A look into the future for LCV operators

Our recent industry event LET’S EXPLORE: LCV FLEET brought experts and visionaries together to highlight some of the key trends and upcoming challenges facing van fleets. Find out how to futureproof your fleet with the 6 key findings from the day…

1. Smart data – the difference between business success and failure

Big ‘smart’ data will help provide increasingly accurate insights into what will happen and how we can make it happen – it will help make the difference between business success and failure.

Only fleet operators that harness digitalisation with effective business strategies will ultimately be able to futureproof themselves successfully.  So if you want to join the ‘digerati’ and be 26 per cent more profitable than your competitors (according to Capgemini)[1] – it’s time to get smart with data.

2. Fuel of the future

Demand and the price of oil will continue growing, particularly within the transport sector, albeit at a slower pace than in the past.

Legislation could be introduced next year that increases the percentage of transport fuel supplied from sustainable renewable sources from 5 to 10 per cent which may result in an increase in pump prices over the next few years[2].

Businesses should look to introduce systems to help manage fuel price risk such as fixed and capped pricing deals. Telematics can also help generate the data needed to reduce the total cost of fleet ownership, while technology that underpins programmes to improve driver performance can help to dramatically cut fleet mpg.

3. Managing motor insurance premiums

Insurance premiums are among fleet operators’ largest overheads. This has been exacerbated by an increase in personal injury claims by 62 per cent between 2005 and 2013 and the average cost of bodily injury claims increasing by 73 per cent[3].

Combined with the recent changes to the Ogden rate that will result in an upsurge in compensation payments for victims of life-changing injuries, we could certainly see fleet motor premiums continuing to rise.

Managing a fleet is as much about managing the drivers that drive the vehicles as it is about managing the vehicles themselves. Businesses should look to create a culture where drivers pay attention to how they’re driving, where they take ownership of road risk and engage in self-correction behaviour behind the wheel.

Driver behaviour information generated from telematics supports this business model, providing advice and feedback to both drivers and management. Some insurers will not insure fleets unless telematics technology is installed in their vehicles. Businesses can then use this data to work more closely with their drivers to help control insurance costs.

Our insurance telematics guide explains how you can improve your risk profile and helps you benefit from potential insurance savings which could be worth thousands of pounds.

4. Risk recognition recognised

Heightened levels of customer responsiveness, particularly among service fleets, increasing police enforcement activity and greater levels of operational responsibility are predicted within the LCV market.

Many businesses have been compelled to recognise the risks of prosecution and risks to their reputation and business continuity. In some cases, this is being driven by cost pressures, in others, by corporate responsibilities or demand from their supply chain.

Van operations must continue raising the bar in terms of professional standards by ensuring drivers have the right equipment to help them carry out their job effectively, from racking to load security. Moreover, it calls for best practice operational processes and driver training, underpinned by actionable driving behaviour data.

5. Meeting the last mile challenge

Van operators are being forced to respond to society’s shift towards a 24/7 economy which is driving the need for night deliveries. Companies must adapt their business models accordingly.

In a bid to remain competitive, they must also take steps to address the ‘last mile’ challenge – the final part of the commercial vehicle journey, which can often be the least efficient in terms of time, emissions and congestion.

We have already seen the emergence of e-tricycles for more efficient and environmentally-responsible deliveries within heavily urbanised areas.

Furthermore, we’re now seeing the development and trailing of vans mounted with rooftop drones and vans deploying electric ‘robovans’ to cover deliveries within that all-important last mile.

In a world of the internet of things and connected technology, LCV operators must stay abreast of the opportunities and innovations that will help them to remain competitive.

6. Spotlight on vehicle taxation

The government is striving to tackle environmental concerns by exploring the tax treatment of diesel vehicles in order to reduce harmful vehicle emissions.

The diesel scrappage scheme is still under consideration, for example, and from October Mayor of London Sadiq Kahn will introduce a £10 Toxicity Charge (T-Charge)[4] charge for vehicles not meeting Euro 4 standards. His proposals are also set to see diesel cars and vans that do not meet the Euro 6 standards having to pay £12.50 to enter central London from April 2019.

Furthermore, Britain is set to ban all new petrol and diesel cars and vans from 2040 as part of the government’s much-anticipated clean air plan[5].

Fleet operators must review their vehicle policies to protect themselves and their employees against the risk of rising costs.  This extends to considering the impact of the T-Charge and low emission zones; revisiting fleet vehicle CO2 limits, conducting cost-benefit analyses of alternative fuel options and examining the business case for electric vehicles.

[1] The Digital Advantage: How digital leaders outperform their peers in every industry, Nov 2012
[2] Energy and Climate Change Select Committee report ‘2020 Renewable Heat and Transport Targets’
[3] Motor insurance compensation systems with a focus on whiplash and soft tissue injuries, page 9, http://www.frontier-economics.com/documents/2015/03/frontier-report_aviva-09-03-15.pdf
[4] Mayor of London press office
[5] Plan for roadside NO2 concentrations, Department for Environment, Food & Rural Affairs, Department for Transport, Thérèse Coffey MP, and The Rt Hon Michael Gove MP

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