The new boundaries for urban fleet management

Mayors across Europe are dramatically escalating efforts toward promoting air quality and public road safety. Corporate fleet managers must increasingly view urban access as a key criteria, and actively make plans for alternative forms of transport for both goods and staff.

We have already seen numerous tolls and restrictions introduced to create disincentives for the use of diesel vehicles within city centres. The next step, in some cases only just around the corner, is complete driving bans in city centres, impacting both logistics and staff mobility.

If that sounds far-fetched or too distant, then let’s consider the evidence. The Paris low emission zone (LEZ) was only introduced on July 2015, but already this is seen as insufficient to reducing air pollution and promoting urban quality of life. Mayor Anne Hidalgo of Paris intends to remove diesel vehicles from Paris streets entirely by 2025, and from July 2017 is taking first steps to doing so: the LEZ will penalise the driver of any diesel car registered before 2001 €68 a day; diesel HGVs older than 2006 will cost €135.

London’s LEZ has been around since January 2012, but from April 2019, London will add an Ultra Low Emissions Zone (ULEZ). All diesel cars, vans and trucks will have to meet the stringent Euro 6 diesel standard (petrol still only have to comply with Euro 4). Any LGVs that don’t comply will be charged £12.50 (ca. €15), and heavy duty vehicles will be fined £100. The London borough of Islington has gone further and called for a "blanket ban" on all diesel cars in London, citing the “dramatic impact on air quality”. Their position is understandable – even modern diesel engines produce three to four times more nitrogen dioxide pollution (NO₂) and over 20 times more particulate matter than a comparable petrol engine.

Madrid, Mexico City and Athens have also announced plans to ban diesel vehicles. Collectively, these current or planned restrictions have already dramatically reduced the appeal of diesels. After years of upwards trajectory – in the UK the diesel vehicle share rose rapidly from 14% to 50.6% between 2000 and 2011 – in 2016 its share fell for the second consecutive year, down to 47.7%. In the same year, alternatively fuelled vehicles (AFVs) rose to a 3.3% market share – still modest, but growing quickly. In fact, PWC’s Autofacts projects that European passenger-car and light-duty diesel vehicle registrations will essentially “fall off a cliff” by the end of this decade. Forward-looking OEMs have all but ceased development of small-displacement diesel engines.

While Dieselgate and an increased attention to NOx and particulate emissions has made this (previously feted) engine choice an easy target, traffic congestion is increasingly seen as an attack on the public and economic health of a city. According to the European Environment Agency, air pollution causes 467,000 premature deaths each year, with significant costs to health-care and productivity. Hence, progressive policy makers across Europe are keen to curb all private vehicle use, no matter what fuels it. Over 200 different urban access regulations are already in place across Europe – variably addressing air quality, resident safety, traffic noise, or traffic congestion issues.

Just as access to city centres is becoming increasingly restricted, roadspace is being reduced – replaced by pedestrian zones, cycling infrastructure, and improved public transport. This year, London’s first ever Walking and Cycling Commissioner started in post. Backed by an impressive budget of £770 million, Will Norman will work closely with the Mayor, Deputy Mayor for Transport, and TfL to “make healthy, active, non-polluting travel easier in London”.

Bye bye road infrastructure

Another notable trend is to remove road traffic infrastructure altogether – in an effort to reduce congestion. What sounds counter-intuitive has actually been demonstrated by research, tested in numerous cities, and will be replicated in many more in the coming decade. In 2016, Paris closed a key thoroughfare – the right bank of the Seine – to traffic. The result? “Half of the cars that used to use the now-closed road have disappeared,” according to Fast Company Magazine. In Barcelona, initial so-called “super-blocks” have been implemented, calming residential areas from road traffic, and forcing goods transport to one-third the available road infrastructure, and a more circuitous route. People are being nudged toward other forms of transport.

Crucially, this is all happening at a city authority level, with little control or involvement of national governments. Mayors are proving themselves to be more nimble, radical, and fleet-of-foot than their national counterparts. They have no rural constituents to appease, and have very real and pressing health and infrastructure issues to deal with. Urban versions of the UN are cropping up. The global Compact of Mayors was launched in 2014 by former New York City mayor Michael Bloomberg and Ban Ki-moon; it recently merged with the Covenant of Mayors and now represents over 400 global cities. There’s also the Global Parliament of Mayors, formed in September 2016 by Benjamin Barber, author of If Mayors Ruled the World.

City governments are trying to make their centres more attractive to live, with improved air quality, additional greenery, walking and cycling spaces. And their efforts are working. Eurostat reports an increasing share of people living in some of the EU’s largest cities are already choosing not to own a car. Large residential developments are now appearing with few, if any, car parking spaces. The Lewisham Gateway project in central London currently being built by Muse Developments, will have over 385 apartments, none of which will have a car parking space – every unit however does come with a fold up bike.

In partnership with strategic consultancy Progenium, we developed an electric vehicle adoption index across 20 European cities. Our projections though 2024 showed that city entry restrictions and urban infrastructure to have among the greatest influence on electric vehicle adoption rates.

Within this time, autonomous vehicles will also begin to appear on city streets. Research in the UK by the Transport Systems Catapult, finds that 39% of travellers would consider driverless cars if they were available today. The race to launch the first wide-scale autonomous ridehailing network is being fought by the likes of Daimler, Audi, Uber, Google, Baidu and (perhaps) Apple. Many other startups are being actively supported by governments; just in the UK, driverless vehicles are already being trialled in Bristol, Greenwich, Coventry and Milton Keynes.

The impact on fleet management

Urban access restrictions, changing infrastructure and diesel bans may seem to make fleet management more challenging, and costly (a single, undesirable vehicle could quickly rack up hundreds of Euros in fines in a week). Seen another way, however, life may become easier for fleet-managers, because the direction of travel – pardon the pun – is the same for cities everywhere. Current city LEVs and ULEVs have in common that electric vehicles are excluded – if your vehicle making multiple city stops is electric, then you will not be charged a single cent. Still, even those switching to entirely electric urban fleets will be presented with additional challenges as major city roads begin to close or are replaced with cycle lanes.

From January 2018, all French companies with at least 100 employees on a single site will be obliged to have a mobility plan. The measure is aimed at charting the mobility patterns of all employees, enabling companies to choose the right modes of transport for each pattern and employee. The French government believes this will bring about a transition to a more sustainable mobility approach, in turn demonstrating the viability of a multimodal cocktail of electric mobility, carsharing, ridehailing and ridesharing. 

Given a clear focus on TCO, I believe that corporates can even be at the forefront of implementing new mobility options. Old vehicle and logistics processes will simply be priced out. Fleet managers, who have gone on a journey from managing grey fleets, perk cars and commercial vehicles, to outsourcing and leasing, will likely end up overseeing carsharing, mixed mode mobility for staff, and even managing self-driving delivery robots and shared autonomous fleets. They will become mobility managers.

LESSONS FOR FLEET MANAGERS

• Diesel bans are driving the death of diesel in urban environments
• Furhermore, Europe has over 200 different urban access regulations
• Electrification and self-driving vehicles are seen as solutions for air quality, traffic congestion and urban mobility challenges
• Look to city regulations – not national governments – for guidance on future mobility

Lukas Neckermann

Lukas Neckermann is Managing Director at Neckermann Strategic Advisors, a consultancy with a focus on emerging new mobility trends and their strategic impact. He is the author of “The Mobility Revolution” (Matador Business Press 2015) and “Corporate Mobility Breakthrough 2020” – now available online and courtesy of the Corporate Vehicle Observatory. His third book “Smart Cities, Smart Mobility” will be released in 2017.