Tom Coffey, Merchants Fleet: Eying US Fleet management trends
By providing flexible funding and service options for organizations that leverage vehicles to run their operations, Merchants Fleet offers comprehensive & customizable fleet solutions in North America. While its Innovation Center is in Chicago, Illinois, its headquarters is in Hooksett, New Hampshire.
During the Merchants Fleet Summit which took place in Hooksett a few weeks ago, in between EV test drives and networking, I was able to sit down and talk about some of the US fleet management trends with Tom Coffey, a 38-year fleet industry veteran who is Senior Vice President of Fleet Sales and Consulting for Merchants Fleet.
Photo: Global Fleet Editor Daniel Bland and Tom Coffey (source: Global Fleet, Daniel Bland)
First of all, I know you are growing very fast. CEO Brendan Keegan mentioned fleet assets between US$2-2.5 billion so that is around 70,000 vehicles, right?
Coffey: I am not sure on the number of funded assets but we manage at least 165,000 vehicles. These numbers are rising though. And these are real numbers. I am not inflating them in any way, which does happen in our industry.
Ok great, so it looks like you will be nearing a total of 250,000 vehicles soon. I have a question about safety which has hit the headlines a lot lately. What safety tips do you have for fleet managers?
Coffey: Right now, some of the best safety tools are, of course, telematics. You can evaluate driver performance such as hard braking and abrupt acceleration as well as diagnose engine performance, more so for internal combustion engine (ICE) vehicles.
Although you can see driver speed, you don’t really know if they were above the speed limit on some more outdated tools, but you can usually get a good idea if you know the route they were on.
So, using telematics and having a driver score card to make sure your drivers are compliant with your policy is the best safety tool you can have. Make sure you implement technology that is as close to real time as possible. Many telematics systems offer data that is minutes behind.
If needed, provide driver improvement courses or other disciplinary actions. Remember that safety is good for the well-being of your drivers, but it also results in cost savings.
How is telematics implemented?
Coffey: Many fleet management companies (FMC) supply this to their clients, either online or at a customer portal, partnering up with another company to acquire data. This can be done with Device Enabled Vehicles or through LIS (Laboratory Information System) Connectivity.
For us, nearly 50% of all the vehicles that we lease or manage are set up with LIS, no device is needed.
And how does LIS Connectivity work?
Coffey: Information is coming directly from the automakers or to say OEMs [original equipment manufacturers]. These are vehicles emitting telematics data to the vehicle using cellular data. It is the same as a Device Enabled vehicle except that you don’t need to plug in a third-party device.
This could also include cameras of which the OEMs are looking into as well. Activity can be recorded, sent out through telematics and all connected in real time.
Some of these features have only been common in the industry for the last three years or so. It depends on the OEM as some of them are still a bit behind. I’d say that Ford and General Motors are leading, producing the most connected cars in the US. Overall, connectivity certainly needs a facelift though.
In terms of our management, we can integrate both Devise Enabled vehicles and LIS Connectivity vehicles into a single customer database if needed.
So it looks like the services of automakers and FMCs are starting to merge, right?
Coffey: Yes, sometimes there is just a gray area between what a traditional auto manufacturer does and what an FMC does and this is good for clients as it gives them more choices.
However, the profession of fleet management has been around for a long time, and it is very rare when a third party, whether an OEM or other type of business, has come into the fleet management realm and had a lot of success.
OEMs are good at their job which is manufacturing, and we are good at our job which is fleet management.
We love all the OEMs and partner with them as much as possible. However, it is a simple fact that very few companies can afford to only use one manufacturer for their needs over a long period of time. Maybe for a short period, but not long term.
Our job is to give our clients a choice, so that they can move freely from one manufacturer to another. They need to partner with as many as three or four to get the number and type of vehicles they need.
Many are saying that the concept of vehicle ownership is fading out. What do you think?
Coffey: Most clients are looking for leasing or at least using fleet management services. They don’t want the responsibility of ownership nowadays. I can’t think of a single client that has gone from leasing to ownership in the last two years. They just don’t want to deal with it.
Remember that there is a cost to doing all the administrative tasks in fleet operations. We do this every day, a thousand times a day and for well over 100,000 vehicles. There may be some companies that think they can do it themselves, but they eventually find out that partnering with us is important and that is why we are growing at the rate we are.
Also remember that direct purchases require using up a lot of cash up front. Do you really want to do that, especially if we can give you a competitive offer.
We configure and order the vehicle, deliver it to a nearby dealer where they prep the vehicle and put plates on it. We also manage the title with license renewals every year, take care of maintenance, fuel transactions, accident management, and deploy telematics.What our clients need to do is focus on their competencies, which is serving the needs of their own customers. With this, we will achieve a win-win situation.
Just one last question, what upcoming trend should we be keeping an eye on?
Coffey: Well, sooner or later, all fleets in most parts of the US will have to deal with the fact that they need to figure out which electric vehicles (EV) will be fitting their needs and determine how they will be keeping those EVs charged. Dealing with the infrastructure is probably the toughest part, as ordering EVs is fairly easy.
As for Merchants, we have installed 10 charging ports at our headquarters and are planning another 20 for our own employees, something that took considerable work with our landlord and with the local power company. We also negotiated with three charging stations manufacturers to get a sample of how they performed first.
Now, with this experience, we are in the position to offer this to our clients, helping them install depot charging infrastructure and company sites or even home charging infrastructure for employees.
In the coming years, more public charging will be available but drivers will still need to know whether or not they have enough battery range to perform their jobs and if not, where the best place to charge is. Although OEMS and other players will be tapping into this market, I see FMCs being the dominant players in terms of helping companies make the transition to EVs.
Merchants Fleet Summit 2022 (courtesy of Merchants Fleet)
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Top Photo: Tom Coffey (courtesy of Merchants Fleet)