CommercialFleet

Brexit: what’s changed for fleet managers six months on?

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By James Monks, finance director at RAM Tracking

As fleet operators look ahead to a new year of trading, businesses will be giving thought to what steps can be taken to achieve success in 2017 and beyond. However, six months on from the Brexit vote, companies are likely to find themselves facing additional challenges, with import tariffs, fuel duty rises and restrictions on migration among the factors likely to impact upon profit margins and the smooth running of everyday business processes. 

In order to counteract the impact of cost increases and achieve success despite market volatility, it is essential that fleet managers take steps to carefully forecast possible post-Brexit scenarios and plan accordingly, identifying opportunities to boost efficiencies and streamline business processes wherever possible.

With import tariffs expected to increase by up to 10%, restricted access to the European market is likely to affect prices of both car parts and new vehicles purchased from the EU, putting additional financial strain on fleet managers in an industry already characterised by tight margins.

The UK’s vote to leave the EU saw an immediate drop in the value of the pound, and while sterling has since recovered slightly, it is important for organisations to remember that there is still a significant amount of uncertainty around the UK’s future economic position.

While fleet managers are likely to feel the impact of inflation in relation to key expenses such as vehicle maintenance, reassurance can be sought in the immediate future from Chancellor Philip Hammond’s announcement of a fuel duty freeze in his first autumn statement. 

However, given the volatile nature of the current financial climate, businesses should bear in mind that fuel prices may not remain stable beyond 2017.

As well as the financial challenges faced by fleet operators, companies should also consider potential obstacles of recruiting skilled drivers resulting from the Brexit vote. 2015 saw 35 million EU nationals arriving in the UK, 70% of whom came specifically to work. With tighter migration restrictions amongst the measures to be implemented following the triggering of Article 50, fleet managers will no longer be able to rely on influxes of workers from the continent to meet staffing demands.

While existing pools of EU workers will remain available and there is the potential for seasonal worker schemes to reduce pressure on companies at peak periods such as Christmas, organisations must give careful thought to a recruitment strategy to ensure they have access to a reliable network of drivers throughout the year.

In light of the unpredictable market conditions facing UK companies, robust forecasting is essential, allowing companies to plan for a range of possible scenarios and prepare themselves accordingly. By taking the time to identify potential limitations in day-to-day business operation, for example, in sourcing new staff and expenditure on overheads, industry members can make the changes needed to cut costs and enhance customer experience despite the challenges associated with an EU exit.

One way in which companies can drive down spending is by introducing automation into business processes and taking advantage of available technologies, such as vehicle tracking systems. Providing fleet managers with real-time and historic data on vehicle locations, performance and driver behaviour, telematics systems allow for the enhancement of customer experience by boosting productivity, resulting in faster deliveries and accurate updates about expected delivery times which can be provided to customers. Furthermore, by receiving accurate information about driving habits and fuel consumption, businesses can easily evaluate ways to reduce petrol costs, helping to boost profit margins. 

In order to maximise value from supplier relationships, fleet operators should also liaise with vendors to gauge opportunities for taking advantage of economies of scale and the ability of current suppliers to negotiate post-Brexit obstacles.

In the event that existing partnerships do not allow these issues to be overcome, companies should consider implementing a dual-source supply chain and forging new relationships which better facilitate fleets’ ability to flourish outside of the single market.

There is no denying that the post-Brexit landscape will require fleet managers to carefully think about the different areas of their businesses and plan ahead in order to overcome potential difficulties, however, it is also important for industry members not to panic in the face of change. With thorough forecasting and preparation, companies can ensure that they stay ahead of their competitors and prosper for the years to come. 

 

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