Transport for London (TfL) has a novel way of reducing the number of company cars on its fleet: replace them with light commercial vehicles.

The public sector organisation is able to take such action because the majority of its car fleet is business-use only. Switching drivers into car-derived vans is not only saving money, it is also helping to ensure that vehicles are not taken home overnight.

Fleet manager Ted Sakyi reckons TfL is saving between £10 and £25 per month on leasing costs depending on the model which, over a three- or four-year operating cycle, adds up to a significant reduction to its bottom line.

Fleet News: What was the rationale behind the decision to replace a large proportion of your company cars with car-derived vans?

Ted Sakyi: We have enhanced support terms from the manufacturers on the commercial vehicles which reduces our lease costs. We are also no longer offering company cars. In the last two years we have increased our car-derived vans by 100 units. Because they are all branded, it also discourages people from taking them home, which means we save on fuel costs, even if cars are slightly better mpg. Our policy is no personal usage, but this is hard to control when you have multiple sites.

FN: You still have more than 400 cars on fleet; will all of these switch as well?

TS: Around 50% will move across as they come off cycle. We have also extended the leases on our vans to four or five years, because our mileage is so low, which means our SMR costs aren’t high. The lease cost difference ranges from £20 to £35 per month which is a massive saving [£300,000-400,000 a year].

FN: You recently considered switching from lease to outright purchase. What persuaded you to stay with contract hire?

TS: Our auditors came in to look at it and, while outright purchase is an option, the unknown factors with maintenance cost and disposal just ended the discussion, especially as a public sector organisation. Do we want to use public money to buy vehicles? No. So we are staying with contract hire, with full maintenance. We want to know what our costs are; we don’t want a grey area for budgetary requirements.

FN: Why do you have such a wide range of brands on your fleet?

TS: We want to keep all our options open. We have good support terms but it is nice to have the option, for example, if there are difficulties in supply or issues with a particular model. We don’t want to be held to ransom through a lack of choice. We keep a core of main manufacturers, such as Ford, Volkswagen, Renault Peugeot, plus the Mercedes-Benz Sprinter because of the automatic gearbox.

FN: London mayor Boris Johnson wants TfL to take the lead on electric vehicles (EVs) with a target of 120 by March 2016. Are they really viable for your fleet?

TS: Environmental issues are key for us. ULEVs (ultra-low emission vehicles) are high on our agenda. When we replace a vehicle we consider EVs and hybrids. On car-derived vans there are several models available, but the market isn’t there yet on bigger vehicles. We have 15 EVs on fleet and 11 in the pipeline on order, including Leafs, i-Mievs, e-NV200s and Kangoos.

We are also trialling the Zoe and I-on to identify if they are fit for purpose. With an average daily mileage of 55, EVs do work for us. And they stack up as a financial argument as well, with fuel savings, maintenance savings and saving the congestion charge.

We are self-insured so we take the risk and the numbers show a saving per vehicle of around £500 per year over a three-year cycle. We can use those savings to fund other initiatives.

FN: You have installed telematics on your fleet. What are you looking to achieve?

TS: We introduced telematics three years ago for driver behaviour and fleet utilisation. We are responsible for our drivers and the public, and I wanted the comfort of knowing our vehicle users were protected against fictitious claims. Initially it is a big outlay, but the long-term benefits include reduced repair costs, warranty issues, improved treatment of vehicles, fewer accidents and better fuel consumption, which more than pays for the cost. Tracking our vehicles has reduced mileages travelled by 25%.

But it does take time – these are four- or five-year programmes. We can utilise the device over two lifecycles so they become more efficient over a six-year lease. It is unusual for a telematics company to allow the removal and refit of a system. I put that down to our procurement team negotiating a good deal! We also have to reduce our fleet size by 10% from now to the end of the next financial year and telematics will help by enabling us to remove under-utilised vehicles.

FN: All your drivers have radio frequency identification (RFID) cards which enable them to start the vehicle and log into the telematics system. How do they become approved?

TS: The first step is to read our company vehicle policy. Then they undergo online risk assessment and sign the driver licence consent form to allow us to access their DVLA records . At that point they get their RFID.

FN: How do you ensure all drivers are compliant across all your sites?

TS: We have fleet custodians in each department that are responsible for their vehicles. Drivers have to do daily checks and report accidents, but the custodians’ responsibility is  to make sure vehicles are roadworthy and report any  issues back to the fleet team. Fleet is part of their broader functions; they are our boots on the ground and they keep us close to the issues.

FN: What is your policy towards high-risk drivers and those involved in an accident?

TS: All high-risk drivers have an IAM assessment where we replicate their working environment, for example testing them at night if necessary. If they have had an accident, our safety manager Tim Dawes, who is ex-Met police, will look at the accident form and do a ‘go look scene’ – he goes to where the incident happened to ensure the report matches the scene. He will interview the individual to understand what happened and identify any training need. He will produce a report for a line manager for either further investigation or for no case to answer. Every major incident, £1,000-plus, goes through this process. Anything smaller, the line manager does the investigation.

FN: What’s next for TfL?

TS: The next stage is cameras. We have them in some vehicles; the plan is to roll them out to the rest of the fleet this year. We will have forward-facing cameras for light commercial vehicles and cars, and 360-degree types for the HGV fleet. The business case has been approved. We have to  be proactive to make sure our drivers and the public aren’t at risk.

 

There is also crash-for-cash fraud which has exposed us on several occasions. The cameras means we can settle fault claims quickly or dispute if necessary. Our third party provider QBE felt that, with evidence, at least 40% of our 50-50 claims would not need to be settled.

Safety is one of TfL’s big success stories, since installing telematics and employing the safety manager three years ago. Its incident count in 2014 alone fell by a third year-on-year, which led to a reduction in its insurance premiums of £40 per vehicle.

Its approach to risk management typifies the overall approach to fleet: control everything in-house. The importance of the fleet to TfL’s day-to-day operations is behind the strategy, says Sakyi.

“TfL’s requirements are unique. If we don’t keep vehicles on the road, our teams don’t work. And if our teams don’t work, then London stops,” he explains, pointing to the 10 million people travelling by underground and bus every day.

“People depend on us to move them – and to move them safely. We can’t leave anything to chance.”