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PMV roundtable: effective fleet management

PMV gauges the views and predictions of seven fleet management experts

ANALYSIS, PMV, Fleet management experts

PMV Middle East sits down with seven fleet management experts to discuss recent advances, current trends, and the challenges that lie ahead

Fleet management is a fluid art. No matter where in the world you operate, equipment will evolve, technology will advance, and fresh challenges will arise. Of course, the Middle East is no exception.

Unprecedented growth in the region has only been made possible by large numbers of commercial vehicles and construction machines. However, fleets are all but worthless unless managed effectively. Without expert supervisors and skilled operators, the best kit in the world will be neither safe nor productive.

Participants in the PMV Middle East roundtable on effective fleet management were acutely aware of this fact. A diverse range of experts attended the event, with representatives from the fields of construction equipment, commercial vehicles, lubricants, technology, and fleet finance. All of those present were in agreement that fleet management in the Middle East is in the throes of significant change.

The panel began by discussing how fleet management has advanced during recent years. The main topic of discussion during this segment of the roundtable was the advent of telematics.

The ability to analyse a unit’s performance and operation in minute detail is continuing to transform the face of fleet management in the Middle East. It seems that the region has entered into the era of information.

Participants agreed that the benefits offered to fleet operators by telematics are both numerous and significant. They extend far beyond the ability to track machines and vehicles; as one panel member pointed out, there is no point finding out where a vehicle is going unless you know what it is doing.

Fortunately, the spectrum of available information is expansive. From diagnostics, to fuel economy, to the number of emergency stops that a driver has performed, supervisors now have a plethora of data at their fingertips.

Moreover, this information is far from trivial. Participants were keen to point out the reasons why one might want to know such details. Firstly, telematics data provide concrete evidence to support claims made by manufacturers.

Whether discussing the fuel savings offered by a newly developed transmission system, or the longevity provided by the latest lubricants, telematics deliver cold, hard data capable of proving or disproving a product’s worth.

Of course, if the benefits offered by telematics were limited to original equipment manufacturers (OEMs) and their partnered dealers, this technology would be of little interest to end users.

Fortunately, the data collected by such systems are invaluable to fleet managers, as they can be used both to inform operational strategy and to improve the skills of drivers. The bottom line, according to the panel, is that in today’s market, telematics represent a crucial weapon in the ongoing battle to reduce the operational costs.

Despite the universal acclaim for telematics, participants agreed that technology itself should be viewed as a tool, rather than as a silver bullet. Indeed, the panel went on to identify a broad array of challenges facing the Middle East’s fleet management sector.

Several members of the roundtable pointed out that if the region is to continue to modernise in this respect, effective operator training will be crucial.

Whilst most participants were of the opinion that the competency of operators in the Middle East is generally inferior to that commonly found in regions such as North America and Europe, they also agreed that this is a question of education and not aptitude.

In keeping with the notion of telematics as a tool, data can be used by fleet managers to hone the skills of their drivers, informing them of their mistakes and explaining how they can improve.

Another challenge identified during the discussion was the current dearth of regulation. Whilst some participants were keen to highlight the need for industry to influence the decisions of fleet owners, others argued that legislation has a more immediate role to play in driving such change.

Indeed, there was a general consensus that authorities in the Middle East need to do more to improve both operator safety and the environmental credentials of local fleets.

On the subject of emissions, several participants noted that a transition to ultra-low-sulphur diesel (ULSD) would pave the way for the latest engines, and thus result in improved fuel economy and lower levels of nitrous oxide (NOx) and particulate matter (PM). On a related note, weight limitations for commercial vehicles could serve both to minimise damage to the Middle East’s road infrastructure, and to improve safety.

However, one panel member pointed out that it is not simply a matter of looking forward. Whilst he agreed that regulation has an important role to play in determining the makeup of new vehicles that are to be permitted in the Middle East, he also highlighted the need to legislate for those already driving on the region’s roads.

As another participant pointed out, by simultaneously adopting retrospective and forward-thinking approaches to regulation, authorities can prevent the Middle East from becoming a dumping ground for Europe’s spent machinery and vehicles.

