SPECIAL REPORT: Advancing the green agenda is going to take more than purchasing an electric vehicle. Ahead of Future Fleet Forum, LAPV sat down with a group of industry experts to find out the real barriers to meaningful progress and discuss possible strategies that could lead to solutions.
When LAPV invited a handful of key players from across the fleet management industry to sit down and discuss the challenges and opportunities facing the sector in 2019 we were expecting a lively debate. And we got one. However, what also emerged from this frank discussion was a picture of an industry that is trying its hardest to do the right thing while facing an array of complex obstacles on its journey toward true sustainability.
The issue of price came up straight away. In a sector that has seen years of hard-hit budgets, price remains a contentious issue. For David Maidman, business director of Biffa, contract pricing in the local authority sector is a major issue. 'The number of contracts has remained relatively stable, but austerity and the uncertainty around Brexit is creating a lot of challenges. For us, the biggest day-to-day challenge will be pressure on wage increases and driver recruitment and retention. We have a shortage of workshop fitters because the apprenticeship scheme is not replacing people retiring out of the industry quickly enough'
'Finding staff is hard,' agreed Russell Markstein, commercial director of NRG Fleet Services and Electra Commercial Vehicles. 'At least one manufacturer of truck chassis currently has 500 vacancies. They can't recruit for roles like mechanics and those on apprenticeship schemes often don't see them through. And I agree with David about Brexit ' lead times are long and we are asking for long-term fixed quotes, but it is caveated by Brexit'
The vast amount of data involved in today's industry is another challenge. Nick Bridle from fleet management software supplier Assetworks said the market is moving towards the integration of systems and the consolidation of data as a way of saving costs. 'Whatever you are doing, whether it is fleet management, work flow management, or fuel tracking, it's about integrating that information into one system, removing spreadsheets, and using apps to support compliance. Everyone must produce this data and the cost of maintaining multiple systems is horrendous, therefore councils are looking to integrate their products in one solution. For me, electronic data capture to support compliance is where the market is moving'
Technology is even more important for councils now that many are running smaller fleets agreed David Strachan, area sales manager from Aebi Schmidt. 'There has been a big drive in service delivery in the last year,' he noted. 'We have developed a portal that allows our customers to report breakdowns as they happen, even out of hours, instead of waiting until the next business day. With fewer vehicles, the impact of one off the road is much greater'
He added that the other major trend for Aebi Schmidt has been demand for lower emissions and this is true across the industry. But, as became apparent in the course of the discussion, emissions reduction is far from simple. One immediate obstacle is the cost of technology. In his role at Electra, Russell is at the sharp end of EV sales and says that cost-benefit message is often not getting through. 'We are focusing on the HGV market, and while people are happy to spend money on a Nissan Leaf and pay double what they would for a diesel equivalent, they are baulking at an RCV that might cost £5,000 more'
This is an all-too-familiar story to Sarah Maxwell, fleet support officer from City of London, who is working on transforming the council's fleet. 'People haven't taken on board how quickly this is going to happen,' she said, in reference to the move away from diesel. 'The main issue is getting the infrastructure in time and we are working on a big infrastructure project. We also have demonstration vehicles out with departments for evaluation, but we're finding that people still aren't seeing the bigger picture. We know we have to do this, but at the top, they are just not pushing the button'
Part of the problem is different budgets for different departments. Some have more money to spend than others, and even though City of London has rules preventing the purchase of new diesel, departments on tight budgets are finding ways around this. 'They can't buy a diesel vehicle, so they hire one'
This failure to see the big picture is not confined to councils. The transition away from diesel is still at an early stage and driven in part by the need to meet regulations and low emission zone requirements. But, as Nick Bridle pointed out, to meet the 2019 deadline for London's ULEZ, some companies are simply sending their non-compliant vehicles elsewhere. 'It doesn't solve the emissions problem, it just transfers it'
'We are all facing the same pressures,' observed Arend Mouton, formerly fleet manager for City of London Police and now group fleet manager for Wates Group in the construction sector. 'Safety standards are increasing, FORS and CLOCS are becoming a must, and to meet these standards requires investment. What hasn't been recognised is the major issue of massive budget reductions over the last few years. Businesses and councils have to invest to change but they haven't had the money to do so. Deadlines are coming fast now, so we are seeing knee-jerk reactions. When there are businesses, like Electra, that invest in developing new vehicles that meet our requirements, we have to support them. If the market doesn't buy into these developments, the market won't improve'
'Legislation is ahead of technology,' added Russell. 'The bodies that created the legislation didn't consult manufacturers'
'The sector is experiencing the biggest pressure on budgets at the time that it is going through its most critical change for decades,' agreed Biffa's David Maidman. 'While vehicle manufacturers are coming up with solutions, the greatest challenge remains infrastructure. If Biffa tenders for a local authority [diesel] contract, I don't have to include the cost of a fuel station. But if you talk about adopting a fleet of EVs, we have to include a charging station and lots of depots simply don't have that capacity'
'So, is electric the accepted solution then?' asked Ann-Marie, editor of LAPV and leader of the debate. Not necessarily was the response. It comes back to those knee-jerk reactions Arend mentioned.
