The Russian invasion of Ukraine that began on Feb. 24 is expected have adverse effects on the automotive and fleet industries.
“Take the pandemic and overlay the war in Ukraine and you have a perfect storm scenario,” said Joe Clark, fleet management director at the City of Durham, North Carolina.
Public fleet managers, already dealing with two years of pandemic and microchip shortage challenges, anticipate new challenges in skyrocketing fuel prices, additional vehicle and parts delivery delays, higher prices for raw materials and metals that will hike up vehicle costs, and even increased cyberattacks.
Anticipating Higher Fuel Costs
“I think the biggest impact will be the cost of fuel as it skyrockets in cost. We began mitigating years ago for rising and unstable petrol fuel pricing by migrating into compressed natural gas (CNG) and electric vehicles (EVs),” said Kelly Reagan, fleet administrator for the City of Columbus, Ohio.
This conflict has prompted the Columbus fleet operation to “accelerate our mitigation strategies by moving more and more fleet [vehicles] into both CNG and EVs,” Reagan said.
Dakota County, Minnesota, participates in a fixed fuel price program with other public agencies in the state. It purchases 70% of its fuel at a fixed cost and buys the remaining 30% at market price. “This strategy will help our agency weather the increased costs over the next year,” said Kevin Schlangen, CAFM, CEM, CPFP, fleet manager for the county.
Clark, from the City of Durham, said he expects disruptions in the production or supply of fuel, microchips, and metals for automotive parts, including nickel and palladium.
Fuel suppliers can evoke a “force majeure” clause in their fuel contracts to limit or stop delivery, and his fleet department is already recommending user departments limit their driving to essential functions, eliminate unnecessary idling, and to plan routes smartly.
Preparing for More Vehicle & Parts Delays
Dakota County has been stocking more tires, filters, and other items since the beginning of the pandemic and will continue to keep up its higher inventories. Schlangen expects vehicle delivery dates will continue to increase.
At the City of Durham, “we are increasing stocking levels for items that are hard to find or with long lead times. We also expect to keep our current vehicles longer than originally planned,” Clark said.
The City of Lakeland, Florida, will “continue to retain vehicles that have been retired if they’re in good working order for an emergency fleet,” said Gary McLean, fleet manager. He said these vehicles can be later be used for parts if needed.
The city will also continue to order replacement vehicles early and overstock on parts to stay on top of parts shortages.
“We are moving portions of our fleet into electrified platforms but that’s a long-term solution and doesn’t really help the shortage of new vehicle availability,” McLean said.
Jose Gallardo, Riverside County Fire Department, California, fleet services manager, said he has asked for increased fuel and capital budgets in anticipation of higher fuel and vehicle costs. In addition, he will communicate to stakeholders that future vehicle and equipment purchases will cost more and have longer lead times.
On the Alert for Cyberattacks
Jeff Tews, retired fleet manager for the City of Milwaukee, Wisconsin, said he expects cyberattacks to become more “bold and brazen.”
Gallardo said government agencies have been warned to be aware of cyberattacks in the coming days and weeks. He said the California Department of Forestry and Fire Protection (CAL FIRE) has taken several precautions in the event this happens and added that his team is staying alert and know to report malicious software to leaders immediately.
The Wall Street Journal reported that cyberattacks against Western targets are likely.
Despite the undoubted concerns among public sector fleet managers, and their preparations for the worst, Tews said he hopes all these predictions don’t come to pass.
"If experience is any kind of teacher, we may be in for a couple more interesting years. I would prefer to remain more optimistic, however," he said.