Three Big Issues for Fleet Management's Future
People, Cars and Tech
The Fleet Management industry will go through some extraordinary changes over the next 5 years and more than one company will depart the industry. Assuming of course that the industry still exists.
Whether you’re a fleet manager, an FMO, a rental business, a car sharing business or a taxi owner, your world will be shaken in the next five years in ways that it has never been shaken before. Get ready for the upheaval.
The end game is total mobility services, or if you prefer, Mobility as a Service. Offering transport services on a usage basis rather than on a time basis.
In my last post I wrote about some of the big fundamental, structural changes are already happening and will continue to happen for a while yet. Trends that are shaking up and shaping up the industry. This post is some practical advice on how to manage these changes and just maybe, take advantage.
The three key areas are People, Cars and Tech. If you’re an FMO, that pretty much sums up your industry.
People No, I’m not going to trot out some lame platitude about people being the most valuable asset your company has. They are, but you already knew that.
What I am going to tell you is that cars are no longer your focus, people are.
The buzzword of fleet management today is mobility and you need to break that down a little and understand what it really means. The most significant thing it means for fleet managers is that you are no longer managing cars, you’re managing people.
And if you thought managing cars was tough, you’re going to find people a nightmare.
Mobility is all about on-demand transport. It’s about supplying access to transport rather than the transport itself. That means that your key variable, your point of focus, is the person rather than the car. The point of interest is the person and the method of transport becomes a piece of hardware used to satisfy demand.
Mobility means that you care about managing demand. How do you deal with peak period? What do you do with the hardware when there is no demand?
There are solutions for many of these problems. Uber, for example, uses demand pricing (surge pricing) and in a similar way most energy companies have pricing modelled to demand, but can you apply that to fleet management?
I think that we are likely to see the development of models that are more similar to those that are used for mobile telecoms. Models where a subscription allows a specific amount of access to specific levels of transport and where additional usage is priced at a premium.
For example, I could easily see a ‘basic’ mobility plan that allows in a month say; unlimited public transport, 6 hours of individual automotive time, 12 hours of shared automotive time and 40 hours of bicycle access. I’m making this up, but you can see the direction it’s heading.
It’s all about tailoring a package that a person would want. Remember, you’re managing the person, not the car.
If the changes in the industry can be summed up in one phrase, it’s that we are moving from “vehicle fleet management to employee mobility management”
The focus is moving from the car to the person.
Now that I’ve told you not to focus on the cars, why am I moving on to tell you that cars are so important?
Well cars are going to be the preferred mode of transport for some time, but the desire to own a car is diminishing. As a result, the model for ownership will change.
One thing that FMOs in particular should be considering is whether (and how) they can manage a fleet of their own vehicles. Mobility will mean that vehicles will need to be available on-demand and those vehicles will need to be owned and managed by someone. Why not you?
There’s already a trend away from car ownership and for young people, cars are no longer their ticket to independence. They have much better public transport than we ever had, and they have Uber and peer-to-peer ride sharing, electric bicycles and many more options. One of the results is that many don’t even bother with their licences. In the US today, around 70% of high school seniors have a licence compared to 85% in the late 1990s.
Autonomous cars will spell the end of individual car ownership – why would you own a car when you can have one come around and pick you up – but the change won’t be sudden. Increases in the sharing economy will spell a slow death for what was once the family’s biggest asset after the house.
Build your own fleet. You’re going to need it.
I had an interesting conversation a while back on the subject of technology. I had stumbled across an alternative to a widely used technology. Would it work? I had no idea, but it was inexpensive enough for a trial.
I approached a client I was working with at the time and suggested that they might want to engage in that trial and they declined, saying that they were committed to a long-term relationship with their existing supplier. I pointed out that the supplier was not the issue, it was about the technology, but to no avail.
One thing you can be certain of is that whatever current technology you are using, it will be outdated in a fairly short space of time. Find room in your business to consider alternatives, trial the ones that seem like they might be worth trialling. Never use ‘loyalty’ as a reason for sticking with an outdated technology or a supplier that can’t keep up. It’s not much different to saying “we always did it this way”.
Examine carefully your suppliers, especially in the IT space. Are you getting closer to the mobility space with your supplier? Are you focused on the car or on the driver? You need to grill your suppliers, understand their roadmap and, most importantly, understand what they are doing to get there.
More than ever, your IT suppliers need to be brought inside and become a partner.
And Finally… With so much happening, it’s easy to lurch in one direction after another. Now, more than ever, you need to take your time about your decisions. Think long and think slow, then when you make up your mind, act decisively.
An outcome of all this is that we will see the convergence of several industries that are today quite distinct. Imagining the mobility industry of the future sees a convergence of rental cars, car sharing, FMOs, ride sharing and even vehicle sales.
Vehicle manufacturing will remain distinct, but will become more commoditised. As I mentioned last week, the design will be the key and while we can expect that some of our present-day vehicle brands will continue into the future, you should also expect Google or Apple or Microsoft to have their own branded vehicle. You might well even see a Nike vehicle or a Tag Heuer vehicle. Remember, the key for vehicles is the designer, not the manufacturer.
For the fleet manager and the FMO alike, this means that you need to be familiar with a wider range of industries and even have an interest in them.
About Connector Connector KK is based in Tokyo, Japan and provides expertise in fleet management and mobility through a network of accredited experts across the world. Connector can help you and your company prepare for the future of mobility. Contact them on firstname.lastname@example.org
About Shane Curran Shane Curran owns and operates Stonecutter Consulting from Sydney Australia. He is a Connector Pioneer and accredited expert, specialising in advising Fleet Management Organisations. You can contact Shane on email@example.com
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