By Ed Pierce, Contributing Editor
Samuel Kellner-Steinmetz, the Chief Sales Officer of Fleet Logistics Group, recently sat down with Fleet Management Weekly to provide insight into the current European fleet market as new challenges and opportunities demand the remaking of European and global fleets.
FMW: Please provide some background about Fleet Logistics, its services, how the company distinguishes itself in the European market.
Kellner-Steinmetz: Fleet Logistics’ scope covers two areas of service. First of all, we offer fleet management. I would say that this is our classic service where we will manage the fleet or serve as the link between the leasing company and the company that operates the fleet. In this case, we organize and manage everything for the company.
The second service pillar is consulting and global reporting. This is a product that we offer worldwide as opposed to the classic product which is offered in Europe from Ireland and Portugal all the way to the east, including Russia.
FMW: Can you speak to European trends, opportunities, and obstacles for transitioning to EVs, as well as lessons learned from Fleet Logistics’ European experience?
Kellner-Steinmetz: The world has undergone two significant dislocations in the recent years. First, there’s the COP21 Paris Climate Agreement. The second dislocation is COVID-19.
How do these two events affect the acceleration of electric vehicles, among other trends in Europe and worldwide? We now expect that will be a tipping point for electric vehicle rates in 2027. By 2030, we believe that at least one in four vehicles sold will be electric. This transition will happen due to these two factors.
With the return of the United States this year, the Paris agreement regulates Europe, the United States, and China. So, we see legislation being tightened in these three major geographies.
Because transportation amounts to a third of the total greenhouse gas, change must happen, and it is interesting that industry change is led by legislation rather than by the consumer.
For example, in the EU, we expect that minus 55% of the emissions are to be realized in 2040, or even before. We expect US legislation is also going into this direction. And even China is legislating that overall volume of passenger cars should have a 25% reduction and 25% of that should be electric.
There’s this legislative drive on the one hand and on the other hand, you’ve got the pandemic impact which is triggering the move to electric vehicles.
In Europe, we’ve seen the Green New Deal. Many companies needed capital and fiscal support during the pandemic, and many European countries offered this high demand, fresh capital in exchange for more environmentally friendly and sustainable solutions.
This is what we see in Europe right now. Almost every big customer we’re talking to or working with has a vast demand for changing to fleet vehicles that bring about de-carbonization.
Overall, the combination of the COP21 and COVID has really led to accelerated change, and Fleet Logistics is really talking to customers about their fleet policies. This has been happening more and more for the last six to 10 months with a very high demand for our expert consultancy. Companies are willing to make the necessary investments to address climate change in Europe and globally.
FMW: How have recent trends like the OEM chip shortage, vehicle production delays, remarketing prices, and mobility affected the European Fleet markets?
Kellner-Steinmetz: Vehicle production delays and inventory shortages definitely are impacting fleets on a global basis. As an example, usually it was clear if you ordered a new car, it takes two to four months. If it took a long time, it was six months.
Now, due to the pandemic and to the shortage and delays, a six-month wait is quite fantastic. Nine months, sometimes even 10 or 11 months, is normal. Of course, this situation has had quite an impact on fleets.
Companies have had to adapt to that and find a short-term solution to fill the gaps. Obviously, the majority of fleets in Europe are leased. So leasing usually has a certain end time, and it costs extra money if you extend.
Now, due to the pandemic and the reduction in mileage due to many vehicles standing around for 12 months or more, cars come back at the end of the lease with significantly lower mileage. Sometimes a company can get money back from the lease companies, but there’s no consideration given for under-mileage.
Companies then need to extend the leases of vehicles with under-mileage. That’s a balancing act, but it helps prevent massively higher costs.
The key for fleets these days is flexibility. If a leasing contract can be extended, things are usually fine. If a lease extension isn’t possible and there will be a long wait for a replacement vehicle, companies must look to short-term or mid-term rentals. However, that can be expensive and should be done in a proper way.
If there’s one thing COVID-19 has taught us, it’s patience. Interestingly, we see a higher level of patience now with customers than before the pandemic.
FMW: What fleet segments or vertical industries are poised for growth post-COVID in Europe?
Kellner-Steinmetz: I think businesses in every industry are rethinking, “Do we actually need to commute as much as we once expected?”
COVID has forced everybody to look for other alternatives to conduct business. Virtual meetings have risen immensely while commuting has gone down.
Companies see that there are so many positive aspects to that change, including savings in time and money and the positive environmental impact too.
However, the more we speak with our customers, there’s still an urge to get out again, and I believe as the COVID regulations continue to loosen, transport and mobility growth will continue. New fleet usage policies will bring diminished reliance on vehicles compared to pre-pandemic expectations.
The questions our consultants hear more and more is “Do we even need cars anymore? Is mobility in a different way maybe a better solution? Do we maybe want to use public transportation? If we are in a city, should we use the bikes more?”
Fleet Logistics has developed a state-of-the-art program to assess the opportunity for alternative transport solutions. While we have offered a car configurator for many years, and it incorporates electric vehicles, we now consider whether a car is even necessary. Should we go for cash allowance, or should we go for another means of mobility such as a card for public transportation, and so on? This whole program is customized for each client.
We are also consulting with companies about their fleet policies, which have a direct impact on the car configurator and can help steer employees towards mobility alternatives. I think this will influence the future quite a bit, thinking about what is happening in terms of electric mobility in the next five to 10 years.
FMW: How does technology, such as telematics, drive the fleet industry in the near term and the long term?
Kellner-Steinmetz: Telematics is a hot topic. When we speak about Europe, there is both a very high demand and there are intense restrictions, especially when it comes to the data privacy.
The demand is to optimize efficiency of fleet by creating full transparency and then analyzing the data to optimize the fleet. Data protection is blocking the effectiveness of analyses because certain critical information cannot be disclosed.
However, there are companies who are willing to dig into the details and find ways to get the analyses done even in a limited way.
I have seen an example where the persuasive fleet manager found a way to work with the works council to collect data, and the analysis was unbelievably enlightening. Where the company had been buying quite expensive SUVs and pickups, the evaluation found that it could reduce the overall fleet by one-third by combining routes and sharing vehicles. It replaced the heavy vehicles with customized alternative vehicles that retained safety but cut the acquisition cost by a third.
I believe that telematics will continue to grow in importance. Companies that are willing to make the effort to gather data will find real benefits for their fleet operations.
FMW: What kind of growth does Fleet Logistics foresee for its European business and for the industry in the next year?
Kellner-Steinmetz: Well, basically we have already seen that there’s a strong demand now from consulting in terms of reevaluating existing fleet policies. I think this is one of the main areas that is triggering a certain growth.
I think we will win many more customers in the next year, but I think that there will be a general reduction in fleet sizes. On the other hand, there will be different types of mobility coming along, and this is where our expertise will contribute to near-term and long-term growth.
Our classic services may look different, but we see a big opportunity in managing mobility. Like our customers, flexibility, especially the ability to change with all the regulations that are coming along, is the key to growth.
Europe is a special market because every single country has a completely different setup. With all this legislation and COVID and the EV changes right now, there is a tremendous demand to readjust fleets to meet new and country-specific demands. Fleets need local experts to implement a successful global strategy.
Fleet Logistics is proven to meet that demand throughout Europe, and our consulting experience positions us to address the needs of fleets operating anywhere in the world from North America to China.
So I believe there’s going to be a high demand for consulting, for reevaluating policies. And within the next five years, I think that this change management I was speaking about, where we have this tool for it, that demand will drive the change moving forward.
