SOUTH AFRICAN FLEET MANAGEMENT INDUSTRY FACE MULTI-BILLION SHAKE-UP

By Wren Mast-Ingle

The multi-billion rand fleet management industry in South Africa is due for a shake-up that will see it transformed from its stagnation over the past two decades into a dynamic and innovative business addressing the needs of the country – including skills enhancement and job creation.

World authority on fleets John Bell says factors such as global developments, the changing role of fleet managers and the prevailing situation in the South African public sector will radically alter the local approach to an industry that has got bogged down in the traditional structures of ‘yesteryear’.

“In 2013 the fleet management industry in industrialized countries will turn over some R100-billion with South Africa having its fair share.  In the next five years the figure is set to triple. Currently the biggest factor contributing to management pressure to reduce fleet expenses is the general business climate.  We regularly hear the mantra of ‘outsource to save costs’.  This objective is often not achieved even with new players continuing to join the already crowded fleet management market filled with banks, automobile manufacturers, tracking companies, trucking concerns and plethora of others, this objective is often not achieved.

“Many tout fleet management products but fall far short of the comprehensive package required. Others are primarily concerned with profit taking or simply addressing the needs of their dedicated market as do OEMs. The primary challenges still remain as cost-reduction mandates, fuel price volatility, fleet safety, and increasing driver productivity.  The greening of fleets has now been added to this list,” he points out.

Bell says the major change in South Africa will be a move to Insourcing fleets.  “In the present circumstances no amount of internal fiscal or external sales pressure justifies outsourcing fleet management functions where performance is critical to providing high quality assets and services to fleet users at a reasonable cost.

“Local government Insourcing fleet management however can effect massive savings of between 30 and 50 percent of their present spend in this department and across the board in the South African context that will save billions of rands annually.  It also will result in the upgrading of services offered, for example, by municipalities and Parastatals.

“Of primary importance is that skilled personnel are not lost and others have the opportunity of skills upgrading – a concern in the light of the employment situation in the country and one already affected by outsourcing,” he says.

“The stumbling block for most organisations in instituting efficient insourcing has been the centralisation of external data into one combine data base.  The solution has been the development of systems such as FleetPro which integrate all the functions in to one user-friendly system

“Outsourcing some of the core functions will remain as the most effective way of accessing cost-effective services and products, but fleet management now is moving to insourcing to be able to control and manage the outsourcing input at a centralized point.

“However the traditionally entrenched outsourcing structures built by financial and other institutions and seen as ‘cash cows’ remain an obstacle to visionary thinking and the practical implementation of innovative solutions.  Apart from the SA public sector, there is a critical need to provideaffordable management for the smaller fleets that are being established by growing numbers of small, medium and micro enterprises spawned through the requirements of government tenders and private-sector empowerment deals,” Bell emphasizes. 

“An innovative insourcing scheme not only provides for comprehensive and flexible solutions but also gives a company control over the vehicles and their actual usage. Outsourcing will remain as the most effective way of accessing cost-effective services and products, but fleet management now is moving to insourcing to be able to control and manage the outsourcing input.”

• John Bell has been at the leading edge of fleet and asset management development for the past 30 years. His experience covers all aspects of this complex industry including managing some of the largest fleets and fleet management companies in Africa.