FMW: Let’s talk about the state of the industry. What are some of the significant changes that you have seen that have made a vital impact on fleets?
Frank: I think there have been a lot of changes since I first came into the industry. Clearly, one of the more recent ones is a shift towards more of our clients reporting to procurement rather than sales or operations, or in many cases, both. There is a greater emphasis on cost as well as still fulfilling their obligations to keep drivers both safe and productive, but there is clearly greater emphasis on costs than there was when I first came into the industry.
At the same time, because people are wearing more hats within an organization than they were before, they are required to be more efficient. In many cases, fleet departments don’t have the same types of resources as they used to have. They are asking their fleet management companies to take on more and more of the transactional pieces of their business. They have asked us for things like better outreach to the drivers, help in managing driver behavior, and helping develop their safety.
Another major change has been the integration of fleet and risk departments. Very few fleet departments coordinated very well with their safety departments. But today, we are seeing greater integration with EH & S and greater sensitivity to the safety needs of the driver and the reputation of the company.
FMW: What is your view on the state of the economy? The stock market certainly is robust.
Frank: The stock market has lots of factors in it. Plenty of focus is placed on interest rates, but things like future expectations and company valuations are also important.
In terms of the general economy we are fairly bullish. I think America is still one of the greatest places to do business. I think we see a lot of our customers becoming more optimistic. They certainly are still all under cost pressure and I think they always will be. We live in a very competitive, global world. I don’t see that going away; in fact, I see that getting more and more difficult for everybody.
So, I think we all will have to continue for the rest of our careers to focus on being efficient while also getting the most productivity out of our fleets that we can. But, I think that the American economy has some strong legs, it seems to be picking up and we seem to be doing better than the rest of the world.
FMW: Let’s talk about funding costs – they have been historically low these past few years.
Frank: Back in 2008, we had a financial crisis. In theory, there were a number of regulations and laws passed to make sure that it doesn’t happen again, or at least decrease the severity or the likeliness of another financial crisis. The Dodd-Frank Act is probably the most recognizable change, but there have been others. The actual implementation of those laws has been very slow, so I would say in the last six years now, very little of that has actually been implemented.
We are just now turning the corner. Some of the regulations around securitization are just now being implemented; the SEC just released their first draft of that. If you read the Wall Street Journal in the last couple of days, they just started coming out with regulatory capital requirements. It started with Basel III.
The Fed has just now released some guidelines that go beyond the regulations of Basel III. What they basically say is that the banks, at least the large banks, need to carry more regulatory capital to cushion themselves against risk and in some cases shorter term and more liquid capital. That capital has a cost and that will raise funding costs for everybody.
FMW: Where do you see growth opportunities in the industry?
Frank: Growth tends to cycle around two different industries. For example, oil and gas is a huge growth business. On the other hand, we have seen pharmaceutical companies shrink their sales forces. However, we have the Baby Boomers aging, we have got amazing medical technologies that are coming out, bio-tech drugs, and I think eventually you will start to see more and more innovations in those fields. Those things need to be sold and new equipment needs to be serviced.
I think as the economy continues to evolve we will see different areas continue to get stronger, other areas will get more efficient, and maybe they will need fewer people and those will shrink. We have traditionally seen that, but I think in the big picture, as vehicles get safer, more fuel efficient, more cost effective, companies are going to want to deploy more of them.
For example, if you think of self-driving cars in the future, probably a few years off, but when that happens you think – what does that mean for the fleet industry? Well, I think that there is some terrific potential. If you can have a vehicle that can do deliveries without needing a driver, how much does your cost go down? How much safer is it because you don’t have somebody that could be injured? So, you might have more and more companies saying that they would like to have a fleet because there are more potential applications with less risk and cost.
So, I think the future for fleet, given the trends, is incredibly bright.
FMW: What keeps you up at night?
Frank: I think what keeps me up at night is also the thing that makes this business so much fun and makes it so exciting: the pace of change. This business is constantly moving – there are so many different factors to consider. As this business has kept up with all the other technologies it is changing very, very fast.
Wheels deals with over a hundred thousand vendors across businesses like DMVs, tag agents, used car dealers, maintenance shops, etc. Trying to keep up with the pace of change and interact with those types of vendors is always challenging. So, probably the thing I lose sleep over is just keeping up with that constant pace of change.
FMW: What do you see in the future for Wheels?
Frank: I don’t think Wheels’ mission will change. We have focused since our founding on keeping drivers safe and productive, helping our clients maintain the efficiency of their fleets while keeping administration simple and easy. I don’t see that changing. What will change is how we do it. So, as we talked about, many of the vehicle choices have changed. I think it has been wonderful that vehicles continue to improve, they get cheaper, they get more fuel efficient and they get safer as time goes by. The technology we have to manage vehicles and drivers continues to improve and I think it will continue to get smarter and more capable. But I think the basic mission will stay the same.
