Operations

9 Trends in Public Fleet Management

September 2016, Government Fleet - Feature

by Thi Dao - Also by this author

Fleet managers leading public fleet associations around the country, as well as consultants, weigh in on nine trends in public fleet management, commenting on new vehicle technologies, the technician shortage, the professionalization of the fleet manager role, and not having fully recovered from the recession.

1. Catching Up on Vehicle Replacements

The improving economy has improved fleet budgets for many public agencies. One of the effects of this is a shift in focus, according to Paul Lauria, president and co-founder of Mercury Associates Inc., a fleet consulting company.

“When the economy is doing well, which it has been for a while, organizations tend to shift their focus from short-term concerns — which generally revolve around cost cutting and containment— to more strategic improvement opportunities such as organizational realignment, information system replacement, and fleet modernization,” he said.

Many organizations are still trying to get their vehicle replacements back on track after the recession, and Lauria, in his consulting business, has seen more interest in identifying optimal vehicle replacement cycles and appropriate fleet replacement spending levels and financing methods.

Renee Tyler, fleet acquisition, parts & special projects manager for the City of Little Rock, Ark., and vice president of the Arkansas Public Fleet Managers Association (APFMA), said the lack of sufficient replacement funding, despite the improved overall economy, has presented a challenge for fleet.

“We get funding and we’ve gotten a bit more funding in certain instances, but we don’t have enough funding to adequately meet the needs of our [aged] fleet,” she explained.

Facundo Tassara, fleet manager at the City of Norfolk, Va., and president of the Tidewater Area Fleet Managers Association, a group serving fleets in South­eastern Virginia, said replacement funding in the region has been weak, although it does seem to be improving.

In its survey to its membership this year, the National Conference of State Fleet Administrators (NCSFA) found that replacement spending was either the same or had increased over the past two years, but 57% of respondents said this replacement spending did not meet their needs. This is due to delayed replacement schedules from the recession, said Cindy Dixon, NCSFA president.

Sam Lamerato, CPFP, retired fleet superintendent and fleet service committee chair for the American Public Works Association (APWA), has heard many fleet managers expressing their frustration about insufficient replacement funding.

“The fleet manager needs to have accurate data to justify the need for timely fleet replacement and stand up and represent it as the subject matter expert,” he said.

Lauria believes ad-hoc appropriations for vehicle purchases won’t solve the backlog of vehicle replacement needs. This has led to a higher interest in alternative forms of financing, such as debt financing.

2. Adding Technology…

Along with a focus on replacing fleet vehicles, public fleet agencies today are adding technology to enhance fleet operations. Lauria sees many fleets acquiring a new fleet management information system (FMIS), upgrading an existing system, or re-­implementing an existing system to make better use of it. Better access to funding is allowing fleets to upgrade from a lower tier product to one with more functionality, or move from a desktop system to a web-based system.

“An underlying factor in this area is the expectation that fleet management organizations are going to be more data driven,” Lauria said. “A lot of organizations are finding that they have difficulty producing accurate, meaningful information to support decision making.”

Fleets that had a robust system but weren’t using it to its full capacity are turning to firms such as Mercury Associates or the software provider to assess the way the system was implemented and improve reporting capability, he said.

An additional technology increasingly being adopted by fleets is telematics to improve tracking and preventive maintenance (PM). Fleets are also upgrading their fuel sites and modernizing fuel tracking and recording, said Tim Calhoun, CAFM, fleet director, Palm Beach County (Fla.) Fire Rescue and president of the Florida Association of Governmental Fleet Administrators (FLAGFA). This is being done to improve fuel accountability and for better PM scheduling.

The City of Little Rock has incorporated telematics into 95% of its vehicles and also recently upgraded its fuel management program, accurately capturing fuel use information to bill user departments.

Tyler from Little Rock believes additional funding will allow fleets to purchase and use technologies to enhance fleet operations. As an example, she cited the potential use of tablets for vehicle diagnostics and parts ordering, which prevent technicians from having to leave the shop floor, or the automation of certain reports that are now pulled manually from the FMIS.

3. …Results in Data Overload

While increased use of technology may improve operations, it also usually means more work for fleet departments. With so much data available from the FMIS, telematics, and fuel systems, fleet employees must be able to analyze the data to use it effectively.

“We all want to be data driven, but it’s almost like it’s data overload,” Tassara said. He has an analyst for the fleet’s 2,000 vehicles, but many smaller fleets don’t have the budget to hire an analyst.

