Can businesses cut travel by 25% in the next five years?

Posted By: TMC - 7th March 2019

By Paul Hollick.

It’s possible. But be careful how you go about it.

With so many businesses scouring their bottom lines for cost savings in the current climate, I wasn’t surprised to see that a recent survey found a significant proportion of companies actively seeking to cut their business travel.

Half of 250+car fleets and six out of ten 100-250-car fleets told Sewells, the fleet analysts, they believed they could reduce business travel by 25 per cent in the next five years.

Going into the detail:

  • 66% of the 1,000 businesses questioned had set targets to reduce their volume of internal travel.
  • 60% had targets to cut trips to suppliers.
  • 66% had targets to lower the number of journeys to clients.
  • 65% saw video conferencing as a viable alternative to business travel. (Source – British Business & Mobility Study)

Commercial fleet operators also anticipated less travel in future, with 44% of large fleets also saying they believed it would be possible to cut mileage by a quarter over five years.

Those figures reflect a similar picture in private motoring where the most recent National Travel Survey report shows that the average UK motorist cut their yearly mileage by nine%, and car journeys by 11%, between 2003 and 2017.

15.4% fuel saving

Business travel is often one of the candidates for a cost saving target. At TMC we already save clients an average of 15.4%  off their fleet fuel bills. And there are further savings to make by using the insights highlighted in the reports we provide to shape and optimise fleet and travel policies.

There is growing awareness that well-informed Business Mobility solutions can open up major opportunities to reduce travel costs by making more efficient use of people’s time and skills, business vehicle assets and connectivity technologies.

However, the emphasis must be on ‘well-informed’ changes. For example, 58% of companies surveyed by Sewells said they planned to reduce commuting to the workplace. That implies they will need usable data on their employees’ commuting vs. leisure vs. business mileage. I can’t help wondering how many of them collect this data for their own cars and grey fleet, let alone for wholly-private driving employees?

Accurate baseline

Every business knows a proportion of its business mileage is unproductive but most do not have the data or the analytical tools to identify which miles matter and which could be dispensed with or rearranged.  It is essential to begin from an accurate baseline.

For example, as TMC’s guide “What is a business mile?” explains, the location of declared workplaces has a big impact on the driving patterns and mileage costs for mobile and home-based employees. One of our clients, quickly identified via our trip data that they could increase some of their employees’ productivity and reduce business and commuting travel simply by changing which branch they were attached to, or declaring two workplaces per employee.

Peak driving and MaaS

Referring back to the 2017 National Travel Survey findings, it’s likely that the UK and Europe, if not the world, has already passed peak car travel for a variety of reasons including the internet, demographics and environmental concerns. It would be a mistake, however, to assume that cuts in business travel will therefore simply happen organically.

One hears a lot about MaaS – Mobility as a Service – these days. Sewells believe that companies are pinning their hopes for more cost-efficient travel on new on-demand mobility services. But they warn (and I agree with them) that MaaS is still in its infancy. It is unlikely to make a significant contribution towards reduced business travel over the next three – five years.

The most dangerous approach that companies could take would be to mandate arbitrary cost reductions – i.e. “gut and squeeze” travel budgets – and hope for the best. A recent post on LinkedIn highlights the dangers of doing so across a whole business.

A 25% saving on business fuel and mileage is achievable

Having said all that, TMC has helped several companies to save more than 25% of their fuel and mileage costs by enabling them to implement changes such as removing private fuel BIK, maximising recovery of fuel VAT, and deterring over-claiming of expenses. At the same time, our data capture and reports helped them refine their internal administration processes and vehicle policies (including ULEV adoption) to be more cost-effective in future, which also has seen substantial, additional savings.

So, the short answer to the question is yes – significant savings on travel and fleet costs are possible. But companies that wait for MaaS to deliver them, rather than using their own consolidated data today, will wait a long time to enjoy them.