Driving down costs from the ground up
It is a well ingrained behaviour for businesses to invest in technologies and tools which examine potential cost savings in the air; comparisons across multiple airlines, timeframes, class of travel and loyalty benefits are just some of the variables we associate with managing the cost of our travelling workforce. But in comparison, potential savings achievable at ground level don’t attract the same attention. This is surprising, when you consider the potential.
On a cost per km ratio, the average Sydney to Brisbane flight will cost a company 13c per km travelled compared to $3.75 per km travelled on the ensuing taxi transfer*.
Typically, ground transport accounts for 10% of recorded business travel expenditure**, so it’s worth asking the question: Am I getting the best deal on the ground?
Keep your options open and relevant.
CTM undertook a detailed analysis of a client’s ground transportation trends and expenditure as part of their first annual review process. Through the incumbent TMC, the client had been subject to standard CPI increases (2%) on car hire rates year on year, with no strategic supplier negotiation conducted on their behalf. CTM conducted a tendering process with three major car rental suppliers to become the client’s preferred supplier. Negotiations were based upon typical metrics such as base rate spend, total invoiced spend, annual car hire days booked, average car rental days, top car types booked and key locations. Additionally, CTM investigated a wide range of ancillary fees and benefits tailored to the client’s unique travel trends and needs.
Drive a hard bargain.
Each tender presented highly competitive rental rates and unique ancillary benefits, providing CTM with the opportunity to renegotiate even further on the client’s behalf. The outcome was a 7% reduction in car rental savings (5% reduction on the previous year’s rental rates plus avoidance of the 2% CPI increase), equal to $25,000 savings per year to the client. We asked the questions, we got the result.
3 competitive tenders. 7% savings.
CTM Client Value Manager, Lorell Nelson said that many businesses were missing out on valuable savings because they weren’t asking for a better deal. “Typically, companies assume the supplier’s standard ‘business rate’ offering is the best available deal. It’s not.”
“Our job is to be experts on our clients’ business travel needs and proactive in identifying and implementing cost saving opportunities across all aspects of business travel. If you use a travel management company who has excellent supplier relations and isn’t afraid to ask the questions, you’ll find that a bit of competition goes a long way in delivering valuable cost savings.”
“Typically, businesses assume the standard ‘business rate’ offering is the best available deal. It’s not.”
CTM SMART TAXI
Taxi fares alone account for 5% of T&E expenditure.
As a result, CTM has developed a proprietary taxi application which enables companies to reduce their on-ground travel costs by up to 75% through enhanced itinerary management and informed communications.
*Based upon $127 fare Sydney to Brisbane travelling 940km compared to taxi from Brisbane Domestic Airport Terminal to CBD at $60 travelling 16km.
**Based upon CTM’s combined client travel expenditure data, comparing total air and car rental recorded expenditure in August 2014.
Reducing your business’s ground transport expenditure.
At CTM, we are constantly seeking ways to improve your travel program across air, hotel and ground transportation. We do this by ensuring our suppliers remain competitive and relevant to your business travel needs.
Whilst we’re not going to give away all our secrets, here are some of our top tips to reducing ground transportation costs.
1) Conduct a detailed analysis of your ground transportation trends and expenditure to potentially negotiate lower daily car hire rates. Consider:
- Car type by location
- Key destinations and routes
- Pick-up and drop-off preferences
- Kilometres driven
- One way rentals
2) Consider a formal car hire RFP to better understand the market position and offerings. Make sure you:
- make the most of your TMC’s supplier relations department, maximising global deals negotiated on a local level on your behalf
- align your negotiations to your company specific requirements
- arm yourself with all the data needed to drive negotiations for a reduced daily rate
- assess your need for ancillary add-ons – are they delivering relevant value or simply inflating rental rates?
3) Ensure supplier coverage fits your requirements across all key locations. Consider a secondary supplier where necessary
4) Analyse the cost benefit of downgrading preferred car types across your corporate travel policy – consider compact (CCAR) vehicles for CBD usage and full size (FCAR) for regional rentals
5) Ensure that the insurance excess options align with your corporate travel insurance policy – is there a duplication of excess reduction/waiver fees already covered in your travel insurance policy?
6) Understand your company-specific health and safety policy
7) Review taxi hire versus car rental expenditure
8) Consider CTM SMART Taxi application for airport transfers
9) Consider form of payment options and associated benefits
To find out how much you could be saving, contact CTM today or send us an enquiry below.
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