Driving Profits In Transport Business naturally comes with risk. How you mitigate that risk could mean the difference between a sustainable, profitable enterprise and a business surviving on the edge. Here's how fleet management companies handle their risk.
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"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 impacts on profitability and growth in the fleet management industry.
To keep costs down and profits up, focus on:
- 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
- Bringing services in-house
- Complying with legislation.
Attracting and training quality drivers
Attracting quality drivers is one of the industry's main challenges. Businesses often have to recruit drivers and upskill them to become quality, reliable drivers.
"SAB has a programme where a driver will be sourced and run on a SAB truck for a year to 18 months," says Con Conradie, country commodity manager: fleet for SABMiller. "He is assessed over a long period and once he meets the grade he can buy his own truck and receive a ten year contract."
"We place our drivers on advanced driving courses and all our drivers are allocated to a specific vehicle, which has reduced our insurance costs," says Dorin Charalambous, MD of DSC Transport.
Preparing for the risks
Hijacking
"We have branded our reps' vehicles with a full body wrap," says CEO of Nature's Choice, Greshan Mandy. "Since then we have not had a single case of theft. It's advertising for your business as well as an immediate deterrent."
Driver behaviour
"We contracted with Driver Check to monitor our fleet and their behaviour on the road," says Mandy.
"We also have cameras in the vehicle to watch the vehicle and the driver," he adds.
"These can deter the drivers from driving recklessly. If your driver has not done anything wrong the camera can prove his innocence," says Reinard Basson, financial manager for Shoprite Group Transrite National.
Delays in delivery
"A truck is scheduled to do a certain route and that whole route has been timed, from the moment it leaves the depot, when it stops at an outlet and the time it takes to offload," says Conradie.
"Each vehicle has a slot at the outlets and the vehicles have mechanised forklifts. We levelled the pavements and widened the doors at our outlets so that there would be no delays," says Conradie.
"Sometimes we deliver palletised goods and the next day it is a delivery of cement bags. Often there is no one to assist with the offload, which results in delays while you wait for assistance," says Hennie Engelbrecht, director of Kopano Fuel.
The need for specialist services
Transporting for niche industries is in demand, with specialist transport services required for niche products.
"Cost is important to us but delivering the product the way we want it delivered is also key," says Carel Ganger, financial director for Ceva Animal Health. "We're transporting a high value product and there's a need in the transport industry to do something specific for cold chain."
Bringing services in-house
"We used to use sub-contractors to get our product to the market as quickly as possible. Courier costs were becoming exorbitant and we were being impacted by the labour strikes in the transport industry," says Mandy. "We made a decision to bring transport in-house and we are now saving around R300 000 per month."
Complying with legislation
"Our legislation and regulations are changing and many municipalities across the country are taking pride in maintaining their road infrastructures and ensuring that vehicles carrying abnormal loads have the right permits in place. This is beneficial to the industry," says CEO of Matalana Transport, Comfort Padi.
"Customers are also ensuring that suppliers become compliant with the current legislations, such as ensuring that transport suppliers are ISO 9001 accredited and compliant."
