Release date: 4/18/2018
The term “mobility” is quickly being grafted into the definition of the fleet management profession.
For example, NAFA's Board of Directors recently established the definition of fleet mobility as, "The movement of people and/or product from Point A to Point B in the most efficient, effective, and sustainable manner possible." How that movement is achieved may be irrelevant to consumers, but for fleet managers – for which fleet has been synonymous with asset management for decades – it lies at the core of the job.
"With the evolving concept of mobility, all fleet managers are -- in a sense -- developing mobility experts. Anyone with an integrated plan to use reimbursement policies; leased, owned, and rented vehicles; as well as public transit, and even bicycles, could qualify," said NAFA's Director of Education Katherine Vigneau, CAFM®.
With the rise of ridesharing apps, organizations may no longer own or lease the majority of vehicles they utilize. As burgeoning autonomous driving technology evolves, the term “driver” could one day be little more than a euphemism. The coming changes in transportation will be as transformational as the shift from horses to the combustion engine.
The promise of the future can be blinding, leading individuals to believe that zero-ownership and fully autonomous vehicles are just around the corner. Erick Guerra, Assistant Professor of City and Regional Planning, University of Pennsylvania, teaches courses in transportation planning and quantitative planning methods. He advises against jumping toward the speculative future too quickly.
“The timing (for autonomous vehicles) is going to be wider than a decade. The most reasonably possible, lowest prediction might be three years. In terms of some of the test vehicles out there now, you could say we’re there already,” Guerra said. “Pennsylvania, Michigan, and California are already taking the lead.”
In terms of legality, things are more complicated. NHTSA regulations, state departments of transportation, and departments of motor vehicles (as in the case of California), will regulate the operation of autonomous vehicles. All these will be required to sync in some logical way.
Others are more confident that the future is coming faster than we imagine, and autonomous vehicles will bring about the diminishment, if not the end, of vehicle ownership. Consultant and author Lukas Neckermann said that what has become a defining aspect of the mobility concept -- zero-ownership -- sounds far more extreme than it actually is. "Many fleets are already not owned by the operators, but by fleet management companies (FMCs) and leasing companies.
"If we think about (work) cars as perk vehicles, for instance, for staff located in or near cities, it's more a hassle to have a car as a perk," he continued. "It's conceivable that the concept of a car allowance will evolve to, say, an Uber or Lyft allowance." In this, the sedan fleet manager's job will require much more attention to data and less to traditional asset management.
FMCs May Soon Compete With Manufacturers
In the future, the FMCs will have competition with the car manufacturers themselves. In January 2016, General Motors launched its personal mobility brand Maven. Ford Motor Company followed a month later, announcing the creation of Ford Smart Mobility LLC, a subsidiary formed to focus on emerging mobility services.
Fiat Chrysler Automobiles (FCA) CEO Sergio Marchionne, however, indicated his company would not follow suit during an interview with Automobile magazine. His take was that he could not see an ownerless, driverless scenario appealing to consumers, neither now nor later.
While Guerra views autonomous vehicles as an inevitability, he’s also skeptical about zero-ownership. “There are a lot of reasons why people own vehicles. You hear a lot about today’s vehicles spending 95 percent of the time sitting around, and that people will choose against such underutilization. But we have a lot of things right now that sit idle 99.9 percent of the time, and people aren’t rushing to break their attachment to those things. Plus, we have a tendency to view these things strictly through the lens of urban planning. There are areas throughout the country where such access – immediate or otherwise – isn’t available. It’s not that (zero-ownership) isn’t within the realm of possibility, but I can’t see a complete elimination of car ownership.”
Neckermann also admits that there’s only so far zero-ownership can go: service fleets, law enforcement, and delivery vehicles will likely always be exempt because of the specificity of their utility. These vehicles undergo extensive upfits, and in terms of security and identity, there has to be a stringent level of closed-shop control.
One of the predominant reasons why organizations buy and lease cars is for control. Oversight of who drives what, and whether they have the capacity to do so safely, has been the key to risk management.
Ownership, however, is expensive. One of the more enticing aspects of zero-ownership via a carsharing service is that an organization would have the relative reliability of a vehicle on demand without having it on the books. Currently, these vehicles are still human-operated with all the risk issues.
"Eventually, all vehicle reservation business models will have an app, that includes taxi services alongside those like Uber and Lyft," said Janis Christensen, CAFM®, Director for Mercury Associates Inc. She questions the differences being voiced regarding app services versus taxi services. "Currently, if (the vehicles) go to the same place for the same business reason, it’s still mobility and has the same impact on the environment."
But taxis have an advantage over the most cost-effective versions of carsharing. Limousine service vehicles are required to adhere to maintenance standards to remain in service. Neckermann said, "In the United States, most anyone [in a wide variety of vehicles, in nearly any workable condition] can become an Uber driver."
He added that this is not an entirely new concern. If your staff uses personal vehicles, you have little control over the condition of their vehicles, either. There is a presumed duty of care involved, with the understanding that employees should only drive vehicles that are deemed safe by the regulations of the land. The question is whether that duty of care is rigorously insisted upon by the organization, or whether it is merely an unenforced expectation. "Arguably, you're putting your staff at risk if you tell them to go from A to B and their tires are bald and their brakes are worn," Neckermann said, thus presenting the rationale for a company offering cars in the first place.
