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Save costs, be greener28th of November 2012
Green issues have tended to take a back seat in recent years as businesses prioritise cutting costs over reducing their carbon footprint. Yet they may be missing a trick because the two can go hand-in-hand, as Hartley Milner reports.
Managing a vehicle fleet must figure among the most stressful challenges in running a business, not least because for many companies transport costs come only next to the payroll in having the greatest impact on their bottom line.
High among the anxieties of fleet operators is the escalating day-to-day running costs of their cars and vans and the burden of complying with carbon reduction legislation imposed on them nationally and by the EU. Much of this is aimed at driving up motoring costs to steer people towards using more efficient vehicles, with the promise of tax sweeteners for those who do.
So faced with this ‘stick and carrot’ policy businesses are increasingly seeing the wisdom of looking at their transport overheads, with reducing fuel costs a key target area.
Yet of more than 400 European fleet managers surveyed earlier this year almost a third said lack of information was preventing them from making greater fuel efficiency savings.
Pump prices across Europe soared in 2011, up by 35 per cent on the previous year following a surge in oil prices and in the tax take of governments seeking to finance the green agenda. The trend has continued throughout this year. If you run a fleet in Switzerland, you will have seen prices shoot up by 28 per cent for petrol and 32 per cent for diesel. Norway continues to be the most expensive country in which to fill up, with Italy close behind. The UK has the sixth most costly petrol (with France) and joins Sweden in having the second most expensive diesel.
Fuel use, however, is one area where big savings can be made while embracing greener policies, according to UK consumer advice agency the Energy Saving Trust. Similar organisations exist in most European countries.
“For fleet operators, the cost of fuel is typically second only to the cost of funding the vehicle,” said Fergus Worthy, transport programme manager at the Trust. “Reducing fuel consumption is, therefore, an important concern for them, partly to cut carbon emissions and environmental impacts, but more often to save money.
“In the UK, for example, every litre of diesel saved equates to CO2 and cost savings to businesses of approximately 2.55 kg and £1.19 (1.24 euros) net of VAT respectively.”
The Trust promotes a range of solutions to offset rising costs. “In general, organisations should follow three key principles in order to run an efficient fleet: choose fuel-efficient vehicles, drive them well and drive them less,” said Worthy. “Examples of specific solutions that we typically recommend include taking steps to measure and monitor miles per gallon (mpg) and mileage and training drivers in eco-driving techniques to ensure each mile is driven efficiently.
“Eco-driving training is most effective when supported by driver league tables and incentives to encourage fuel-efficient driving in conjunction with technology processes to accurately monitor individual vehicle mpg. Fleets can save up to £1,000 (1,238 euros) per vehicle each year through the implementation of best practice techniques.”
Fleet operators are also increasingly turning to GPS tracking technology. These systems log journey information that is transmitted via satellite to a remote controller who can then visually monitor a vehicle’s real-time location, speed, route, periods spent idling, stops and starts, mileage and time spent at customer locations. They also generate reports on a vehicle’s performance, allowing its efficiency to be assessed over its lifetime.
All this information can be used to improve a host of fleet management operations, including reducing fuel costs typically by around 13-20 per cent.
You can purchase a basic fleet tracking system from around 249 euros per vehicle, excluding installation charges. However, most operators opt for the flexibility of leasing. To lease a basic system over five years starts from around 1.24 euros per vehicle per day, rising in cost according to the level of sophistication required.
A cheaper alternative uses the latest smartphone technology, though it does not offer the same range of functions. These systems require a handset equipped with GPS and an online tracking application to monitor the location of a driver’s mobile phone. Because it is portable, it is ideal for companies whose staff share vehicles but still want to know who is driving a particular vehicle at any one time and their current position, speed, bearing etc. The main strike against mobile phone tracking is its inability to connect into a vehicle’s electronics system remotely in order to access in-depth details about journeys.
The drive for ever more fuel-efficient and cleaner vehicles has seen a new phenomenon on Europe’s roads – the green van man. Alternative fuel commercial vehicles are increasingly becoming a viable solution for companies looking to make savings, whether buying new or converting their existing fleet. Options include plug-in electric vehicles (both pure EV and plug-in hybrids) and switching to biofuels, liquefied and compressed gas or hydrogen.
Electric cars and vans attract tax concessions and even government grants in many countries, helping to offset the purchase price that can be significantly higher. Their savings potential is in reduced running costs, as little as 0.02 euros per mile. While the range of these vehicles is increasing, over 160 kilometres between charges in some cases, they are still more suitable to town or city driving.
Low carbon hybrid technology that switches back and forth from petrol or diesel to electric running also carries a price premium, but again can attract tax incentives and subsidies. Hybrids perform best in commercial vehicles that spend a lot of time held up in traffic or do a lot of stopping and starting, activities that can account for up to 27 per cent of fuel use.
Manufacturers claim their vans and trucks have a range between refills of more than double that of equivalent conventional vehicles and can boost fuel savings by as much as 57 per cent. Plug-in hybrid vehicles with a longer battery range are also being developed as countries provide more recharging points.
“There are advantages and disadvantages of the systems available, and it is crucial that fleets select the most appropriate vehicles for the type of driving which will be needed,” stressed Worthy. “In much of Europe, the infrastructure needed to support plug-in vehicles is developing rapidly and we believe such vehicles will be important as we reduce our consumption of hydrocarbon fuels.”
But whatever the vehicle type, it is only as efficient as the person behind the wheel. The Energy Saving Trust offers driver training to help companies get the most out of their vehicles, including fuel and CO2 cutting tips such as using air-conditioning sparingly, keeping windows closed at higher speeds, maintaining tyres at their correct pressure and generally driving more smoothly.
Outsourcing sales and marketing company Ceuta Healthcare called in the Trust as part of a review of its environmental impact, fleet running costs and employee safety. The company has 130 vehicles, comprising 70 Renault Megane Sports Tourer estate cars with the remainder of mixed manufacture but all producing CO2 emissions of less than 140g/km. Its sales people each clock up on average 26,000 miles annually and in total more than three million miles a year.
Drop in insurance
Facilities manager Helen Bolton said: “As part of its review, the Energy Saving Trust told us about its 50-minute smarter driving course, which was reasonably priced and, with time being of the essence to our sales people, it could be conveniently delivered at their team meetings.
“We ended up rolling out the training across the entire company because there were quite a few young people we thought would benefit. We appreciated that to drive greener is to drive safer, as well as being a way of saving money. The feedback from our people has been very positive. Many of our drivers said ‘yes, I had got into bad habits, but this has made me think about the way
Ceuta estimates the training alone is saving it around £250 (310 euros) per driver each year. A spin-off benefit has been a £25,000 (30,975 euros) drop in the company’s insurance premium, thanks to a dramatic fall in panel repair bills.
Fuel cards have been issued to all sales people and their fuel expenses are now reimbursed on the actual cost, rather than pence per mile, which encourages them to find the best price at the pumps. Any private mileage costs are deducted from their salary.
Managers, meanwhile, are kept focused by a carbon emissions cap on their company car use, currently 140 g per km, reducing to 130 g per km next year.
“Communication with our workforce has been key to getting results, but it has to be consistent,” said Bolton. “Every so often, we put out updates and drip-feed information to employees to keep them thinking about the way they drive. After all, if we can save money as a company and be greener at the same time, it will help everyone in the long term.”