Can Fleets Survive Covid?

Can Fleets Survive Covid?

The business world has been turned upside down since the arrival of the pandemic. As a commercial insurance broker, we’ve felt the full force of these changes. For example, while requests for shop and office insurance have been quiet during lockdown, so demand for courier and truck insurance quotes have skyrocketed.

Many believe that the changes we’ve seen will be long-lasting and trends such as the rise in the number of people working from home will become part of the new normal. There’s certainly evidence to support this. Facebook has announced 50% of its workforce can now work from home permanently as can those of banking giants ING and ABN and a host of others have it under consideration.

While this is good for employees and for businesses’ bottom lines in terms of reduced overheads, what does it mean for the fleet industry? With more people working remotely and using video communication the need to drive from place to place has been diminished so does this spell the end of fleets as we know them?

At Coversure Kidderminster we’ve been heavily involved in the fleet industry since our founding in 2000 and we’ve earned a national reputation for great value fleet insurance quotes. Over the years we’ve seen the industry face many challenges to which it has responded by becoming cleaner, leaner, more flexible and far more environmentally-friendly. But can the sector survive Covid? We believe it can and here’s why…

Green Fleets

Electric vehicle fleets (EV) have been the talk of the industry for over a decade now. In that time the conversation has moved from ‘Could they work?’ to ‘When will they become practical’ and onto, ‘When will they become the norm?’.

According to data from the Society of Motor Manufacturers and Traders (SMMT) 13.7% of all new registrations in January 2021 were for electric vehicles (EV) – up 200% on 2020. Greater awareness of the damage that traditional fuels do to the planet coupled with cost savings – an EV costs around 2p per mile versus 12p for an equivalent diesel – have focused drivers’ and manufacturers’ minds.

Becoming sustainable has been the goal of many big fleet owners for some time, one that they are now within striking distance of hitting. Amazon has begun using some of its planned 100,000 electric vans and other big logistics companies such as DHL and Royal Mail have made similar commitments.

Sustainability is about brand as much as cost-effectiveness for these businesses, and their commitment to it points to a long-term future for commercial vehicle fleet. Amazon has already invested $2.2bn as part of its quest to be carbon neutral by 2040.

The Rise (and rise) of Online Shopping

The pandemic has been a disaster for the High Street. So much so that the Chancellor is set to unveil a £5bn relief fund in The Budget. For online retailers it’s been Christmas every day. In 2020 online shopping grew by 36% – the highest annual growth seen since 2007, according to the IMRG Capgemini Online Retail Index. It accounted for over 30% of all retail as more and more people embraced its convenience.

This led in turn to an explosion in demand for couriers. The sector grew by 23% in 2020 and Mintel has predicted it will become a £21bn business by 2024. We’ve saw a huge increase in the number of courier insurance quote requests coming, a trend that has continued into 2021.

This is another reason to have faith in the long-term future of fleets. Commercial vehicle fleet owners look set to be busier than ever in the coming years. With 50% of us expected to work from home on a full or part-time basis by 2024 according to the ONS, and with more and more people seeking the space of country and coast, so the lure of online shopping will only grow stronger.

The End of Clean Air Zones?

Air pollution has been a growing problem in the UK and its now thought that 40,000 people each year die prematurely thank to unclear air. Traffic pollution has been a significant contributor to this, something that’s been underlined during lockdown as pollution levels have fallen by 17%.

The need to do something had prompted cities including Birmingham, Bath and Leeds to introduce Clean Air Zones (CAZ). Thanks to the pandemic all of these schemes have been delayed until June of this year at the earliest, while other big cities like Nottingham and Hull have discounted the idea completely.

The reasoning behind these cancellations and postponements was fear of what it would do to the local economy. For fleet owners – especially for taxi and courier fleets – such zones are a problem as daily charges of £8+ are costs that will be hard to swallow. In light of the devastating effects of lockdown on city centres many are questioning whether proposed schemes will ever see the light of day. Others point to the rise in the use of low emission EV fleets which would be exempt from charging and so remove the revenue raising element that has made them attractive to local authorities. While nothing is certain, it looks like CAZ may be re-thought.

Brexit

Now the deal’s been done and we’re starting out on life after the EU we’re feeling the changes it has brought. Thus far there are challenges around getting things in and out of the country and that things will be different from here on in. For truck fleets this may prove to be an opportunity.

Supermarkets and big retailers have found that the added checks are making their previous ‘just in time’ models aren’t working like they used to. To combat delays, they are bringing in more goods at a time and storing them in the UK. This has created further demand for hauliers as they need more lorries to get things into the country and then in and out of local distribution hubs.

If the government presses ahead with the creation of 10 free ports (places where goods can be loaded and unloaded without having to pay duty locally but in the final destination) then there could be another surge in demand as ports like Bristol and Hull continue to expand.

Can Fleets Survive Covid?

The post-pandemic world will be different in a number of ways and fleets will be affected by it. Digital communication and remote working are likely to have an impact on some fleets – particularly those run by businesses who have them for sales or consultancy teams. The lure of cutting costs will prove strong and as vehicle ownership gives way to rental and pay-as-you-ride models, so some businesses will let theirs whither.

For other businesses – especially for courier, truck and commercial vehicle fleets – survival and growth looks certain. From Tesco to DPD, demand for drivers is soaring as firms try to keep up with the frenetic pace of growth from online sales.

Like so many sectors, fleets will be changed by Covid, and like so many it will prosper as a result.

Like Some Fleet Insurance Help?

We’re specialists at insuring fleets at Coversure Kidderminster, and we know that premiums can vary substantially – that’s why we’ll look for the most cost-effective quotation that suits your circumstances.

If you would like to know more about getting the fleet cover that’s right for you, then please contact us. You can call the Coversure Kidderminster team on (01562) 822664, email Coverdsure Kidderminster or request a no-obligation fleet insurance quote here.

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