The need to hire an analyst to oversee the data is a strain for small fleets, Dave Head, retired fleet manager and chair of the Northern California chapter of the Municipal Equipment Maintenance Association (MEMA), said.

“There’s a mass of information, and medium and small fleets can’t afford that person so they can’t manage [fleet] at the same level,” Head said.

Calhoun, who doesn’t have a fleet analyst at Palm Beach County Fire Rescue, agrees that data is creating more work for fleet departments.

4. Recruiting & Training Techs

The most commonly cited challenge was the difficulty in hiring qualified technicians. This is caused by the mass retirement of baby boomers as well as comparable benefits and higher salaries at private maintenance facilities.

As these experienced professionals retire or leave, they take with them years of knowledge.

“I really feel local governments need to look at the pay scale of their technicians and fleet staff. It’s a trained skill and it is becoming harder and harder to find good technicians. We’re going to lose them unless we pay them a wage that is compatible with the private sector,” Lamerato said.

Vince Lorefice, director of Public Works for the Town of Wickenburg, Ariz., and president of the Rocky Mountain Fleet Management Association (RMFMA), agreed it has been hard to find talented fleet technicians, partially due to the fact that it’s not viewed as a prestigious job. This is compounded by the fact that while fleets have started getting replacement funding for vehicles, “we haven’t necessarily received staffing levels back to pre-recession levels,” he said.

The number of qualified technicians applying for open positions has decreased, Paul Condran, fleet services manager, City of Culver City, Calif., and president MEMA, said.

When the city gets entry-level candidates, it often hires for attitude and trains the new employee to become a journey-level technician, Condran said. Kelly Reagan, fleet administrator for the City of Columbus, Ohio, and chair of the Ohio chapter of MEMA, added that once those technicians have the experience and training they need, they’re often qualified enough to leave the public agency for more lucrative opportunities.

Head believes this problem won’t go away until public agencies change how they hire employees.

“You’re restricted on being able to change a job description to better fit the technicians you need in the field. You can’t change competitive wages based on skill sets because you’re entrenched in a union environment and civil service environment that is completely inflexible,” he said. “Young guys coming out of school aren’t interested so much in having a big chunk of their pay going to retirement and health.”

5. New Vehicle Technologies Present Training Challenges

Not only is it difficult to recruit, but training new recruits presents its own challenges, Lorefice said.

One of the difficulties of bringing in inexperienced technicians, which many fleets have done, is not only teaching them the basics of being a technician, but also “trying to get them up to speed on the older items, then trying to get them up to speed on alternative/­future fuels that are out there. Some of the technologies have really changed,” Lorefice explained.

Jim Wright, president and CEO of Fleet Counselor Services, a consulting company, brought up a study he conducted for a fleet to determine how much technician training was necessary. He found the fleet’s technicians previously provided adequate training for its technicians with an average of one day every three months. Now, technicians at that shop require on average three to four days of training every three months in order to stay current. Fleets need to pay for the cost of training and travel, and they lose the direct labor time on the shop floor.

Condran thinks the problem is only going to get worse as vehicles in the next few years advance in leaps and bounds.

“In the next five years, the automotive industry is going to undergo one of the biggest changes in the history of the automobile,” he said. “Partial [plug-in] and fully electric, as well as autonomous vehicles, will replace the time-tested internal combustion engines. How is a municipal fleet going to handle these kinds of applications?”

In addition, the cost of diagnostic tools will continue to rise.

“With technology changing so rapidly, not only is it requiring technicians to get more training, but it’s putting a strain on municipal tool budgets, where you must purchase the updated software for these vehicles, and you’re at the mercy of the software provider,” Lamerato said.

And if diagnostic equipment needed for advanced vehicles is a problem to buy now, what will happen to diagnostic equipment costs when even newer technologies arrive?

6. Scrambling to Green Fleets

Many fleets cited a continued effort at fleet greening, attributing this to political pressure.

“Cities want their citizens to be proud of their cities and what they’re doing for clean air,” Wright explained. “A lot of the elected officials mention that while they’re running for office.”

The greening trend continues despite the fact that alternative fuels may not be the most cost-effective option.

“The return on investment generally isn’t there but there’s still a political pressure to use alternative-fuel vehicles,” Lorefice explained.

The NCSFA found that 80% of respondents to its survey must meet one or more alternative-fuel vehicle mandates, Dixon said. Most respondents are trying to reduce their vehicle size or procure alternative-fuel vehicles if funding permits.

Paul Hanna, CAFM, fleet and facilities supervisor for the City of Olympia, Wash., and secretary of the Public Fleet Managers Association in Washington, said fleets in the state are seeing a tremendous pressure to go green.