Concerns Specific To Ridesharing Need To Be Resolved
What about the ridesharing service vehicle? Who is responsible for the upkeep and, in the event of a crash within the scope of work, which party bears the liability: the service, the driver they contracted, or the company that chose to use the service? With the promise of a sedan fleet featuring all the benefits of an owned/managed group of assets without the primary costs and responsibilities of that ownership, many operators view ridesharing apps as the next transformation for their work.
Not so fast, suggests Gail L. Gottehrer, Partner with the law firm Akerman LLP.
“In the hypothetical,” Gottehrer posits, “an employer could decide to eliminate its fleet and implement a policy requiring employees who had company-issued vehicles to instead use a specific rideshare company, which has entered into a contract with the employer to provide transportation services for those employees. If an accident occurs while the employee is a passenger in a vehicle operated by one of the rideshare company’s drivers, and it turns out that the driver should not have been driving for the rideshare company, the employer should expect the employee to allege that the employer bears some of the responsibility and liability for any injuries and damages suffered by the employee.”
In other words, the employee who was being driven by the rideshare company driver at the time of the crash may argue that the employer jeopardized his safety by creating the mandatory rideshare policy. The employee may allege that the employer wanted to reduce its costs by eliminating its fleet, and in order to achieve that objective, it required its employees to use the rideshare company, thereby exposing the employees to unnecessary risks and unreasonably dangerous situations. “Similarly, the employee could contend that the employer - intentionally, negligently, or recklessly - created an unsafe workplace and unsafe working conditions for the employees in order to save money,” Gottehrer said.
A company that wants to implement a mandatory rideshare policy despite these risks should consider taking certain actions proposed by Gottehrer when designing its policy. These may help an organization manage its risk and put itself in the best position to defend itself against potential allegations from employees, including:
- Making sure that the employer has a legitimate, non-discriminatory business reason for its decision to implement the mandatory rideshare policy. The reason may be the need to reduce costs by eliminating its fleet, a high number of accidents involving company-issued vehicles driven by employees, or a company decision to help reduce traffic and the number of cars on the road. The employer should document the reasons for its decision and the data upon which it relied in reaching its decision.
- Conducting due diligence on the rideshare company. The employer should thoroughly investigate the rideshare company’s history; the amount of time it has been in business; its financial condition; its policies for hiring drivers, monitoring their performance, and terminating drivers; its safety record; and any complaints, lawsuits, investigations, and regulatory proceedings that have been brought against it.
If, in response to a lawsuit from an injured employee, the employer can show that prior to selecting the rideshare company, it reviewed relevant information about the company and found that it posed no risk, or a minimal risk that was not greater than the risk posed by employees driving themselves in company-issued vehicles, it could have a defense to the employee’s allegations of negligence, recklessness or knowingly subjecting employees to an unreasonably dangerous condition. If the due diligence process revealed significant risks, however, such as that the rideshare company conducted minimal vetting and testing of drivers or had a bad safety record and numerous lawsuits pending against it, and the employer decided to contract with the rideshare company anyway, this could strengthen the employee’s position and weaken the employer’s potential defense.
- When negotiating the contract with the rideshare company, include provisions addressing the safety of employees. By requiring the rideshare company to agree, in the contract, to take on obligations and make certain representations - such as that it will provide only its highest rated drivers for the company’s employees, that it performs background checks on its drivers, and that no complaints have been made against the drivers it provides - the employer could have a defense to a claim by an injured employee that it acted negligently or recklessly, or that it exposed the employee to an unreasonably dangerous situation.
The employer can also seek to include an indemnification provision in the contract, in which the rideshare company agrees to indemnify the employer for any costs it incurs in a proceeding brought by an employee arising out the rideshare company’s violation of the contract, including as a result of the rideshare company providing a driver who did not meet the agreed upon criteria or should not have been driving for the rideshare company in the first place.
- Applying the mandatory rideshare policy consistently. If the policy is not applied to all employees who previously had company-issued vehicles, it could create a basis for employees affected by the policy to allege that the company discriminated against them and subjected them to disparate treatment. If senior management or certain employees are not required to use the rideshare company, and are exempted from the policy and permitted to keep their company-issued vehicles, this has the potential to undercut the company’s argument that it had a legitimate business reason for implementing the rideshare policy and strengthen the injured employee’s position.
Will Insurance Costs Push Us Toward Driverless Vehicles?
- Monitoring the implementation of the policy once it is in place, and evaluating its effectiveness. If there are problems with the policy, the employer should evaluate them and modify the policy accordingly. The employer should not ignore complaints made, or concerns raised, by employees and should ensure that no retaliatory action is taken against employees who complain or express concerns about the policy.
Studies like those conducted at Stanford University’s Revs Institute for Automotive Research show the riskiest part of any vehicle is the driver, and autonomous technologies will outperform the skills of a driver in an emergency. A Huffington Post article quoted Clifford Nass, Director of the Revs Program: “One of the great ironies is that autonomous cars are much more dangerous, but not while they’re being autonomous...they’re dangerous because of the driver taking over from the situation.”
Because of this, Lukas Neckermann predicts the economics of manual driving will eventually sway many holdouts. “Insurance rates (for them) will likely be two, three, even four times as high as those for autonomous vehicle owners. The insurers will say, ‘I have a vehicle here that is programmed to avoid crashes, but then I have a human driver that statistically will be more likely to be involved in crashes.’ It’s naïve to think insurers won’t be punitive.”