ARI’s Expanding Global Reach

Creighton,Jim

Jim Creighton

Vice President, Global Strategic Services, ARI

What is the state of the global fleet mar­ket right now?

ARI offers global fleet leas­ing and man­age­ment ser­vices through an alliance of top tier mar­ket lead­ers under the name Global Fleet Ser­vices or GFS, and we’re find­ing that busi­ness is as robust as ever. Our part­ners in South Amer­ica, par­tic­u­larly in Brazil and in Colom­bia, are doing quite well. Those mar­kets cur­rently have very healthy economies and our part­ners are deal­ing with increased order vol­ume and demand from their customers.

Our part­ner in South Africa is also doing very well and imple­ment­ing a great deal of new tech­nol­ogy. The econ­omy through­out the con­ti­nent of Africa is under a lot of pres­sure at the moment, so growth from a fleet stand­point is not as robust as it was in the past. Much of that has to do with gov­ern­ment reg­u­la­tion and safety concerns.

We are see­ing a great deal of growth and activ­ity in India, China and Aus­tralia with our part­ner ORIX. They con­tinue to expand and they are doing more and more in India these days, but the envi­ron­ment in India is very insu­lar. I would esti­mate that 85–90 per­cent of the econ­omy is inter­nal not exter­nal, so our part­ners are deal­ing with issues related to how to get their infra­struc­ture up and run­ning and how to keep things oper­at­ing smoothly once they do get their infra­struc­ture estab­lished. But, despite these start up chal­lenges, India is where they see their biggest oppor­tu­nity for expan­sion and growth.

China con­tin­ues to be an expan­sion oppor­tu­nity from both a con­sult­ing and leas­ing and fleet man­age­ment stand­point, but there are still a lot of con­trols in China that make oper­at­ing there some­what dif­fi­cult. We are try­ing to learn more and more and we think that as that mar­ket expands there are going to be sig­nif­i­cant oppor­tu­ni­ties there.

What sorts of trends are you see­ing in the global market?

Just like in the North Amer­i­can mar­ket, com­pa­nies across the globe are being asked to do more with less. Deci­sion mak­ers have more respon­si­bil­ity than they’ve ever had before. Maybe they had respon­si­bil­ity for a sin­gle coun­try or a sin­gle region and now they are being asked to be respon­si­ble for oper­a­tions across the globe. Maybe their com­pany has grown or is seek­ing to break into new mar­kets. What­ever the case, fleet man­agers are often being asked to be more strate­gic and to make sure the company’s fleet is being run as effi­ciently and as cost effec­tively as possible.

We also see a con­stant need for train­ing, edu­ca­tion and under­stand­ing, espe­cially as fleet man­agers are asked to take over or move into new mar­kets. For exam­ple, a trend we have found is that peo­ple think they can set a sin­gle, fixed pol­icy for their fleet and then dic­tate that it be imple­mented around the world – but that doesn’t always work well. They need to under­stand that what is per­mit­ted (and not per­mit­ted) in one mar­ket doesn’t nec­es­sar­ily hold true for every mar­ket. We have spent a lot of time try­ing to train and edu­cate peo­ple about the rules, reg­u­la­tions, mar­ket cus­toms and cul­tural norms of dif­fer­ent coun­tries and regions around the globe and help them adjust how they man­age their fleet accordingly.

For exam­ple, if a fleet man­ager has a suc­cess­ful fuel pur­chas­ing pro­gram in the U.S. and Canada, that same pro­gram is not likely to work in Mex­ico because there is one fuel sup­plier in Mex­ico – the gov­ern­ment. So, if you don’t buy your fuel from Pemex, then you are likely to face sig­nif­i­cant trou­ble, because that is the only game in town. Can you issue a credit card? Yes, but is there a fuel card that most North Amer­i­cans are used to hav­ing their dri­vers carry in their pocket that isn’t accepted through­out much of Mex­ico yet. So, you can have a pol­icy in the U.S. and Canada that is imple­mented via a fuel card, but that pol­icy won’t work in Mex­ico. That is just one exam­ple of the kind of thing a fleet man­ager needs to be aware of when mov­ing into new mar­kets. Essen­tially, a fleet man­ager should always begin with an under­stand­ing of the mar­ket­place, and then adjust accord­ingly so that a pol­icy meets the needs of the com­pany and suits the cus­toms and norms of the mar­ket. Another exam­ple would be the dif­fer­ent lease types – i.e. open end, closed end – and how they may vary from coun­try to country.