The state has legislated that “by 2018, all municipal and government fleets in Washington that use more than 200,000 gallons of fuel per year are mandated to use biofuel or electricity in all vehicles ‘to the extent practicable,’ ” he explained. “This is an unfunded mandate that is putting the squeeze on many ­medium-sized fleets.”

One potential solution to meet the biofuel mandate is by using renewable diesel, which is now becoming more commonly used by government fleets in California and Oregon. Washington doesn’t have a renewable fuel standard or a secured contract, but Hanna hopes that by fall of this year, there will be a state contract in place for renewable diesel to help local fleets comply with the upcoming legislation.

Not all fleets are exploring alternative fuels just because of mandates, however. Tassara believes that now is the best time to plan for fleet greening, when gasoline prices are low. “There’s a mentality of this alternative-fuel vacation because of lower fuel prices,” he said. “You’re not planning for retirement when you’re 60. The perfect time to plan is now.”

One consideration for using vehicles with new technology and fuels is technician safety and ensuring they’re trained to perform work on the vehicles. Wright said technicians have been electrocuted while working on hybrid vehicles, and he’s seen fleets sending out all work on hybrid vehicles, resulting in downtime. As fleets diversify in alternative-­fuel vehicles, they’ll have to determine the best way to handle maintenance and repairs.

7. More Requirements to Be a Fleet Manager

In the past few years, retirements of fleet managers have escalated. Finding their replacements have become more difficult because standards for the modern fleet manager have increased.

“The requirements or desired abilities for today’s fleet manger are considerably more than they were 10, 15, or 20 years ago,” Wright said. “There are more requirements, and the requirements are much harder to achieve. That is becoming more and more prevalent, even among smaller agencies, and they are looking for people with a business degree and additional education of any kind.”

Lamerato has seen increased interest in technical certifications such those from the National Institute for Automotive Service Excellence (ASE) as well as management certifications such as NAFA’s Certified Automotive Fleet Manager (CAFM) and the American Public Works Association’s Certified Public Fleet Professional (CPFP) .

Lorefice said the RMFMA is aware of this problem, and the group has been focusing on succession planning for the past few years in an attempt to train the next generation of fleet managers, providing classes on topics such as management skills and analyzing data through its Future Leaders program.

8. Organizational Realignment

Lauria from Mercury Associates has seen increased interest in organizational realignment for fleets. The company has been working on projects to determine whether the consolidation of a decentralized fleet management program is a good option. This is part of the strategic improvements that public agencies are looking into now that the immediate effects of the recession have receded, he said.

Reagan, Head, and Condran from MEMA also believe organizational realignment is more common and will be more common — and it’s much needed. Reagan pointed out that many fleets in central Ohio aren’t policy-driven agencies, and fleet management doesn’t have the absolute authority over vehicle purchasing, maintenance, and remarketing. This means user departments have control over the vehicle, making policies and changes difficult across the entire fleet.

“Agencies like fleets, that are managing hundreds of millions of dollars of assets, need to have the support from the top down,” Reagan said. The City of Columbus moved to this model years back, when Reagan first started, and the fleet team has authority over fleet decisions from a mayor’s executive order.

While Head agrees fleets are moving in this direction, he believes there are some obstacles — such as state or federal grant funding that directs vehicle use to a specific application. This means the vehicle purchased with that funding can’t be shuffled around, limiting the fleet manager from making the best decision about the vehicle.

9. Considerations for New Facilities

FLAGFA members are concerned about aging facilities and how best to modernize or replace their facility for the future. Many fleet facilities today are antiquated, and those with the funding to construct new maintenance facilities must be careful about whether it will be a good fit for the future, to make sure it is capable for repairs on different types of vehicles, Calhoun said.

Even though the City of Culver City’s maintenance facility is only 15 years old, Condran is finding the fleet is running out of room, a warning to fleets designing their own ­facilities. The ­facility is designed for compressed natural gas (CNG), but, “How are we going to deal with advancements in technologies beyond natural gas?” Condran wondered.

As vehicles advance and change, fleets will be limited by their facilities on what they can maintain. From vehicle lifts to parking to hydraulic fluid needs, fleets need to be careful how they spec their vehicles and plan for the evolution of fleet, he said.

Lamerato added that a state-of-the-art facility can bring in more technician candidates when recruiting millennials. A modern facility won’t be the only draw, but that ­— combined with updated equipment and tools, decent pay and benefits, and challenging projects — can help fleets hire and keep young technicians.

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