The spike in fuel prices that peaked last year has concentrated every fleet manager’s mind: “How can I reduce the cost of travel?”

The economic downturn, allied to growing environmental pressures, means every business is slashing expenditure where it can.

Which means looking at alternative means of business travel.

Company cars remain the top choice for travel.

But some fleets have started to take a holistic approach, which includes considering trains, planes and, in some cases, bicycles.

Companies such as BAA, Eon and Vodaphone have made huge savings on mileage and carbon emissions.

Home working and video-conferencing are also growing in popularity.

Gary Killeen, commercial leader at GE Capital Solutions, Fleet Services, claims that awareness of options such as rail and low-cost air travel is high but take-up remains slow.

“Despite a level of concern over costs – especially fuel – employers are backing the company car,” he says.

“However, we are seeing that company car use is becoming more considered – employees are not simply jumping into their car to make a journey without considering the alternatives, especially those provided by technology such as video-conferencing.”

Mr Killeen’s views are backed up by statistics from Regus Group, the workspace provision company.

It reports a 40% increase in video-conferencing requests.

“Remote meetings enable effective collaboration among dispersed colleagues and eliminate the headaches and high cost of travel,” says chief executive Mark Dixon.

“Companies can also help the environment by hosting a video-conference – lower carbon emissions, reduced fuel consumption and less traffic congestion makes it a greener way to work.”

Further evidence that company car use is being tempered comes from the British Vehicle Rental & Leasing Association, which has found that average contract hire rentals have dropped from 21,643 miles in 2007 to 19,617 miles last year, part of a sustained downwards trend.

Rail use, in contrast, has increased to a level that is higher than at any time since before the Second World War.

Meanwhile, rail fares increased in January by an average of 6%, making the more environmentally-friendly transport form seem less advantageous.

In fact, Europcar reckons a daily rental car is cheaper than the train.

Renting a Renault Clio midweek for two people for a trip from London to Birmingham costs £65 per person plus fuel and congestion charges.

This compares to £132 for an open rail return, calculates Europcar, although the cheapest ticket, a fixed train time booked in advance, costs just £5 each way.

“Renting a vehicle for some journeys not only offers substantial savings, but also the comfort, convenience and flexibility that rail travel struggles to offer,” says Catriona Lougher, marketing director for Europcar.

Fleets need to embrace the changing role of supplying transport, taking all the options into consideration for every journey.

It requires more detailed management of travel requirements. But the cost savings, and the reduction in carbon footprint, are valuable gains.

In a speech earlier this month, Transport Minister Jim Fitzpatrick explained how the Government initiative Smarter Choices was impacting on fleet journeys.

The behavioural change programme encourages people to use alternative forms of transport or to teleconference.

“Smarter Choices have been used by the Meadowhall shopping centre in Sheffield. The creation of a travel plan resulted in 55% of staff using public transport,” says Mr Fitzpatrick.

David Tidman, transport manager for the RNLI, comments on the shifting view of fleet cars.

“The big change has been in the attitude to the use of a company car. In the past, if you had a company car you had to use it. Now that’s been turned completely on its head,” he says.

“This has been influenced by the younger generation of drivers who think twice before driving their cars. They are much more likely to use the train or plane as it might be the most effective travel option.

Frequently they are also using technology – for example, tele-conferencing or video laptop links.

“I think the reason behind this change in attitude is down to external factors, including environmental impact and fuel prices. The fact that transport costs are reduced is a welcome by-product.

“The other factor that’s changing the way we manage company cars is health and safety and the length of time spent behind the wheel.

"Whereas in the past you would expect a driver to travel hundreds of miles to a meeting and return the same day, they are now actively encouraged to stay overnight and rest.

“Thanks to the rise in budget hotels and mobile office kit, the cost is minimal, but the welfare and safety benefits for the driver are immense.”

Professor Peter Cooke, head of the Centre for Automotive Management at the University of Buckingham, believes that a combination of increased car taxation, duty-of-care issues and running costs will push more forward-thinking companies and fleet managers towards mobility management.

“There’s no doubt the company car has become less important than it used to be for both organisations and employees,” says Professor Cooke.

“I think many companies, particularly for staff who don’t clock up high mileages, will decide to rent cars as and when required.

“Businesses must move away from only deciding whether or not to provide company cars and look at the issue from a personal business mobility point of view.”

Old-style company car management is no longer enough to satisfy the changing economic and environmental landscape.

Fleet managers need to consider a range of solutions to keep staff mobile, their company's bottom line in the black and their environmental credentials green.

Case study: Lee Whiteing

 

Lee Whiteing, HSBC’s UK travel and fleet manager, explains the breadth of the travel requirements he is required to manage for the international bank.

Travel

My main role is split in two. There’s the management of our supplier base – especially our travel management company HRG – and the operational elements of travel, including communication, policy, training and strategy.

HRG has 35 staff exclusively working on the HSBC account, which requires a dedicated account manager. Key suppliers are the airlines, hotels, car rental, ground transport (taxis, executive cars, airport transfers), serviced apartments (used for longer-terms stays which are more cost effective than hotels), rail companies (both domestic and Eurostar) and event firms.

At present, HSBC is focusing on cost reduction in travel, the environmental impact of travel and the corporate social responsibility issues surrounding travel.

This ranges from asking “do you really need to travel?”, to looking at the policy, negotiating cost reductions with suppliers and pushing alternatives to travel, such as video and phone-conferencing.

Fleet

From a fleet perspective, things are a little simpler.

Day-to-day running of the fleet is handled by our leasing company, HSBC Vehicle Finance.

My role here is around managing the costs and looking at the policy, including strategies such as duty of care.

Our travel focus

Significant changes over the past two years have seen the focus shift to a number of areas. These are:

Environment

A significant impact in terms of both travel and fleet. From a travel perspective, our goal of reducing CO2 emissions works in tandem with our desire to reduce costs.

Less travel and greater use of alternative technologies automatically has an impact and we have seen a big reduction in travel since the third quarter of 2008.

On the fleet side, we have revamped our choice lists so that cars ordered now must have CO2 emissions of 160g/km or below.

Corporate social responsibility

This centres around security and duty of care.

We have a traveller tracking product that lets us know where travellers are at anytime, if they are booked into a hotel or on a flight.

This enables us to act very quickly if there is an incident – such as the terrorist shootings in Mumbai last year.

Duty of care entails driver licence, MoT and insurance checking, traveller awareness, hours spent driving and so on.

Cost reduction

Budget holders now see their total car costs each month.

With travel we write to business heads twice a week to highlight lost saving opportunities that may not have been taken by a traveller.

Doing this so regularly enables action to be taken often before a trip has taken place.