Editor's choice
12 Mar 19

3 challenges for fleets in Canada

1. Productivity and cost control

Canadian businesses have entered 2019 facing a unique set of challenges, exacerbated by the uncertainty of their unpredictable neighbour to the south.

Both domestic and international criteria are dictating fleet strategies in Canada, according to ARI, the fleet management specialist.

While cost considerations and operational efficiency are always a key area of focus, productivity – keeping a business moving – dominates current fleet thinking, said Geoff Seely, vice president and general manager, ARI Canada.

“Amid disruptions and evolving business challenges, customers want a strategic partner that understands their business and offers meaningful recommendations that propel their business forward,” he said.

The oil and gas industry is a huge employer and a major fleet operator in the west of Canada, but the sector is vulnerable to global market trends. The pressure of this international competition for investment is forcing businesses “to do more with less as their profit margins continue to tighten,” said Seely.

“The Canadian business environment needs to reduce costs and optimize productivity to remain competitive. To that end, we anticipate sustained growth for ARI across Canada as customers seek our expertise to help them drive fleet efficiencies.”

But where fleets in Western Europe might seek an all-inclusive leasing and fleet management service from their suppliers, Canadian fleets demand an unbundled service offer, said Jesse Mann, director, Lease Portfolio Management, ARI.

“Customers expect a truly transparent fleet management solution that provides greater control over operating expenses in order to reduce total cost of ownership,” he said.

2. Maximising residual values

Blessed by favorable exchange rates, fleets in Canada have taken advantage of the opportunity to remarket their vehicles across the southern border in the United States.

This export channel for used vehicles has lowered supply to the domestic market and boosted residual values, according to Ted Davis, vice president, North American Supply Chain, ARI.

“As the supply of used vehicles continues to decrease and more closely aligns with consumer demand in the region, prices are beginning to increase,” he said.

However, there is the ever present risk that automotive tariffs and trade agreements between Canada and the USA could undermine this export market.

“There are a number of factors, including potential tariffs rates, that can significantly influence resale values and how they all align will ultimately determine the combined effect on the used vehicle market,” said Davis.

3. Stricter health and safety laws

Employers in Ontario, Canada’s most populous province, are having to adapt staff contracts and guidelines to contend with significantly stricter driving laws.

New distracted driving regulations came into effect at the start of 2019, with stiff penalties for offenders – mandatory license suspensions and significant fines for each offence.

The definition of distracted driving is not restricted to using a cell phone behind the wheel.

“Other common acts such as typing a destination into your navigation system or eating while behind the wheel also constitute distracted driving,” said Geoff Seely, vice president and general manager, ARI Canada.

“As a result, many fleets have (or are preparing to) increase their investment in driver safety assessment and training initiatives to better protect their drivers and their organization from risky behavior on the road.

“It’s important that fleet managers consult their human resources and risk management departments to build clear expectations for employees, especially those with company vehicles. Once the fleet safety policy is established, it is critical that fleet operators promote driver comprehension, both in terms of the inherent safety risk and the policy itself, and strictly adhere to the parameters of the policy.”

 

Authored by: Jonathan Manning
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