The Supply Chain issues from 2020 and 2021 have, as expected, continued into 2022, meaning Out-of-stockorders are an ongoing feature and parts prices are going up. The shortage of technicians and the increasing complexity of vehicles requiring more highly-skilled technicians is also putting pressure on staffing. In one survey we looked at 4 out of 5 garages say repair costs are going up.
Tight supply of replacement vehicles: As predicted
Speaking to a manger for a global brand in the light commercial sector highlights what we all suspected would happen. He has orders for vehicles stretching into October 2024, because the factories can’t produce the volume of required vehicles. And in a twist, he now has customers walking away from their deposits on ordered vehicles because the looming recession makes them nervous about the financial situation next year.
Once again, it’s supply chain issues exacerbated by a shortage of chips for technologically advanced vehicles. This was a problem even before the war in Ukraine, but that conflict has only made the situation worse.
War in Ukraine: We didn’t see it coming
The war in Ukraine has driven crude oil spikes, which generated fuel price increases for our customers. This has increased the pressure to shift away from dependence on conventional ICE fleets at the same time as supply constraints make it more difficult to source EVs. The war in Ukraine is also playing a role here by disrupting the supply of neon and palladium which are used in semiconductors; Ukraine and Russia are major suppliers of these materials, with Ukraine producing around 80% of the world’s neon.
Extended lifecycle of vehicles: It could be happening
There’s anecdotal evidence the shortage of supply and cost of new vehicles means more fleets are making do with aging vehicles, especially specialist vehicles that need bespoke enhancements to basic bodies. If this is the case, workshops will be charging for this, which will hit fleets in the pocket. These older vehicles are also likely to be less fuel efficient, not a happy situation when petrol prices in NZ increased by 32% over the year and were up 15% in Australia for the year.
There is an upside: if you do manage to swap out that old truck for a new one: the old truck is now worth more in a market with tight supply.
It would be interesting to hear from our customers about this topic, and whether you are using the servicing modules in Smartrak solutions to keep on top of preventative maintenance.
Increased operating costs: Absolutely
Whether it’s fuel and maintenance bills, energy costs or wage pressure, the cost of operating a fleet isn’t going down. And with inflation running at 7.3% in NZ and 6.9% in Australia (both 32-year highs), there’s little good news to report as we enter 2023.
In our predictions at the start of the year we asked if inflation would be a 2021 issue due to demand outstripping supply, and whether fuel and energy costs would make it a persistent problem through 2022. We now know the answer to that one.
Budget constraints: Yep
That fleets should expect continuing pressure to achieve more with less was always going to be a safe prediction. The drive for efficiency is reaching into every budget and now the C-Suite has sustainability on its to-do list fleet operations will come under particular focus.
Our advice is the same as before: fleet managers need to show they are ahead of the game and better informed than the C-Suite. Get the strategy for your future fleet together over Christmas. Remember, the looming recession is sapping consumer and business confidence. In this situation people tend to sit on their hands and defer spending. Get your ducks in a row, build a good business plan for a more efficient fleet and make your move early. If you’re not sure where to start ask us about the check list for your plan.
EV expansions: It’s happening
On both sides of the Tasman, change is coming.
The NZ Government’s carrot-and-stick approach to reducing transport emissions has driven record uptakes in EVs this year, alongside a 72% crash in UTE sales for April (admittedly on the back of a pre-tax rush to buy in the previous month). And on the other side of the Tasman, federal support for sustainable transport is finally getting in step with individual states that were previously having to forge strategies on their own.
NZ government departments and local government fleets are now on notice that transitions to EVs and emissions reporting are on the agenda, alongside an expectation that all government agencies will reduce fleet count by 20% before 2025.
Even Joe Public is getting behind the sustainability wave with one survey reporting that 81% of consumers agree sustainability adds value to brands.
Working from home: No one wants to end a good thing
When we made the prediction that putting the remote working genie back in the bottle would be difficult post COVID did we believe it or just wish it? Either way, it’s become a bargaining chip that employees will use effectively given current labour shortages.
If this sounds like your organisation, here’s the advice we shared last time.
If remote workers (even part of the time) still want the company car as part of their package. How is that use going to measured and a value placed against it? Tracking seems an obvious solution, but there are privacy concerns. Best advice here is to put in place a Vehicle Use Policy (VUP), it’s the foundation of all good practice (and any technology you deploy). If you don’t have one here’s a link to a template that will get you started.
If your employees want to swap out that company car for cash-in-kind and use their own vehicle – that raises all the concerns about the grey fleet: safety, reliability, brand reputation, driving while impaired. Your Duty of care responsibilities don’t go away – if it’s used for work, it’s classed as a workplace. Grey Fleet may look like a cheap and easy option to begin with but can become a management and legislative nightmare
And from Smartrak . . .
So that’s the big picture, now a couple of reminders of what we’ve been up to during 2022.
Helping fleets transition to reduced emissions
Organisations are rapidly understanding that emissions reduction is a productivity win (green fleets save money). That’s why Smartrak offers a solution ecosystem that allows fleets to move into a lower emissions environment at a pace that suits them. This approach is illustrated by two product releases during 2022: Emissions Reporting and Trip Planning.
The September release of Emissions Reporting for government fleets and early adopters in NZ has ensured Smartrak’s place as a lead innovator in the sustainable transport space. Emissions Reporting automatically reports on fleet emissions using a protocol that meets international best practice. This provides measurement confidence and granular levels of detail so Fleet Managers can identify where the worst emissions are being generated.
Our new Trip Planning product was released as a Beta version during 2022 and is now undergoing further development for general release in 2023. This product will enable a hassle-free introduction to reduced emissions and future fleet capabilities for organisations that aren’t ready for broadscale adoption of EVs and alternative modes of transport like micro mobility. Like all our new developments, Trip Planning ensures any technology investment today builds seamlessly in capability, so your fleet can easily step up to the next level as the need arises.
Improved integrations for EVs
Throughout 2022, Smartrak has been working on a range of vehicle management tasks that pertain to EV adoption. Visibility of and reporting on battery charge state has been of particular focus to ensure range confidence with users and to help Fleet Managers develop charging strategies.
Solutions like this are a natural follow-on from the reporting tools our customers are using in their initial evaluations of EV adoption. This work has been gaining momentum during 2022 and the capability-set available to fleets with EVs will continue to grow in 2023 as Smartrak expands on the delivery of its Sustainable Transport Vision.
It’s been a busy year, so there may be a few good reads that slipped through the net during 2022. Here’s a selection that you really should take a look at when the rain has cancelled your beach cricket tournament.
The TasNetworks case study. Fleet optimisation, operational planning, driver fatigue, power pole heroes, and high-risk areas – all sorted with a successful deployment involving over 460 vehicles.
The Vehicle Use Policy Template. A VUP is the platform for building any fleet safety culture. As one of our people has said: “Ultimately, fleet safety is about people and policy. Technology simply provides the tools and data to help achieve positive outcomes.” The VUP brings the people and what our solutions do together. It has a really important role and most of our customers don’t have one. Download our template and make a VUP your New Year’s resolution.