As a rule, fleet man­agers need to be aware of how fleets are han­dled and what the rules, reg­u­la­tions and mar­ket cus­toms are when enter­ing a new mar­ket so they can make effec­tive deci­sions. We are putting a lot of empha­sis on try­ing to make sure peo­ple learn and under­stand the dif­fer­ences between regions and mar­kets, and encour­ag­ing them to let us know where they need the help and we will try to get them the answers they need to make effi­cient, smart, cost effec­tive decisions.

Where do you see ARI going in terms of expansion?

ARI has been in North Amer­ica – the U.S., Canada, Mex­ico, Puerto Rico and the Caribbean – for many years and we have a very strong pres­ence in that mar­ket. We made our first foray into the U.K a year ago when we acquired a com­pany by the name of Fleet Sup­port Group, which we now refer to as ARI Fleet U.K. We have started to inte­grate our processes and bring some of our tech­nol­ogy and staff on board there, but the com­pany already had a strong pres­ence in the mar­ket and offered a range of dri­ver and vehi­cle based fleet man­age­ment ser­vices. We think we can bring value to the mar­ket­place and to our U.K. clients by intro­duc­ing some of our inno­v­a­tive tech­nol­ogy prod­ucts and devel­op­ing a new range of solu­tions that will help fleet man­agers run their fleets more efficiently.

Over­all, the mar­ket in Europe is still very volatile. The banks – and the banks that own a lot of leas­ing com­pa­nies – remain under a lot of pres­sure to deliver returns. The mar­ket is just start­ing, hope­fully, to turn in the right direc­tion. We are focus­ing our atten­tion on fleet man­age­ment ser­vices – essen­tially main­te­nance, acci­dent, and dri­ver based pro­grams. But, we do have inten­tions to expand else­where in Europe, and when the right oppor­tu­nity comes along we will look to take advan­tage of it.

Let’s hear about some of your expe­ri­ences with your global partners.

It’s been an inter­est­ing expe­ri­ence, with­out ques­tion. And, you can learn about the mar­ket­place and what the cus­tomer is look­ing for in the most unusual ways. For exam­ple, I was recently in Brazil and took a tour of some used vehi­cle lots. I am stand­ing on a lot that prob­a­bly had about 350 cars. Now of that num­ber, prob­a­bly 347 of the cars were sil­ver, and there may have been one each that was red, black and white. I asked one of my hosts why almost all of the cars were sil­ver, and their response was enlight­en­ing, but also log­i­cal and obvi­ous at the same time: because that’s what the cus­tomers want.

I won­dered fur­ther about the mar­ket­place, because in the U.S. – and in other mar­kets – hav­ing all the same color car is just about the worst thing you can do. In many mar­kets, you have to have some dif­fer­en­ti­a­tion. And the host’s response was even more enlight­en­ing: the sil­ver cars look very much like the guardrails that are preva­lent in the coun­try, so if the cars rub the guard rails, it doesn’t show up as much as it might on a dif­fer­ent color car.

Now, my host was jok­ing some­what, but I know what he was say­ing was also some­what true, because I have dri­ven there and it is a lit­tle crazy. It is some­thing that we would never think of doing – hav­ing 98 per­cent of the cars on a sale lot all the same color – but they had no prob­lem with it, because their cus­tomers didn’t really care what color the car was, they just wanted trans­porta­tion. In fact, sil­ver had an advan­tage – it might not show marks quite as much as other col­ors. Now, in the U.S or on the con­ti­nent of Europe, con­sumers would never stand for that. In those mar­kets, you have to have vari­ety. You have to have a selec­tion. Also, in Brazil they think noth­ing of just putting pure ethanol into their tank because they can sup­port ethanol so much eas­ier down there. You are hard pressed to find ethanol in the U.S. except in the Mid­west. See­ing all of that first hand was an incred­i­ble expe­ri­ence and I learned quite a bit about how mar­kets can vary across the globe.