'I always ask our customers exactly what they are trying to achieve,' said David Strachan from Aebi Schmidt. 'Do they want to go emissions free or are they trying to reduce their carbon footprint? Because these are two different things. Customers often want to go electric because that is their interpretation of what they have to achieve, but it is not necessarily what they have to do. There are other options ' CNG, etc ' and other sources of emissions, such as non-tail pipe. They want to make sure they have ticked every box rather than looking at the most important issue, and that is reducing their carbon footprint'
Electric is popular because it's obvious ' it's a PR win, in other words. But there is no one-size-fits-all alternative fuel solution. Electric is no good for on-call vehicles and CNG doesn't work for slow moving vehicles, neither does Euro VI. 'At Riverside, most of the breakdowns we get are regen-related or related somehow to Adblue because the engine isn't getting hot enough,' said Russell. 'If the vehicle is going up and down the motorway, it works, emissions are low, and we don't hear a thing. We've been mis-sold Euro VI in terms of LA specifications. The reality is it's just as messy'
'The policymakers are out of kilter with modern requirements,' agreed David Maidman. 'On paper, Euro VI was just what was needed for cities and clean air, but it doesn't work in a stop-start environment. On the one hand, Euro VI is here to save the planet, and on the other operators now need to factor in taking smaller vehicles for a 40-mile drive down the motorway once a week to clear them out'
Nor is it just about the capital cost of vehicles, as Nick Bridle from AssetWorks pointed out. It's about optimising the longer life of EVs and there's a huge amount of data on vehicle performance that manufacturers should be passing on to the people who need it to maximise the operation of those vehicles on a day-to-day basis.
But what about solutions? If legislation has caused as many problems as it has solved, and lack of infrastructure ahead of stricter emission targets is a major obstacle, how can the sector work together to develop both short- and long-terms solutions? Technology is not the whole answer. The general consensus is that the key lies in doing things differently
'It's a considerable cost jump from diesel to electric and justifying that cost is one of the biggest issues for councils,' said Aebi Schmidt's David Strachan. 'Yes, we can offer fuel savings and longer service life, but electric vehicles can also operate at night, and there are other ways councils can change their operations and mindset that can have a positive impact. Product innovation has developed even in the last 12 months. Technology is moving forward very quickly'
The market is progressing so fast, in fact, that many customers are limping along hoping that something will happen, and prices will come down. But they won't, said Russell. 'The reality is that they will have to change the way they do things. There are a thousand reasons not to, and until or unless it becomes law and every major town and city becomes a clean air zone, it's not going to change'
Sarah thinks many local authorities outside London are going to wait until 2021, and there is already a lot of focus on City of London and how it will cope with the coming ULEZ. 'After April everyone will be looking to see what our fleet is doing and whether we can run a service with what we've got'
The rate and pace of change is actually one of the main challenges, Biffa's Dave Maidman believes. 'How long does it take a local authority to procure a contract? By the time they bring the vehicle to market, it is out of date. So, people are holding back to find out what the next solution might be ' maybe we will be running trucks on yoghurt in five years? Contracts last for ten years, but if a new vehicle comes along in three, the councils will want it'
'That's the real world,' pointed out Russell. 'Technology moves on'
'But it gets into the wider debate,' replied David. 'If you don't do something different, nothing will change. Expecting it to is the definition of madness'
But what can be done differently? 'Have any of you seen any examples of best practice, in the UK or internationally?' asked Ann-Marie.
'DHL did a trial with solar panels on trailers that saw a 6% saving on fuel costs,' said David Strachan. 'That might not sound like a lot, but the truck and trailer commercial market is huge ' if they can all save 5-6% that's significant'
Russell revealed that Electra Commercial is working on the world's first electric trailer. 'We're trying to get it to Future Fleet Forum. It's really simple technology, but it is a cost' Yet, said David Strachan, all it takes is for one big player to invest in equipment like this to make a real difference.
