Intertruck’s Marcel van Eeuwen and Eaton’s Eric Zahrai tell PMV’s James Morgan why increasing numbers of UAE transport companies are choosing to outsource their fleet management activities
To say that the Middle East’s equipment sector is maturing would be tautological; all global markets are maturing to some extent. What’s interesting, however, is the pace at which it is reaching maturity.
This, after all, is a region famed for its cash-rich buyers and ‘do-it-yourself’ attitude. 10 years ago, the GCC’s largest contractors purchased, operated, and maintained their own machines. Today, there is an increasing tendency for such outfits to hire in both equipment and operators.
Although relatively new to the Middle East, this operational mentality represents a tried-and-tested model in markets such as North America, Europe, and Japan. Nevertheless, the Gulf is catching up with its global elders, and catching up fast.
There exist multiple drivers behind this rapidly-occurring shift, not least the shadow cast by the global economic crash of the last decade. When the downturn hit, the region’s largest contractors were caught off guard. Sprawling fleets, low demand, and a dearth of offload options proved a damaging combination for many.
Consequently, the post-crisis climate has been characterised by equipment divestment. Why plough capital into swathes of machines when you can pay somebody else to assume this risk on your behalf?
A similar shift is taking place within the Middle East’s transport sector, although with one major difference: companies are not turning their backs on vehicle ownership. After all, it would make little sense for a logistics firm to rent its trucks as they represent the lifeblood of its business.
Instead, increasing numbers of operators are choosing to outsource fleet management activities, freeing themselves to focus exclusively on their raisons d’être: taking people and goods from A to B.
On the flipside of this coin stand the organisations offering this expertise. One such firm is Netherlands-headquartered Intertruck Group, which has been active in the UAE market for seven years. With roots in the parts distribution sphere, this company has succeeded in staying ahead of the curve, exploiting the Middle East’s growing fondness for third-party fleet management specialists.
Rather than abandoning its post as a distributor, Intertruck has deftly married these activities with its burgeoning operations-focused business. Indeed, it was at a parts-related launch event that I was able to sit down with the company’s chief executive officer, Marcel van Eeuwen, and Eric Zahrai, EMEA commercial director for truck and aftermarket at Eaton, one of Intertruck’s principals.
“This is the official launch of Eaton’s full aftermarket clutch business in the Emirates,” began Zahrai. “We signed an agreement with Intertruck at Automechanika Dubai 2014. It was at this point that the firm became our authorised distributor for the UAE. Previously, we have only been able to supply angle-spring clutches, which are those typically used in the North American market. We are now able to provide diaphragm-spring clutches, which are commonly used by European models.”
You’d be forgiven for assuming that the launch of Eaton’s diaphragm-spring clutch range in the UAE would be a niche news story. However, this is a move that could have significant ramifications for the country’s commercial vehicles sector.
It’s common to find both North American and European trucks on local roads, the balance weighted towards the latter due to traditional trade routes. With this in mind, a manufacturer that can offer clutches compatible with both segments is likely to prove popular in the Emirates.
As van Eeuwen explained: “There are two core products that exist within the field of clutch manufacturing: the North American model, which is an angle-spring technology, and the more traditional diaphragm-spring technology from Europe. The 430mm diaphragm-spring clutches, which Eaton is introducing to the UAE today, are suitable for use with all leading European brands. What’s more, Intertruck already has them in stock. We’re ready to roll.”
It seems that this message has been received loud and clear by the UAE’s transport community. The jointly-held launch event, which took place in Dubai last month, was a veritable who’s who of the region’s largest fleet owners, with representatives from Al Jaber, Emirates Transport, and even Dubai’s Roads and Transport Authority (RTA), to name but a few.
“We’re hosting guests from across the Emirates, not just Dubai,” van Eeuwen told PMV. “Clients from Fujairah to Abu Dhabi to Ras Al Khaimah have travelled to this event. All of the UAE’s major players are here.”
You might well be wondering how a clutch launch succeeded in generating so much industry buzz. Essentially, this is because, with the introduction of its diaphragm-spring product line, US-headquartered Eaton has become the first original equipment manufacturer (OEM) to supply all major clutch technologies: angle-spring, diaphragm-spring, and automated models. It’s now possible to meet the clutch-related requirements of entire fleets with just one brand.
“Eaton has been supplying North American-style clutches to the UAE for a long time, and for the past year, through Intertruck,” explained van Eeuwen.
“Now that Eaton has added European clutches to its product offering, it can cater to any customer, regardless of the vehicles they own. Most UAE firms run European trucks and buses. Some operate with North American models. It no longer matters; in conjunction with Eaton, Intertruck can now serve all UAE fleet owners with just one brand. Eaton is the only manufacturer in the market that can offer all types of clutch,” he told PMV.
Previously, Intertruck sourced its European clutches from German manufacturer, Sachs. However, following its US principal’s decision to enter the diaphragm-spring segment, van Eeuwen and his team took the decision to partner exclusively with Eaton.
