Most SA vehicle fleet owners are paying up to 20% more than they should to run their vehicles, says fleet consultant Michael Crankshaw. He blames poor financial controls and ignorance about the details of effective fleet management.
It's a view shared by major fleet-management providers and some vehicle manufacturers and distributors. Though some established companies run their operations professionally and cost-effectively, many don't. The biggest risk is to the burgeoning number of new companies that have sprung up in recent years. Whether it's trucks, vans or cars, proper fleet management may be the difference between survival and failure of their business.
For all companies, the main concern should be cost. In the truck market particularly, the temptation is to buy the cheapest vehicle available. Providers of low-cost trucks have done well from the boom in new-vehicle sales. However, Crankshaw and others say buyers should ask a lot of questions before committing themselves to purchase.
Too many don't. Mercedes-Benz commercial vehicles marketing manager Harry Teifel says: "Market newcomers don't know what to look for. They have yet to learn the basics of transport management."
Crankshaw, MD of Fleetcube, says even established fleets are often run by financial directors or managers more concerned with administration than with proper fleet management. That's why he says: "Many fleet costs are 20% out of line."
The cheapest available truck may be - and sometimes is - the right option for some companies. But buyers should come to that decision after looking at all the alternatives. It is possible to compare every specification and running cost - particularly if a buyer knows which routes his fleet will be travelling.
Different businesses need different vehicles and specifications. They also need different means of finance. According to Crankshaw, finance can account for 50% of total costs on a heavy truck. As the vehicle ages, and maintenance and service costs escalate, it may become more difficult to meet payments. Not all operators are aware it is possible to structure finance to pay more at the outset, and less later to counter escalation of other costs. It's even possible to reduce payments over predictable low-income periods. Fleet Africa MD Monwabisi Manjezi says: "The seasonality of a business and its cash flow needs to be looked into."
If operators don't find flexible finance, they may be forced to skip on maintenance, which stores up problems for the business. This situation is likely to become worse if forecast further increases in interest rates come to pass.
According to Manjezi, other factors to be considered include technology. "The level of technology required to deliver an optimal service must be determined. To meet a functional need, a functional vehicle must be selected. In addition to this, the skill level of the driver needs to be taken into account. SA is challenged with a lack of skilled drivers, and this is on the increase. Driver capability is critical to ensure that the technology is understood."
The truck must also be able to withstand SA operating conditions, says Manjezi. Not all trucks on the market are designed to cope with local altitude, dust, road conditions or even the long distances which many vehicles have to cover. Teifel is more blunt: "There are some bad trucks out there." Not only are they unsuited to the market, but they are high on costs and low on safety, service and back-up. "I fear there will be a rude awakening for some buyers," he says.