Finally, the discussion turned to the subject of fleet management trends that we can expect to see in the future. All were agreed that fuel economy and environmental concerns will continue to climb the regional agenda, spurred ultimately by industry influence and legislation.

It was also suggested that there would be a streamlining of products, especially within the field of lubrication. Naturally, end users prefer to buy fewer products that can do more, and as technology advances, it will become possible to meet this demand.

Several panel members also predicted that education would lead to a change in the regional mindset. Essentially, customers will move away from the tendency to focus primarily on how much a product costs at the outset, towards an increased interest in cost per mile or cost per hour. Again, OEMs and distributors will be able to use data provided by telematics to influence purchasing habits.

To accommodate legislation and to facilitate transnational transportation, the GCC is likely to consider the adoption of a model similar to that of the European Union.

Relaxed border controls will benefit logistics operators, but such firms could also face stiff competition following the development of a region-wide rail network. As one member of the panel observed, GCC governments will incentivise rail freight to encourage returns on their investments.

The importance of fleet management and machine control technologies will continue to rise, and developers will need to create products capable of integrating the systems of multiple brands within a single, easy-to-use interface.

Finally, finance penetration for commercial vehicles and equipment will continue to grow as the market matures. In turn, financiers will develop tailored and flexible packages for fleet owners, whilst using tools such as the UAE’s Al Etihad Credit Bureau to more effectively calculate risk.

Vipul Malhan
Head of Business Vehicles and Mortgages
Emirates Money

What’s your role?
As head of business and commercial vehicles at Emirates Money – part of Emirates NBD – it is my job to help stakeholders to finance the commercial vehicles and equipment that best suit their needs.

How’s business?
In 2013, the commercial vehicles sector saw phenomenal growth, both in terms of total sales in the UAE market, and also in terms of finance. As such, business has been extremely good for Emirates Money. We see fleet finance as a growth industry, and we have dedicated teams to manage our relationships with clients and dealerships.

How are you driving change within the fleet management sector?
It’s our goal to help customers meet their fleet requirements. We begin by meeting with clients to gauge how they want to improve their fleets. Once we’ve identified the most appropriate assets, we devise finance packages that suit their ability to repay, and to manage their monthly cash flow.

What fleet management trends do you expect to see during the coming years?
Firstly, I think that finance penetration will continue to rise in the UAE’s new and used commercial vehicle segments. Infrastructure and real estate projects – and Expo 2020 – will stimulate this demand.

We expect lending in the UAE’s business vehicle segment to increase to up to 57% during the next two years. Customer retention will also become increasingly important as new players enter the market.

Lastly, with the advent of the Al Etihad Credit Bureau, banks and finance companies will have access to customers’ exposures. In turn, the onus will be on financiers to calculate risk effectively.

What are Emirates Money’s main priorities for the next 12 months?
In the coming months, Emirates Money will expand the spectrum of products that it finances within the fleet and equipment sectors. These finance options will be available to our customers before the end of 2014.

Frank O’Connor
Managing Director

What’s your role?
When I attended PMV’s last roundtable, I was general manager at FAMCO’s Truck & Bus Division. On 1 January 2014, however, I became managing director for FAMCO in the UAE.

How’s business?
Things are going really well at FAMCO. We experienced gradual improvement in the UAE during 2013, and that has definitely continued into the first quarter of 2014. We’ve had an excellent start to the year, and we’re confident that this is going to continue.

How are you driving change within the fleet management sector?
FAMCO has taken the decision to have telematics technology fitted to a large number of its commercial vehicles at the Volvo factory in Sweden.

In the past, we would go out and talk to UAE customers about telematics, and then make a lot of local alterations to the trucks to integrate the hardware if it was desired. Our new approach means that many of our trucks arrive with the necessary components. Rather than presenting telematics as a tempting option that we can fit retrospectively, therefore, it’s now much easier for us to get customers up and running.

