Fleet Management: Fuel for Increased Productivity

The global economy is under stress as the result of various factors, including Russia’s invasion of Ukraine, the winding down of the pandemic, and the multiple supply chain challenges that these shocks have generated. For this very reason, corporate executives around the world need to give serious thought to how to reduce costs, increase productivity and boost their competitiveness. Mexico, of course, is no exception and, in fact, its economy is set to bounce back more slowly than those of our North American neighbors, making a push for increased productivity and cost reduction even more pressing.

For companies that are constantly moving merchandise and people, boosting competitiveness requires ensuring optimal transportation strategies. The use of fleet management services can be a critical tool to achieve greater productivity, safety, and sustainability objectives.

In the Mexican market, the concept of fleet management tends to be less commonly heard of and sometimes confused with mere leasing services. Of course, financing a company's executive, sales, distribution and services fleet is extremely important but a holistic approach to fleet management offers much more than that. I would like to focus on three key areas that should be considered when exploring how to optimize fleet management.

First, fleet management can help companies with the optimization of their processes and costs, resolving special needs without wasteful spending. A company that produces widgets, toys or avocados has a core business that is not necessarily tied to managing large fleets and the complexity that comes with it. Their core business doesn’t include managing repair shops or vehicle spare parts inventories because they are not in the transportation business, but ensuring that their company has an efficient and cost-effective delivery system is fundamental to their competitiveness. Partnering forces with a fleet management company allows our clients to focus on their core business while we focus on ensuring the optimal operation of their fleet by offering analysis, consulting services and proactive solutions and actions.

As a reference, and despite the challenges since 2020, we have managed to present cost-saving projects for upward of MX$3 billion (US$153 million) that included the analysis of the proper vehicle selection, optimal replacement analysis, and spend optimization for maintenance, fuel and insurance.

Second, our focus on safety is based on collecting and correctly analyzing data as fleet managers, which allows us to maximize the safety of our clients' fleets and their employees. Forty-seven percent of those employed in the transportation sector in Mexico work in freight transportation.  The use of technology to keep track of the operational statistics related to driver behavior and accidents allows us to optimize employee training for our clients.

By reviewing data related to excess speed, the use of the breaks and distracted driving events, clients can adopt measures to prevent accidents by increasing both the awareness and training of their operators. At Element, we are proud that we were able to reduce reported client accidents by 15 percent in 2021 and reduce collision costs by 67 percent as a result of different safety measures: preventive intervention, assertive-driving training, maintaining the correct equipment aging to update security specs, leveraging telematics reading to avoid risky driving situations and other measures to enable this improvement.

And finally, of course sustainability and a reduction of a fleet’s carbon footprint is something that all businesses are striving to achieve. Element Fleet Management offers a unique program that helps clients transition from internal combustion engine vehicles to electric mobility without having to worry about the infrastructure and training challenges that this might entail.

Our new product, Arc by Element, includes not only the leasing of the electric vehicles themselves but satisfies infrastructure and training needs. The service entails the creation of on-site electricity charging stations both at operational facilities and even at the homes of executives and freight vehicle operators. We also walk drivers through the optimal use and operation of the electric-powered vehicles. As of 2022, by promoting a greener vehicle selection, we have saved more than 6,700 tons of CO2 grams, the equivalent to more than 450,000 trees saved.

Companies that quickly adopt electric fleets will have a competitive advantage in their sectors. Doing so will help them comply with their ESG commitments that involve achieving net-zero emissions, which is especially important for publicly listed companies looking for financing and trying to sustain the value of their stock in an increasingly volatile market. Further, consumers and B2B clients are looking to ensure that their suppliers share similar values when it comes to sustainability and climate change abatement. The use of electric vehicles translates good intentions into concrete action.

As we analyze the economic risks and opportunities both globally and in Mexico, we need to recognize that a complex environment requires an agile and innovative response. The adoption of a sophisticated fleet management service can contribute to ensuring that your company is a step ahead of the rest in achieving its business objectives and ESG goals.