How To Keep The Wheels Turning For Your Transport Business
You're reading Entrepreneur South Africa, an international franchise of Entrepreneur Media.
“Whether your fleet consists of ten vehicles or 1 000 plus, it always boils down to the cost of maintenance, fuel and cost-efficient routes,” said Dr David Molapo, Head of Fleet Management, Vehicle and Asset Finance at Standard Bank, at a round-table event hosted by Standard Bank to determine key areas that business owners and transport managers must focus on in order to keep costs down and profits up.
Key discussion points included:
- Mitigating fuel costs for business growth
- Implementing tools and telematics to save on transport and fleet spend
- Training and monitoring drivers to ensure driver and load safety
- Mitigating risks such as hijacking, driver behaviour and delivery delays
- When to bring services in-house
- Complying with legislation.
Change with the market
“We used to subcontract our transport to other companies. However, there were very few vehicles that were servicing the Durban Johannesburg leg, so we got vehicle and asset financing and purchased some of our own trucks to take our cargo,” explained Trevor Pillay, owner of Shan’s Transport and Logistics Agency.
“On the return leg we began making money. However this changed when the market changed and the route suddenly became competitive, which meant that we needed to carefully monitor our fuel consumption.”
To remain competitive in the market, Pillay and his business began using fleet cards. “We get an SMS as soon as one of our drivers fills up and we allocate a certain amount of fuel for the trip so we know upfront the consumption of fuel. The driver can then fill up at a petrol station where we receive a benefit,” said Pillay.
“Our trucks are only allowed to go to a proper truck stop and not use any petrol station that they choose,” agreed Hennie Engelbrecht, director of Kopano Fuel.
“Price is king and we have found that paying in advance to specific dealers and forming relationships with the person at each fuel dealership has assisted us with our fuel consumption.”
Implement smarter ways of doing business
Other fleet owners have found that fleet telematics systems are essential to managing costs. “We use a mixed telematics system quite extensively,” said Reinard Basson, financial manager for Shoprite Group Transrite National.
“Telematics helps us to calculate the kilometres travelled and the fuel consumption on each vehicle. Each of our drivers receives a scoring which tells us what their harsh braking score is, which means that we can do a fuel consumption score per vehicle as well as per driver.”
Basson believes that you can’t manage what you don’t measure, and so his company focuses on the details.
Fuel consumption and the cost of repairs and maintenance according to each region is measured. “We drill down into the details,” he said.
“We install tracking units in our vehicles and have a screen in-house to track the vehicle behaviour: How fast the driver is braking, how harshly he is steering and how much petrol is being wasted,” added Dorin Charalambous, MD of DSC Transport.
Reduce insurance costs with telematics
“There is a change in the insurance industry with the introduction of telematics to monitor routes, weather conditions and time taken, and to price accordingly,” said Bryan Verpoort, Head of Corporate and Business Insurance at Standard Bank.
“The thinking around this is to consider punitive benefits. For example, the insurer may advise you not to operate within a certain window due to high risks, but if you as a fleet manager decide to do so, you will receive the cover but your policy will have an increased excess.”
Verpoort advises that if fleets are managed and operated properly this will reflect on the price. “It’s important to build up a long-term track record where insurers can identify you as a professional operator, as professional operators will always have lower claims. Generally, house-keeping goes across the whole business,” said Verpoort.
“How you manage your staff, your warehouse and your transit will impact on your insurance pricing.”