REPOSITIONING THE BUSINESS FOR FUTURE MAINTENANCE FLEXIBILITY

The other big change in direction since Peter Backhouse returned to Fraikin is the end of in-house vehicle repair and maintenance.

“First, we can see that in the future the maintenance requirement is reducing dramatically,” he says, “particularly in the alternative fuel environment. I’m talking 50% less.

“Second, we looked at the efficiency of our workshops and at the volume of vehicles that were actually being maintained by them. We realised that over 80% of our fleet was already externally maintained.

“When I was first here we had 15 to 18 workshops around the UK. I came back in July and we’ve only got six. That tells you that, strategically or not, the company has walked down a pathway of saying ‘Is this a sustainable model?’

“What was very evident to us was that to have a significant level of maintenance in-house meant that we would have customers traveling 20, 25, 30 miles. You’ve got to think like a customer when you’re making these decisions. VOR is the most important thing to customers. Every time they lose that vehicle, whether it’s travel time or stem mileage to a workshop, plus the workshop activity, we have to provide a substitute vehicle.

“We’ve got an awful lot of cost involved in collecting the vehicle and bringing it back in. We had customers saying to us ‘Why am I driving past the dealership to get to your location?’ We already have an extensive network of third-party maintenance providers who work very loyally with us.”

Closing the workshops will save a lot of money and help Fraikin get back into the black. But moreover it will change the way the business thinks about providing maintenance, in a way that is more flexible, dynamic and efficient for its customers.

“When you’ve got a very inefficient workshop network, you’ve got a very high cost that is consuming cash,” says Backhouse. “The cost base is going up with utilities and labour rates all rising, you’ve got technician shortages and all of those other factors.

“When I looked at what we had versus outsourcing, it actually became a no-brainer, economically and operationally. It’s still a tough decision because for 45 years, internal workshops have been in the DNA of this business. In France, it still is. It was a hard decision and I’m very sorry that we had to make it, but nonetheless it was the right decision for the company.”

In recent years Fraikin has invested in its mobile technician capacity and this will continue.

“When I was last here we’d started the journey of mobile technicians, for light vehicles in particular,” says Backhouse. “Over the last six or seven years, our portfolio of light vehicles has grown with customers like AO and Sainsbury’s.

“We can maintain a 3.5-tonne or below vehicle on a customer’s premises, such as a store location. So we’re now investing in our mobile technician workforce, and they do general defect work and servicing for around 40% of our fleet. There is minimum disruption to the customer and it’s an area that I’m very keen to grow.

“I want to upskill the mobile technician capability, so that we’re not just doing servicing and minor defects, we’re also doing maintenance on tail-lifts and those kinds of things. I can see no reason why we can’t complete 90% of a customer’s vehicle maintenance requirements at their location, through a responsive and dynamic mobile technician capability.

“That means minimum downtime and no vehicle substitution. While the technicians are there, they can also repair other defects that haven’t been reported yet. They can look at the other vehicles and manage those defects and start to be a bit more pre-emptive.”

Fraikin currently employs around 30 mobile technicians and Backhouse wants to see that grow to more like 50, with some recruited from the company’s closing workshops. The mobile technician solution is a core part of Fraikin’s maintenance provision to its customers, and brings about a step change in how it thinks about and delivers highquality customer service.

INDUSTRY INFLUENCER:

Fraikin is keen to lead the way on alternative fuels but sees charging infrastructure as the main obstacle to electric vehicle take up

SHORT SUPPLY: The lack of new vehicles means Fraikin’s ageing fleet is reaching “crisis” proportions, according to Backhouse

Fraikin does have a competitive edge when it comes to asset financing, with access to syndicated securitised funding of around €1.5bn (£1.3bn) of capital at low interest rates compared to raising money from a bank or other asset financing business.

But shortages of new vehicles mean Fraikin cannot secure all the stock it needs for existing customers, let alone new ones, and Backhouse goes as far as to say the ageing fleet profile is reaching “crisis” proportions.

“We’ve got around £58m worth of vehicles on order that date back to 2021,” he says. “We need those vehicles in because I can’t keep running vehicles that are 10 years old, for the sake of reliability for my customers. I need those vehicles delivered in. At the moment, I’m looking at 2022 orders that are coming through towards the back end of 2023 and early 2024.”

Economic uncertainty is, however, starting to free up build slots at some of the truck manufacturers.

“What we find is that there’s been a lot of speculative orders placed with them that are now falling away,” says Backhouse. “Now those build slots are available and they’re calling us saying ‘We’ve just got another 60 builds that are freed up, do you want them?’

“Another change that we’ve had to adopt is that we would not normally order a vehicle unless it’s either for our rental fleet or we have a contract signed for it. We don’t speculatively go out and just order 200 vehicles but now we’re having to. Now we’re saying ‘We’ll order those 60 that have become available and then we’ll find customers for them’.

“We know that we’ve got a replacement programme within our portfolio of 5,000 assets, if you exclude the fleet management business. We've got around 500 or 600 vehicles today that have reached the end of their contract term and we’ve extended them because the vehicles either can’t be ordered or they are on order but it’s going to be 12 months before they come.

“We’re educating the customer to understand those supply chain problems, because previously the easy option was always to extend and extend and extend. That causes us problems; no one wants to run an old vehicle for too long because the maintenance costs go up, the reliability drops down and drivers won’t drive them.”

Electric future

While Fraikin is keeping a watchful eye on electric trucks, it is no surprise that it is seeing the greatest take up of electric vehicles (EVs) on the light commercial side, especially supermarket home deliveries.

“We are seeing interest in electric vehicles grow,” says Backhouse. “Not just because there is a corporate desire to have electric vehicles but because there are logical operational benefits for some customers to make that transition now, especially with the rising cost of fuel.

“Generally, it’s small urban deliveries, not long distance. We’ve got around 35 electric vehicles on order, some for customers and some for our rentals. Predominantly they are in the 3.5-tonne to 7.5-tonne range.”

But the sticking point on rapid adoption of EVs of just about any size always comes back to the lack of recharging infrastructure.

“The vehicle works, no question,” argues Backhouse. “It’s just the charging and how does that interfere with the cycle of your operations?

“We’ve been putting in an awful lot of work over a number of years and in particular the last six months to really grasp and embrace the alternative fuel revolution. We want to get ahead of it, become the industry influencer.” 