Fleet News

Five-year outsourcing contract on course to save £55m

TRANSCO is on target to cut fleet operating costs by £55 million over five years after signing what is claimed to be the largest vehicle outsourcing contract in Europe and one of the biggest in the world. In 1995 Transco fleet manager Peter Babbage carried out research into the hourly rate of the 56 garages being run by the company to refuel the 8,000-strong fleet of vehicles and 8,000 pieces of plant machinery.

His research found that the fleet cost of owning and using the garages was £23.75 million each year. His study concluded that by outsourcing, this cost could be reduced to £13 million. On September 12, 1995, PHH Vehicle Management (then known as PHH Truck Management Services) won the five-year contract. The 56 garages were sold and the fleet now uses 250 independently-run sites nationwide.

There was also a saving to staffing costs with the 320 people needed to manage the company's transportation operation through the garages reduced to just 16. This week it was revealed that to date Transco's savings had reached the £30 million mark, putting PHH and Transco on course to hitting their target of £55 million by September 2000.

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