Nevertheless, the Intertruck CEO was keen to point out that his company’s priority is not to sell products; it’s to provide a service.
“Intertruck exists to help bring its customers’ costs down, but cost is not just about the initial price of a part; it’s about the total cost of ownership (TCO),” he explained.
“Unfortunately, there are people in the GCC who focus too heavily on the initial monetary cost of parts. The problem with this attitude is that it doesn’t make sense to buy cheap components if you are having to replace your clutches every six months.
“The products that Intertruck uses might not be the cheapest on the market, but they last for much longer. And don’t forget, installing a clutch takes six to eight hours. This is a cost in itself, both in terms of the mechanic’s time and the downtime of the vehicle. Say you choose to buy a clutch that’s AED1,000 ($270) less expensive than the equivalent Eaton component. When you factor in labour and lost earnings, it could prove AED5,000 ($1,360) more expensive than if you’d selected Eaton at the beginning.
“Ultimately, shifting the sector’s focus away from initial price towards TCO is a matter of education. This is what Intertruck is trying to do. We are attempting to educate the market,” van Eeuwen added.
This, according to Zahrai, is a strategy shared by Eaton. Regardless of the global market in question, the US manufacturer strives to ensure that the regional channel partners it selects follow the same premium philosophy.
“When we decided to join forces with Intertruck, we did so very carefully,” said Zahrai. “Eaton does this in all regions of the world. We find the best partners; those who share our way of working. It’s about being close to the customer and really trying to provide the support and responsiveness that are so critical.
“We do have high expectations of our partners in terms of their aftersales support, just as they have high expectations of us when it comes to product quality. This is a two-way street,” he emphasised.
Indeed, during their first year as partners in the UAE, the companies have chosen to share the burden of investment in personnel. As distributor, Intertruck has one salesperson dedicated solely to Eaton components, and five others who offer Eaton as part of their wider product portfolios.
Keen to show its commitment to the market, however, Eaton has also been active in this field.
“We have hired a dedicated salesperson for the UAE who operates out of Dubai,” revealed Zahrai. “This appointment was made in mid-2014, shortly after the announcement that Eaton and Intertruck had joined forces in the Emirates.
“It was always our plan to hire staff specifically for this region. It forms part of our broader strategy to train GCC distributors to be the front face of Eaton; to give them the tools and knowledge they need to serve customers effectively,” he added.
This shared commitment to customer service links back to Intertruck’s mission to act as both a service provider and a parts supplier. Over the past year, the firm has made significant headway within the fleet management sector, and van Eeuwen contends there are a number of key reasons behind this success.
“Anybody can see that commercial vehicles are becoming more complex,” van Eeuwen noted. “It’s no longer enough to grab your tools and go at it; it doesn’t work that way anymore. When it comes to modern trucks and buses, you need to have access to high-quality components that complement one another.
“I like to use the following analogy. 20 years ago, a single tail light would have been compatible with models from all major manufacturers. Today, you’d probably need 25 types of lamp to cover the same range of vehicles because they’re all different. The specificity of trucks and buses has increased dramatically within a relatively short period.
“At the same time, operators have started to ask fundamental questions about the nature of their businesses. What is the core business of a transport company? It’s not ordering replacement parts. It’s not servicing trucks. Whatever the cargo – be it cement, foodstuffs, people, etc. – the primary function of these companies is to transport things from one place to another,” he said.
Within the context of this market-wide re-evaluation, van Eeuwen and his team have succeeded in promoting the fleet management side of their business.
Last year, Al Jaber Leasing Services became the first company in the Middle East to take advantage of Intertruck’s Vendor Managed Inventory (VMI) concept, an announcement that was made simultaneously with that of the Eaton distribution deal [PMV, July 2014]. During the intervening months, the firm has added a string of high-profile names to its client list.
“Since mid-2014, Al Jaber LEGT Engineering & Contracting (ALEC), Al Jaber Steel Products, Cemex Topmix, Emirates Transport, and Solaris Bus & Coach have all come on board,” revealed the Intertruck chief.
“These companies were already Intertruck customers, but we approached them and asked what additional services we could provide. Consequently, they have all expanded the range of services that they use us for.
“Fleet management doesn’t necessarily mean taking over their entire operation. It could be as simple as more comprehensive parts provision: same-day delivery, lifetime guarantees, etc.
“Ultimately, our business model is about TCO, and our customers – the Emirates’ largest fleet owners – understand the benefits of this approach. They don’t focus on the initial cost of a component; they want to know how long it will last. Intertruck, meanwhile, can take responsibility for logistics, maintenance, spare parts; you name it. It all boils down to one thing, and that’s maximising the uptime of our clients’ fleets.
“In 2014, Intertruck grew by 40%. Much of that growth was driven by our fleet management concepts and VMI system. During the first quarter of this year, we have grown an additional 35%. It’s nice to grow 40% in a year, but this brings with it its own set of problems. Let’s just say that these are nice problems to have,” van Eeuwen concluded.