Another inter­est­ing story came from an expe­ri­ence I had with our South African part­ner. I have been to Africa, and much of it is still very basic and unde­vel­oped. South Africa has a very good econ­omy and is very sophis­ti­cated in parts, but you can also go twenty miles out­side of Johan­nes­burg and be in the mid­dle of the jun­gle. I have seen cars being worked on by the side of the road, where they lit­er­ally dug a hole in the ground to change the oil in the car. There is very basic main­te­nance there – there are no garages, so they make repairs right as the car or truck may need them, often right on the side of the road. Yet, they have some of the most sophis­ti­cated telem­at­ics solu­tions that we have ever encoun­tered, and they are very proud of this for two rea­sons: it allows them to gov­ern the speed of the vehi­cle and they can mon­i­tor and track where vehi­cles are with geo-fencing. The dri­vers accept it because they know that if they don’t get a speed­ing ticket it saves them the money and it saves their job. Jobs are very valu­able there – unem­ploy­ment is very high. So, they don’t mind hav­ing a telem­at­ics solu­tion gov­ern the speed of the vehi­cle. Or, if the truck gets hijacked they want to be found. Their safety is very much a concern.

Yet, when we explain that same tech­nol­ogy to our part­ners in Aus­tralia, they rejected it out­right because Aus­tralians care deeply about free­dom. They don’t want any­body to con­strain the speed of their vehi­cle or know where they are. So, between these two south­ern hemi­sphere economies one econ­omy – South Africa – loved the telem­at­ics solu­tion and accepted its use, while another – Aus­tralia – resists the tech­nol­ogy rec­og­niz­ing that it would never fly in the marketplace.

It is incred­i­bly inter­est­ing how you have to under­stand the cul­tures, what their val­ues are and what is impor­tant in each to know what will work and what won’t work. Over time, telem­at­ics may come to be more broadly accepted in Aus­tralia, espe­cially as com­pa­nies begin to real­ize the ben­e­fits of the tech­nol­ogy – i.e. fleets can save fuel, which results in cost sav­ings, and can improve over­all safety for dri­vers. But, with­out under­stand­ing their cul­ture and their val­ues, you might not under­stand why telem­at­ics isn’t more broadly accepted today. Sim­i­larly, you wouldn’t under­stand why telem­at­ics are uni­ver­sally embraced in South Africa. Ulti­mately, it is about under­stand­ing the cul­ture of the mar­ket in which you are try­ing to operate.

Is the accep­tance of telem­at­ics the same in the South Amer­i­can countries?

Brazil is start­ing to use telem­at­ics. They have the infra­struc­ture to sup­port it, and I have not heard pos­i­tive or neg­a­tive reac­tions about the adop­tion of the tech­nol­ogy. There is very lit­tle use of telem­at­ics in Colom­bia and Peru at the moment – cer­tainly not to the extent that we have it here in North Amer­ica. I think how­ever, once the ben­e­fits and advan­tages of telem­at­ics devices become more widely known, we’ll begin to see the accep­tance of telem­at­ics solu­tions beyond the North Amer­i­can market.

The biggest chal­lenge we have found at ARI with telem­at­ics isn’t nec­es­sar­ily encour­ag­ing the use of telem­at­ics, but rather once you begin to use them and begin to encounter the enor­mous amount of data they pro­vide, the chal­lenge becomes how to deal with the data. I have heard peo­ple say for years, “I have tons of data and ounces of infor­ma­tion, and I would much rather have more than just a few ounces of infor­ma­tion.” So, at ARI, our focus has been on how to com­pile all of that data your devices may be pro­duc­ing, pos­si­bly across mul­ti­ple plat­forms, and develop use­ful meth­ods for find­ing and report­ing the action­able infor­ma­tion that lies within that enor­mous pile of raw data, and in that way we hope to deliver real value to fleet man­agers who are always look­ing for bet­ter ways to man­age their fleet.