What fleet management trends do you expect to see during the coming years?
In 15 years, the GCC will look very different. I think we’ll see an increase in the number of large, blue-chip logistics companies operating across national borders. In turn, those borders will have to become more open, and the GCC will probably adopt a European-style model. However, I also foresee fierce competition from rail freight as governments look to obtain returns on infrastructure investments.

What are FAMCO’s main priorities for the next 12 months?
FAMCO will continue to use evidence to show how telematics can help fleet operators. We’re able to offer customers financial benefits throughout the life of an asset; not just at the point of sale.

Stephane Flambert
Vice President – Sales Support
Total Marketing Middle East

What’s your role?
My responsibilities include taking care of Total’s technical services and its formulation of production. I’m in charge of marketing, customer service, and OEM relationships. I’ve been working with Total for the last 16 years, so I have good experience within the fields of vehicle and equipment lubrication.

How’s business?
Business is good. We didn’t really suffer during the crisis because we adapted our products and services appropriately. In countries such as the UAE and Qatar, we have more than 20% market shares, and we are also making inroads in markets such as Kuwait and Iraq.

How are you driving change within the fleet management sector?
Firstly, we are facilitating training. We need to provide our partners with appropriate tools, and explain how best to use them. Total is also working to change end users’ habits and to drive workplace efficiencies.

In terms of tools, we have Analysis Compared (ANAC), which is Total’s diagnosis system for engines and driveline components. Based on oil analysis, ANAC helps reduce downtime, extend service intervals, and maximise the lifetime of machines.

What fleet management trends do you expect to see during the coming years?
Firstly, the number of required lubricants will fall. For instance, Total offers two products – TP STAR and TP TRANS – that in combination, can meet all of a vehicle’s lubrication needs. Secondly, users will stop thinking in terms of cost per litre, and start focusing on cost per kilometre or hour. Finally, I think that regulations will also help to drive progress.

What are Total’s main priorities for the next 12 months?
Total’s number-one concern is safety. We will continue to offer high-quality lubricants and operator training. After safety, our priority is to develop eco-friendly products that promote fuel economy and reduce the environmental footprints of vehicles and equipment.

Joe Lahoud
General Manager

What’s your role?
I am general manager at CMC, a 40-year-old company that is the exclusive UAE dealer for brands such as Schwing and Wacker Neuson. I also have a lot of experience within the fields of commercial vehicles and fleet management.

How’s business?
Business is much better than it was a few years ago. The market is picking up, and CMC is ready to cater to customers during the upturn. We’re also expanding our operations. We expect to be in a position to announce additional partnered brands in the near future.

How are you driving change within the fleet management sector?
CMC represents a diverse range of equipment brands, and we are trying to educate customers about the importance of total operating economy.

We are offering equipment coupled with monitoring systems that can help end users to more effectively control factors such as fuel economy, operation, and servicing. Essentially, CMC is committed to helping fleet managers achieve the maximum returns on their investments.

What fleet management trends do you expect to see during the coming years?
I think that it will differ from one market to another. Operators in the UAE, for example, are probably the most cost aware in the region.

This is compared to markets such as the KSA, where fuel economy is not such an important issue. As such, I think that the UAE will be the leader in terms of advancing fleet management in the Middle East, and I think that ultimately, change will be driven by regulation.

What are CMC’s main priorities for the next 12 months?
We are looking into the possibility of introducing a CMC-branded fleet management system. A common problem for end users is that their fleets consist of multiple brands of equipment. This often means that they are operating with different fleet management systems that don’t interact with one another.

John S Taylor
Chief Operating Officer

What’s your role?
I’m chief operating officer at SITECH Gulf, which is a division of Caterpillar dealer, Al-Bahar. SITECH is a joint venture between Caterpillar and Trimble that provides technology for the tracking and monitoring of equipment.

How’s business?
Business is really starting to pick up. Hardly any companies in the region had used this sort of technology when we entered the market, so it’s been an educational journey. Around 18 months ago, fleet operators in the GCC had never heard of machine control. Now, we’re past that; the major companies know exactly what we’re talking about and understand the associated benefits.

