Driving through change: decarbonising fleets
With decarbonisation targets posing a serious challenge to fleet operators, Hitachi’s hands-on services promise to ease the transition to sustainable transportation and cut costs.
The internal combustion engine is reaching the end of the road leaving many commercial fleet owners in need of clear directions for the future. With the 2008 Climate Change Act requirement of an 80 per cent reduction in emissions by 2050, the UK government is aggressively pushing ahead with plans to phase out diesel and petrol engines, accelerating timelines to decarbonise mobility by 2035.
Regulation poses a huge challenge to commercial and public vehicle operators which have less than a decade to grasp the nettle of decarbonising their fleets. Strategic planning for these organisations is imperative, or costs will spiral, as congestion charges rise and balance sheets are burdened with legacy vehicles that can no longer legally take to the road.
Strategic planning for these organisations is imperative.
With more than five million vans and HGVs on the road, the UK road freight sector contributes more than its fair share of greenhouse gas (GHG) emissions including nitrous oxide (NOx). Just 0.5 per cent of all vehicles licensed in the UK are currently ultra-low emission.
Just 0.5 per cent of all vehicles licensed in the UK are currently ultra-low
Cost-effective conversion would be a significant challenge on its own, and the pandemic has dealt a blow to the finances of many businesses – with the exception of couriers and food delivery firms – squeezing capital and making investment hard to contemplate. Setting the issue to one side is tempting but would be a mistake, says Mike Nugent, Head of Intelligent Fleet Decarbonisation, Hitachi Europe.
“Fleet operators can’t put this on the back burner. They have no choice but to comply with legislation and it requires strategic action now,” he explains. “We have under-utilised public transport, a changing working landscape, an expansion of low carbon vehicles (LCVs) on the road to meet demand, and the residual value of all these vehicles is falling. But the business case for replacement has to hinge on the total cost of ownership (TCO). It’s a very complex field, which is where we support customers.”
Hitachi Europe and its sister company, Hitachi Capital Vehicle Solutions (HCVS), provide a route out of the operational cul-de-sac via Intelligent Fleet Decarbonisation, a renewal programme in the shape of a green-transport-as-a-service solution.
HCVS has been leasing, financing and managing vehicle fleets for more than 30 years and is responsible for some of Britain’s largest corporate and commercial vehicle fleets, including those of Network Rail, DHL and Defra. Converting those and others to electric requires a multi-layered approach.
“Our customers are very good at running fleet,” says Nugent. “But what they’re not experts in is total cost-of-ownership comparisons, electricity, grid connections and upgrades, charging points, optimisation and energy management. It takes them way out of their comfort zone and that adds risk.”
This view is echoed by Dale Eynon, Director of Group Fleet Services, at the government department Defra, which recently signed a new contract with Hitachi.
“We have a very complex and mixed fleet ranging from cars, vans and 4x4s through to plant and boats, which makes decarbonising our fleet challenging. There are currently limitations in terms of choice of vehicle availability, cost and charging network. When you overlay culture change on top of this, then we see it being several years before we break the back of it. That said, the work Hitachi is doing in this field is highly interesting and we hope it will support our ambitions on net carbon zero.”
Intelligent Fleet Decarbonisation is an end-to-end solution in which Hitachi guides the customer through an electrification and optimisation programme.
Intelligent Fleet Decarbonisation is an end-to-end solution in which Hitachi guides the customer through an electrification and optimisation programme. This not only sources and finances vehicles but also reduces running costs by employing digital optimisation tools that deliver predictive maintenance and driver-behaviour modification.
“Our package de-risks the whole transformation process,” says Nugent. “We help customers build the business case, prioritise where to start, what to start on and what is the most optimal means by which they can run a fleet.”
Paulo Larkman, Head of Fleet Consultancy at Hitachi Capital Vehicle Solutions, explains how its programme provides a holistic view that supports operators through the entire process of transitioning to electric. It also enables operators to understand the new challenges that this transition involves, such as vehicle charging, converting depots and driver training, and that the real savings come when optimisation is applied to daily running costs.
“There isn't really anybody out there that's saying, ‘we'll put together the whole package and we'll run it for you and then we'll charge you per vehicle mile or per vehicle per month’, because it’s not cheap or straightforward,” he says. “The case for conversion becomes much more compelling when you present it as being built around an optimised fleet and optimised energy. That's where the digital element kicks in.”
Larkman adds: “In the past, we used to make fuel savings by moving to smaller vans and reducing journeys. But now, when you bring digital technology to bear, it just turbocharges the savings, through subsets of use such as journey efficiency, driver behaviour and early fault identification.”
Commercial fleets are often mixed-use and geographically spread, making flexibility an important feature. Hitachi tailors its solution to individual customer needs and budgets. For example, a phased approach could be taken for a mixed fleet, initially targeting those vehicles registering high costs in ultra-low emission zones (ULEZ).
There are approximately 40 very large fleets operating in the UK but thousands of SMEs that run a couple of hundred vehicles each. Nugent sees no reason why the cost savings of Intelligent Fleet Decarbonisation cannot be applied to all to achieve the overarching goal of protecting the planet.
“We make the case for financial benefit but, from a social innovation perspective, Hitachi’s aim is to achieve environmental, economic and social value wherever possible,” he explains. “This is how we make a very big difference as an organisation by bringing all of our skills and capabilities to the fore, to drive demand, drive acceptance and get people to switch.”
A green transport plan which achieves long-term cost reduction is no shortcut, but for fleet operators it’s the best route out of this jam.