What is your take on ethanol blends?

With regard to car and truck fleets, we haven’t seen a very sig­nif­i­cant impact result­ing from the use of ethanol blends. We have found is that if the vehi­cle is truly a bi-fuel vehi­cle and meets proper stan­dards, pretty much every gaso­line has some ethanol in it – some have as lit­tle as 10 per­cent mixed in, but some can have as much as 50 per­cent grade. For vehi­cles that can run on 85–95 per­cent ethanol, those vehi­cles have to be engi­neered to han­dle it and clearly have less trou­ble. For exam­ple, in South Amer­ica where ethanol is much eas­ier to find, many of the vehi­cles there are engi­neered to han­dle that.

For the most part, where we have found a neg­a­tive effect as a result of ethanol in gaso­line has been in smaller engines. So, for exam­ple, if a truck that has a gen­er­a­tor or some other kind of equip­ment like a pump on it that that runs on gaso­line, over time the effects of ethanol on those smaller engines can be incred­i­bly bad. And, if that ulti­mately affects the over­all use of that truck, and in turn slows down the oper­a­tion of your fleet, that is even worse. From a car or truck stand­point, we haven’t seen any sub­stan­tial neg­a­tive results from the use of ethanol blends; how­ever, we do antic­i­pate poten­tial detri­men­tal effects on fuel sys­tem com­po­nents over a long period of time.

What would you advise a fleet man­ager now just tak­ing over global responsibilities?

I think try­ing to tap into as many resources as pos­si­ble, be it peri­od­i­cals, web­sites, the fleet man­age­ment providers, con­sult­ing com­pa­nies. Be a sponge, try to absorb as much as pos­si­ble and have an open mind. Try not to dic­tate pol­icy too much – instead, set a pol­icy, but be aware that you may need to adjust that pol­icy based on a country’s reg­u­la­tions or regional norms. Most of all, adopt a learn­ing envi­ron­ment in your mind – con­stantly be learn­ing, so that you can bring that learn­ing to bear on how you oper­ate your fleet.

That is some­thing that we have adopted at ARI – a cul­ture of learn­ing. We under­stand that we have grown a good deal over the past sev­eral years and we con­tinue to grow. At the same time, our busi­ness model is evolv­ing, so we have to make sure that our employ­ees under­stand that things are dif­fer­ent when you are inter­act­ing with some­one from a dif­fer­ent coun­try or a dif­fer­ent region of the world.

We are putting a lot of empha­sis on edu­ca­tion and learn­ing for our employ­ees so they under­stand the global mar­ket­place also. Through ARI Uni­ver­sity, our company’s com­pre­hen­sive, in-house train­ing and devel­op­ment pro­gram, we are able to offer courses specif­i­cally about global fleet man­age­ment that high­light the sim­i­lar­i­ties and the dif­fer­ences between coun­tries and regions. We encour­age peo­ple to expand their edu­ca­tion, to get an under­grad­u­ate degree or go for a master’s degree, and sup­port that effort with tuition reim­burse­ment. We also encour­age peo­ple to take courses like inter­na­tional busi­ness and learn new lan­guages to help broaden their hori­zons. And again, sim­ply encour­ag­ing all of our employ­ees to keep an open mind so that they can be open to change and oppor­tu­ni­ties for learn­ing when and as they comes along.

What kind of struc­ture do you have at ARI to sup­port your global alliances?

We are con­stantly expand­ing our sup­port for our global alliance within ARI, and have added staff both in Europe and at our global head­quar­ters in New Jer­sey to sup­port our global alliance part­ners. And again, from a per­spec­tive of inte­gra­tion and learn­ing, we are mak­ing sure that more and more areas within the com­pany under­stand what our part­ners’ goals and aspi­ra­tions are around the world and how we can sup­port that. Whether it is data inte­gra­tion, or report gen­er­a­tion, or shar­ing of best prac­tices, we seek to truly col­lab­o­rate with our part­ners so they can gain from the invest­ments we have made and, ulti­mately, the cus­tomer receives the very best in terms of ser­vice and advice. One thing that is very flat­ter­ing is that often our part­ners want to learn more and more about the North Amer­i­can mar­ket­place because they feel that North Amer­ica has some the best and great­est mod­ern fleet man­age­ment ideas and tech­niques, and they want to learn and absorb as much as possible.

