Fleet Dealers, Brendan Keegan: Overcoming Challenges in Fleet Management Today
During a recent visit to the eastern United States, Global Fleet stopped by the Merchants Fleet Summit in southern New Hampshire just outside Boston to have a few words with the fleet management company’s CEO Brendan Keegan.
Take a look at what he had to say about lease terms, vehicle selection, electric vehicle (EV) deployment, and more.
From left to right, Brendan Keegan, CEO of Merchants Fleet, and World Fleet Americas Editor Daniel Bland (Copyright: Daniel Bland)
The last time we spoke, I think you had something like 170,000 cars in your portfolio. What day is today?
Keegan: We have around 185,000 vehicles at the moment, of which around 30,000 from our mobility range we own ourselves and rent for shorter periods. For example, if you are a company doing a construction project or you are a last mile company, you may only need it for 3-4 months.
The remaining 155,000 are financed for our customers, which means we acquire, register and manage these vehicles for them on long-term leases, let’s say 36-48 months.
I just spoke to the fleet manager who told me she is going to try out your shorter rental service, are you looking to ramp up with this new rental service?
Keegan: Yes, it has been the fastest growing segment of the merchant fleet business over the past five years. Let me tell you what happened. We’ve had long-term clients forever, but they started telling us we’re using you long-term, but renting you short-term with other players.
So, we started offering this new offering about six years ago, and now that our customers are able to source their long-haul fleet and their short-haul fleet from us, it’s a huge advantage for them.
What type of vehicles do you have? Are they mostly light commercial vehicles (LCV)?
Keegan: Looking at the asset mix in the fleet we own and lease, it is 95% cargo vans and vans. This also applies to some of our long-haul fleets of what we call the professional fleet or let’s say those that focus on moving goods and services more than people.
I’m talking about companies like last mile, construction, project management, and utilities. I would say that this is the preponderance of our business.
It recently agreed to purchase 12,500 RAM ProMaster pickup trucks. When will you get these?
Keegan: It will take a long time to build those things and then get them as well. I need to double check the exact dates but I would say we will gain it over the next few years. They definitely need it since there aren’t as many manufacturers on the cargo van side as there are on pickup trucks.
So, is a shortage of truck offerings one of the challenges facing the industry today?
Keegan: Yes, there are about 10 different companies that make pickups, and if you think about sedans, there are 30 or so. However, when you think of cargo trucks, there are only a few of them. You have a Dodge, a Mercedes-Benz Sprinter, a Ford Transit, and also a Chevy Express, but that’s less than a high-roof hauler.
Then it’s less so for eVans. As you know, we have Brightdrop trucks, but there aren’t many to choose from.
Do you feel the RAM ProMaster gives fleet managers an advantage?
Keegan: Well, we don’t believe in OEM. We have vehicles like Ford Transits, GM Expresses, and Brightdrops, as well as RAM ProMasters. We offer both ICE (Internal Combustion Engine) and Electric vehicles.
Basically, we really focus on the right application for our customers. For EVs, which are different from ICE vehicles, we need to match each customer’s desired range and do a Total Cost of Ownership (TCO) study with them.
We could say something like the Ford Transit makes more sense in this part of the country while the Dodge Promaster makes more sense in this other part of the country. It is also possible that electric vehicles may not make sense in a certain area due to the lack of infrastructure.
So, we never say this is the right car for you because we need to have our fleet advisory team look at your requests. For example, if you’re in New York City, you drive an average of less than four miles per day. If you’re making deliveries in Wyoming, the average distance between each delivery might be four miles, so that’s a different story.
We may also need to recommend vehicles that fleet managers may not expect. A fleet manager may come to us to tell us he wants a Ford F-250 but our consultant may find out he only needs a Ford F-150 after asking questions about payload and usage. Large payloads may occur only a few times a year and only in some areas. If the fleet manager doesn’t need a heavy truck, we suggest getting a less expensive vehicle.
Like I said, we are OEM agnostic. We want to build relationships with manufacturers and commit to purchasing certain numbers from them. Ultimately, we find what’s best for our customers based on total cost of ownership.
What challenge should fleet managers be aware of regarding EV deployment and what can be done about it?
Keegan: The biggest challenge facing electric vehicles today is having the right infrastructure. Let’s say you have your own building, and you feel like you can put as many chargers as you want, maybe 20 chargers set up for overnight charging in your office or warehouse.
You may discover that there isn’t enough electricity in the grid to power 20 chargers in your area or need to go get a new power plant, issues that could take a few months to resolve.
So, make sure to plan ahead and plan appropriately. If you want 20% of your cars to be electric, plan for it two years in advance. Besides knowing that EVs require more planning than ICE vehicles, remember that getting the vehicles is one thing but getting the right charging solution is another.
There are charging solutions for the office, home and field, so you need to know your fleet profile and you need to know what you really want to do to set up your electrification strategy.
Questions to ask yourself
- How many electric vehicles do we want, and when?
- Do drivers bring their cars home?
- Do drivers have field projects to take care of?
- How will we avoid paying household electricity bills that are not related to electric vehicles?
- Have you prepared a comprehensive total cost of ownership analysis?
Keep in mind that OEM incentives are reduced nowadays and prepare for changes in interest rates and prepare for inflation. A car purchased in 2020 could cost around 48,000 today (2023).
Also know that locations vary. For example, California has better rebates, incentives, and infrastructure than many other states right now. To help you along the way, I think hiring a fleet management company to set up the entire ecosystem (charging, power, utilities, vehicles, etc.) makes sense.
They don’t just provide advice, they also need to back up what they say. You need to hire companies that own what they do, which means they will focus on doing a good job after making their suggestions.
Finally, you should know that the electric vehicle landscape is changing rapidly. We put our first fees here at the beginning of 2020. We’ve already converted some of these fees to new technology and it’s not even been three years.
Remember, assembling a multinational fleet and a first-class mobility management strategy is essential for any global fleet manager. To benchmark your strategy against your peers, download the full results of the 2022 Global Fleet Survey here. To participate in the 2023 World Fleet Survey, click here.
(Tags for translation)North America