Rainer Laber, chief executive officer at Fleet Logistics, speaks to Sotiris Kanaris about the company’s full-year results as well as the strategy behind the recent acquisition of two companies.
German fleet management company Fleet Logistics has seen its fleet size grow every year since its acquisition by product certification and qualification services provider TÜV SÜD group in October 2012.
The company saw its fleet size grow by 25% year-on-year in 2015. "In the beginning of 2015, we managed 134,000 vehicles and we ended up the year with more than 180,000," says chief executive officer at Fleet Logistics Rainer Laber.
Laber says that being an affiliate of a financially stable group as well as independent from the finance and automotive industries has created an acceptance among customers, which in turn has boosted contracts.
"As an independent fleet management provider we are able to optimise the finance offers to our customers through our multi bidding process. This is our online bidding platform which we employ to find the best package and price for every single vehicle to be added to our customers’ fleet."
Laber also cites the broad geographical coverage offered by the TÜV SÜD network – which spans more than 70 countries – as a reason behind the growth.
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"We have the ability to go wherever our customer wants by following the existing TÜV SÜD network, with no need to create a new company branch in each country. We are in 27 countries physically and through our operation in Singapore we serve 10 Asian countries remotely, including Japan and India. Using TÜV SÜD infrastructure worldwide makes us very flexible in entering new markets," he explains.
Fleet Logistics’ strongest markets apart from its home market of Germany are the UK, Belgium, France and Netherlands.
This global coverage has resulted in the company’s ‘typical’ customers being multinationals, of which many belong to the pharmaceutical, chemical and food and drink industry.
Laber says that multinationals are turning to fleet management companies because they want to have the same reporting systems and standards across the different countries they operate in. He adds that the considerable cost of running a fleet makes fleet management attractive.
"Companies know their fleet spend accounts for 4-6% of their operating cost and they see a potential to bring it down and improve their carbon footprint. In whichever industry you operate, you can earn profit in two ways; by increasing your revenues – which is expensive because it means paying to conquer the market – or bringing down your costs. Fleet represents a part of their spend which is high enough to make it attractive for them to work with us to reduce those costs," says Laber.
The changing tax rates on emissions and corporate environmental obligations have triggered higher demand for fleet management in recent years. Laber says that tax optimisation directly affects the customers’ P&I and that both large and medium size companies are increasingly sensitive about their environmental responsibility.
Fleet Logistics has to collect information on individual country tax and environmental policies, companies’ strategic targets and safety policies as well as models of car manufacturers together in order to support its customers. "We need to bring this information together and that is very complex. This is the main challenge for fleet managers," says Laber.
He said that the company has prepared thoroughly for the new lease accounting standards. "For the time being we do not expect significant changes to our business model or our product portfolio as we already manage both lease and purchase fleets."
In May 2015, TÜV SÜD’s division Auto Service acquired 100% of the shares of fleet reporting tool provider TCOPlus and its sister company Fleet Vision which is an international fleet consulting firm. These companies operate TÜV SÜD Auto Service’s fleet business unit alongside Fleet Logistics.
Being part of the same company has created a ‘chain’ of services for customers, according to Laber.
He explains: "It is a nice chain of consulting in the first round, operative support with real fleet management locally from Fleet Logistics in the second round, followed by tool provision from TCO Plus for instance to budget and plan fleet costs.
"I think it is fair to call it a ‘one-stop shop’ because it is quite comfortable for the customer to cover many of his challenges in one place. This seems to be a competitive advantage, but others also have their own."
Laber adds that Fleet Logistics has already benefited from these acquisitions by gaining new customers. "It turns out that some customers who started up with fleet management by installing the TCOPlus tool or by demanding the consulting services of Fleet Vision, then got interested to shift part of their fleet management to us.
2016: Consolidation and US move
Despite being confident that Fleet Logistics will have at least another 20% growth in fleet size in 2016, Laber calls 2016 ‘a year of consolidation’ and investment in the business.
"The growth this year will take care of itself naturally from the new regions and countries that we are expanding into. We have grown at such a rate over the last year or two that we do not wish to over-promise on our service delivery to our customers. We need to ensure that we have in place the people, systems and processes to ensure that we deliver a consistently high, standardized level of service."
In 2016, the company will make its first "tentative" move operationally in the US, working with a large international chemical company with a global fleet of around 8,000 vehicles.
Laber says that the US fleet management market is the largest in the work and one of the most structured and segmented. However he acknowledges that the US -with regards to the financial services system – is quite different from other parts in the world.
In the first quarter of the year, Fleet Logistics will also expand into the Latin American fleet market. Operating from a hub in Sao Paulo, Brazil, the company aims to service fleet customers in various countries of the region. It will initially use the existing infrastructure of its parent company.
Laber also identifies Mexico, Poland and the Czech Republic as markets with big potential.
He believes that customer recommendations from around the world will be the best advertisement to continue the company’s growth in the future.