CommercialFleet

Fleets Informed

Fleets Informed

November update from Flex-E-Rent

Post-Brexit uncertainty means fleets need to be flexible 

By Danny Glynn, managing director of Enterprise Flex-E-Rent

For many businesses, long-term decision-making is on hold pending clarity on what Brexit will mean for the UK. With their reliance on long-term, high-value assets, the transport and haulage industries are among the most affected by this situation.

Equally, end customers are also unsure of demand and keeping plans short term. The concern is that the commercial impact of Brexit will be akin to the financial crash of 2008-09.  

But financially and economically, the two are markedly different. There’s no credit crunch here. In fact, credit is still widely available and cheap, perhaps temptingly so. There’s also an oversupply of vehicles, which makes assets even easier to acquire. Not to mention economic growth is being forecasted for 2017.

Some sectors like construction are even seeing transport SMEs and owner-operators prosper as bigger companies outsource surplus to them, rather than expanding their own fleets through long-term contracts at a time when customers may be unwilling to commit. Meanwhile, vehicle providers are enticing sales by promoting low-cost deals.

But even those companies that are seeing their business increase need to be careful about what may be around the corner.

Put simply, flexibility is more vital than ever. While many end customers are unwilling to commit to long-term distribution contracts due to their concerns over negative fallout from Brexit, commercial vehicle operators have access to cheap funding and attractive deals on vehicles.

But operators should be wary of large capital commitments when they’re not certain what the future will hold. They should think more flexibly instead.

It’s vital to maintain a vehicle fleet that supports customer demand. That could mean taking vehicles on shorter-term deals – perhaps for one or two years (or even less) instead of the five- or seven-year contract hire arrangements they previously adopted.

That has its own challenges: how many commercial vehicle providers are willing to take the risk on shorter agreements? Many don’t want to offer flexibility because they may end up lumbered with a fleet they can’t shift. This may lead to either paying a premium or compromising on the vehicle.

It’s more important than ever to deal with providers that can withstand uncertainty and offer flexibility without limitations.

We may not know all the longer-term implications of Brexit, but the immediate impact is more about what’s not happening than what is: many organisations are simply unwilling to commit to long-term contracts, whether as vendor or buyer.

So, although it may still be easy to acquire new vehicles outright or take on long-term funding deals, what’s clear is that businesses could be better off by being more flexible in their approach.