that rather than staying the course of what they are doing today.”

However, these alternate methods of mobility are not going to be commonplace overnight, as fleets will need to find ways to best leverage the solution.

“Fleets, particularly in North America, remain truck-centric with an emphasis on moving both people and equipment,” said Woods of ARI. “While some fleets may be able to leverage these emerging trends in certain scenarios, mobility solutions such as ride sharing are still likely several years away from significantly impacting the fleet sector.”

Giesie of Enterprise Fleet Management noted that a majority of its customers may not be suited for a sharing model, as it currently stands.

“The majority of our customers are service providers whose vehicles require a high degree of specialized upfitting specific to the services they offer, and therefore are not easily shared,” he said. “That doesn’t mean we don’t think there will be a sharing opportunity. We’re keeping a close eye on emerging technologies and markets to determine what role ‘sharing’ will play in the fleet management space.”

Likewise, fleet professionals should continue to keep an eye on the ever-changing industry, as these changes gradually occur, potentially creating new opportunities to efficiently run a fleet.

“As an example, instead of a sales person having a car to use on their time, there is a pool of cars, and you can assign a car to a driver in the same way that you can sign out a conference room,” said Hardesty. “I think all those things are really going to change the way people start looking at fleets, because now you’re managing the fleet for the time it’s being used rather than having your fleet car in somebody’s control for the whole term of the lease.”

Meanwhile, Bradley of Element addressed doubts about certain mobility concepts, specifically with services like Lyft or Uber.

“We have looked at ride sharing or using Uber/Lyft in lieu of a fleet vehicle for urban drivers,” said Bradley. “If they are low mileage drivers who typically drive in a concentrated area there are some scenarios where this can make sense. That said, I don’t expect this to become a prevalent solution in the future. This approach is generally more cost restrictive (i.e., an unexpected 40-mile drive with Uber vs. a company car) and less predictable (i.e., Uber’s surge charging, timely arrival of car sharing) which limits its potential cost benefit.”

He added that many drivers consider a company car to be a job perk, so this decision to utilizing services like these could be taking away a benefit from the driver.

While most fleets haven’t implemented these mobility solutions, this could all change in the coming decades. According to a recent study from Cox Automotive, mass adoption of autonomous vehicles should begin ramping up in 2023 and will ultimately drive a shift in vehicle ownership from consumers to larger mobility service providers with large fleets of battery-electric, autonomous vehicles.

How Telematics Will Evolve

Telematics is another major fleet tool that will impact much of future fleet decision making, and is continuing to create a stronger presence in the fleet space.

“The fleet management space is buzzing with a variety of new technologies, but telematics and advanced analytics continue to be the fuel that drives innovation,” said Lou Vella, telematics product development manager, ARI. “By the end of 2018, telematics devices will be in use across approximately 30% of all North American fleet vehicles – with that number expected to rise to almost 50% by 2022. Telematics and advanced analytics are driving efficiency today and are poised to continue to do so for the foreseeable future.”

Telematics technology today already helps fleets understand more about vehicle utilization, driver trends, etc., and is becoming more ubiqituous across the industry.

“As these programs continue to be more and more affordable, widespread adoption of driver monitoring programs can be expected,” said Donahue of EMKAY. “The immense benefits these programs offer to fleets has always been attractive. Now that they’re not only affordable, but also much simpler to start-up and administer, it’s hard to resist the numerous benefits they can provide. Big Data is taking over the industry, and the best way to obtain massive amounts of data is to track your own fleet.”

Moving forward, it will only become a more essential tool to fleets to understand more about their operations.

“Telematics as we know it today is going to evolve,” said Hardesty. “Maybe it will track utilization a little bit more; maybe it will track how often certain people are using certain cars. You’re still going to be making your decisions based off of data that the telematics is going to gather, and I think that that is just going to be different in the future, with whatever is important at that point.”

Coffey of Merchants echoed the significance of what telematics will do for fleets moving forward.

“Analyzing data to find actionable insights will continue to gain importance as fleets become more connected and the amount of data produced continues to grow. It will remain essential to start with creating a baseline and then manage to the baseline creating alters and thresholds. The biggest challenge many fleet professionals experience is the lack of time to consume and analyze all the data inflows that can come with a robust telematics program,” said Coffey.

Changes to the technology will mean fleets will need to stay privy to the latest technological developments going on in the industry, but also make sure their fleet partners are staying current.

“There are many steps that will need to be taken in this rapidly changing space. Fleets should embrace new and evolving technology that is available now. For example, telematics already provides a lot of information that can help fleets run more efficiently and safely. Some fleets are enjoying a lot of success by using it. And it will not be long before the majority of vehicles on the road will be manufactured with an embedded modem. Fleet managers should evolve as vehicle technology evolves,” said Giesie of Enterprise Fleet Management.”

The benefits of this may lead to new key changes, including improved safety, reduced cost via improved utilization, improved assessment of rightsizing, etc.

But, as mentioned earlier, the fleet professional needs to be skilled at assessing this data, which will become an increasingly common requirement for fleet managers as the role of the position becomes more about effectively reviewing and assessing.

“In order for a fleet organization to benefit from the increasing amount of data, it will need to adhere to an effective analytical process,” said Wuich of Donlen. “That process should begin with asking the right question so that clear and quantifiable objectives are set. The process ends with key performance indicators used to measure just how well those questions and objectives were met. In between, an organization must collect the right data and transforming that data into meaningful insights with actionable steps.

Article by Andy Lundin; originally published by Automotive Fleet on December 18, 2018
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