How are you driving change within the fleet management sector?
SITECH and Caterpillar are working with companies that use multi-brand fleets to integrate the different systems and implement a single viewpoint for the collective data. This is really going to be the next stage, as far as fleet management is concerned; to develop a single interface that can be used across multiple systems.

What fleet management trends do you expect to see during the coming years?
One of the most important aspects, as far as fleet management is concerned, will be implementation. The biggest trend that I expect will be that more and more operators in the Middle East will actually start using these systems. The cost of the technology will decrease, GSM networks will continue to improve, and customers will come to fully appreciate the benefits offered by fleet management systems.

What are SITECH’s main priorities for the next 12 months?
In terms of fleet management, we’ll continue to work towards a single, multi-brand system. SITECH will also continue to develop machine control applications. Naturally, all of these technologies will be available to customers as part of one, integrated package.

Gurshaman Singh
Area Manager – UAE and Oman
Commercial Vehicle Business Unit Tata Motors

What’s your role?
I am area manager in the UAE and Oman for Tata Motors, which is part of India’s Tata Group. Primarily, we sell buses in this region, but recently, we have started to make promising inroads into the trucking segment as well.

How’s business?
The market has been pretty exciting during the last few months, and we expect that 2014 will prove much better than previous years. Things are really starting to pick up. During the last financial year – April to March – Tata Motors enjoyed 12% growth.

How are you driving change within the fleet management sector?
At Tata, our goal is to provide the complete fleet package to our customers at the lowest possible price. Consequently, we must deliver products that offer lower total costs of ownership than those of our competitors. Of course, this is linked with the effective provision of servicing and spare parts. Essentially, we want fleet operators to be able to achieve the same results with our vehicles as they can with other brands, but at a much lower price.

What fleet management trends do you expect to see during the coming years?
I use the acronym, ‘ICE’. ‘I’ stands for ‘information’; stakeholders will be able to more readily access information about a vehicle’s activities and performance. ‘C’, meanwhile, stands for ‘cost of ownership’. Naturally, this needs to be reduced. Finally, ‘E’ stands for ‘ease of maintenance’; if a vehicle is not easy to maintain, lower costs are meaningless.

What are Tata’s main priorities for the next 12 months?
Tata’s priorities differ depending on the product segment in question. We would like to firmly position our trucks in the local markets; this is an entry strategy. On the other hand, as Tata buses are already established in the Middle East, our focus will be to continue to improve the vehicles that we offer. This will help us to increase our market share.

Johan Alberts
General Manager – People Transportation
Al-Futtaim Logistics

What’s your role?
As Al-Futtaim Logistics’ general manager for corporate transport, it is my responsibility to look after the vision of the company, and also, the management of its business.

How’s business?
It’s really booming. Things are going very well, not just for transport, but also in terms of contract logistics. We’ve gained a lot of new business, especially on the corporate transport side of things. We’re currently transporting around 22,000 people 43,000km per day. This is being achieved, moreover, during peak traffic hours across the UAE.

How are you driving change within the fleet management sector?
At Al-Futtaim logistics, we only use workshops that are authorised by Al-Futtaim itself. For example, my colleagues and I have implemented service-level agreements with FAMCO facilities. This has really served to drive safety and efficiency within the management of our fleet. It’s unusual for us to have even one breakdown in a month, despite the fact that we operate 220 buses. Things are working well.

What fleet management trends do you expect to see during the coming years?
I think that the next major development, in terms of fleet management, is likely to be legislative in nature. Before long, all fleet owners will have to register their vehicles, and ensure that they are maintained correctly. This should really help to remove many unsafe vehicles from the UAE’s roads.

What are Al-Futtaim Logistics’ main priorities for the next 12 months?
Al-Futtaim Logistics should not price itself out of the market. We pay our drivers well, we see that they are trained, and we look after their wellbeing.

We’re not willing to cut corners in these areas, so we drive competitiveness through efficiency. For instance, one of our clients in Abu Dhabi was previously running 120 buses. After we optimised his routes, he was able to reduce this number to 50.

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