When it comes to Europe, we under­stand the Euro­pean mar­ket­place is dif­fer­ent and there is no “one stop solu­tion” in that mar­ket­place. As a result, we try to make sure we under­stand what the best prac­tices are for each type of fleet, whether it is a car fleet, a truck fleet, a large fleet, or a small fleet.

We then seek to align our­selves accord­ingly and we are always pick­ing the brains of our Euro­pean alliance part­ners so we can be sure to stay cur­rent. We also work closely with our cus­tomers to find out exactly what their needs are, mak­ing sure we dig to get what they need and answer what­ever ques­tions they may have. And, once we have a solu­tion, we share that infor­ma­tion and what we have learned with our peo­ple back in the U.S. and in our other loca­tions – Mex­ico, Canada, Puerto Rico – so that our entire team can be up-to-date with the lat­est infor­ma­tion when it comes to our global operations.

How can global fleets best lever­age their buy­ing power with the OEMs?

I think the OEMs have had their own grow­ing pains, espe­cially Chrysler and GM as they came out of bank­ruptcy, but most of the man­u­fac­tur­ers appre­ci­ate the value of global alliances. I think there are still chal­lenges as dif­fer­ent mar­kets develop and get up to scale – in some areas of the globe, you sim­ply can’t get cer­tain vehi­cles because the demand is not there to sup­port an OEM ven­tur­ing into that mar­ket­place. And, if you recall I men­tioned being flex­i­ble when you develop global poli­cies, that would then present a case where if you have already set a cer­tain pol­icy designed around a spe­cific vehi­cle, and you enter a new mar­ket where that vehi­cle sim­ply is not avail­able, you will need to be flex­i­ble in terms of how you deal with the pol­icy you already have in place.

Essen­tially, you have to see where your foot­print is, what the options are and – in the end – do not align your­self with one sup­plier. It is more advan­ta­geous to have at least two, or even three, so that you can lever­age your buy­ing power as much as pos­si­ble to max­i­mize your returns. Also, for the most part, large rebates and incen­tives are not avail­able when it comes to global mar­kets, so you need to keep that in mind. The best approach is to nego­ti­ate aggres­sively with regard to pos­si­ble incen­tives you may be seek­ing in the U.S., Canada, Mex­ico, Europe, or Aus­tralia, and then seek to lever­age that nego­ti­a­tion to obtain addi­tional incen­tive from a global stand­point. You may not gain a sig­nif­i­cant amount of dol­lars – but it will be some­thing towards your bot­tom line. And, if you do nego­ti­ate an incen­tive, be sure you have a method to mon­i­tor and track the fleet. When it comes to global fleet incen­tives, the OEMs are very strict about track­ing and report­ing, and that is some­thing that, together with our part­ners and affil­i­ates, we have put a lot of effort into coor­di­nat­ing so that we can give that infor­ma­tion back to our fleet man­agers to apply for those global fleet incen­tives. As I said, they may not be big dol­lars, but there are still dol­lars there that can count towards your bot­tom line if you are care­ful and have meth­ods in place to track and report.

BIO

 Jim Creighton is Vice Pres­i­dent of Global Strate­gic Ser­vices for ARI. In that role, he is pri­mar­ily respon­si­ble for ARI’s strate­gic plan­ning efforts.  He also serves as chair­man of the board for the Global Fleet Ser­vices (GFS) alliance and on the board of ARIZA, ARI’s joint ven­ture in Mex­ico. He was for­merly vice pres­i­dent of global oper­a­tions, vice pres­i­dent of global strate­gic ser­vices, direc­tor of oper­a­tions, and has held var­i­ous man­age­ment posi­tions in oper­a­tions and client admin­is­tra­tion. Employed by ARI since 1983, he has a bachelor’s degree in busi­ness logis­tics from The Penn­syl­va­nia State University.

 jcreighton@arifleet.com

Creighton,Jim

Creighton, Jim