Businesses will also have to start thinking differently about fleets that go into London, especially distribution, said the panel. New distribution centres outside London, smaller vehicles coming into the capital, last-mile electric deliveries, and consolidating capacity are just some of the ideas that were discussed.
'I want to add another issue,' said Arend, 'and that is the effect on infrastructure and the economy. Diesels sales are down 30% this year and will continue to fall. We are already seeing the increasing difference between diesel fuel prices and unleaded. If we all go electric, what will happen to the economy? The economy is not geared up for this shift. The infrastructure isn't in place to shift the taxes raised through fuel. What will happen to our taxes to make up for the shortfall in diesel sales?'
'We have done a total cost of operation model for Electra vehicles, but we haven't even taken account of congestion charge savings in our calculations,' agreed Russell. Because that will change. If everyone goes electric, the benefits of electric vehicles in congestion zones will disappear.
'We are talking as though there is a singular solution,' David Maidman pointed out, 'but we are coming to a place where what you do determines your solution, and it won't be one size fits all'
'Are stronger guidelines from Government required?' asked Ann-Marie. DVSA standards are doing that to an extent, said Nick, but Russell thinks Government efforts have not been well thought out. 'Legislation is way ahead of the technology and guidelines are fairly minimal. Clean Air Zones have not been thought through at all'
The lack of leadership means everyone is doing their own thing. 'The Government is not providing guidance on best practice. They are just telling authorities what they have to achieve,' said Sarah.
The result is that it can become a box-ticking exercise that encourages quick wins and PR-friendly solutions. Lee Rowland from Dennis Eagle said the company took a new all-electric truck to IFAT in Munich and has been inundated with requests from operators who want it now. 'There is still testing we want to do to optimise performance. We want it to be absolutely ready for the job in hand. But customers want it now to boost their green credentials and, to be fair, for some that make the difference in winning contracts'
However, the real problem is that everyone is working in isolation. It's a sector of silos. 'If we want solutions, we have to talk, because talking means sharing information and developing a better understanding,' said David Maidman. 'And that's what we need ' authority to authority, city to city, country to country ' because only when people get together and talk do you get solutions'
'We have to face up to reality, there will be a premium on going green,' said Arend. 'We will need to look at how we can improve on what we do with less money. The fact remains that if there are cheaper alternatives that are not green, but are available and compliant, people will still rather opt for these. On the other hand, if we group together, look at what is genuinely required and develop specs together, then go to manufacturers and commit to purchase what they develop in larger volumes, we could see a significant improvement in the market place for greener options'
Or, as David Strachan put it: 'If you take the problem to its root cause, it all revolves around the obligation to change our behaviours'
Dennis Eagle's Lee Rowland said there are some forward-looking operators. 'We have customers who are taking matters into their own hands and planning the infrastructure they need. They are generating their own power to run vehicles during the day, sell electricity back to the grid at peak times, then recharge the vehicles overnight'
In terms of procurement, he pointed to the Nottinghamshire Consortium and the Procurement Lincolnshire Consortium as examples of best practice. 'They agree core specs and each LA can bespoke their truck, but the fundamental specification is the same. They have a sole supplier for four years, and they work with us to develop their vehicles over this period' Russell held up Dundee as an example of innovative thinking. The council has embraced electric in a big way and the city was recently named Europe's most visionary city for its EV adoption strategies by a gathering of environmental experts in Kobe, Japan. The council's fleet is 40% EV, 15% of its taxis are electric, it is investing in charging infrastructure, and offers free parking in council car parks to EVs to encourage public buy-in. Vehicle maintenance costs are down 35% and the council is seeing significant fuel savings. But for every Dundee, there are many more councils and businesses taking a piecemeal approach, focusing on emissions not carbon footprint, and working in isolation from one another. It was clear from the discussion that a more consultative approach is needed all round, from how vehicles are sold to how they are used, and how neighbouring councils and businesses can work together to consolidate assets, tasks, and capacity.
Above all, central government needs to step up and provide leadership, because right now the law of unintended consequences holds sway. Solving one problem creates another. There is legislation but no plan. Local authorities have to meet certain targets but how they do so is left up their interpretation. Quick wins are tempting for their PR potential but can derail long-term solutions. Manufacturers are developing technology that is streets ahead of the infrastructure required to operate it effectively. And budgets, budgets, budgets. Real change requires not just new technology but a shift in attitudes and behaviour. But it also takes investment. The opportunities for the sector to make a difference are huge. So are the challenges. Future Fleet Forum is about solutions, at a global level, that make that difference. Come along and join the debate.
To sign up for Future Fleet Forum on Jan 23-24 at the Guildhall sign up here.