Ground Transportation Sourcing
Ground Transportation Sourcing gets a bad rap. Most managed travel programs follow the 50-40-10 formula when it comes to breaking out their spend: that is, 50% of the spend is Air, 40% is Hotel, and the lowly 10% is Ground Transportation. Bringing up the rear, Ground Transportation is often an afterthought or, even worse, overlooked entirely. At KesselRun Consulting, we look at Ground Transportation as an important and integral part of the entire Corporate Travel Supply Chain. Our experience has made clear that Ground Transportation is a complex and evolving category that, if left unattended, can lead to lost savings.
GROUND TRANSPORTATION PROGRAM
When should you establish your own Ground Transportation program? A good threshold is typically $100K in spend. A strong Ground Transportation policy is a must for programs of any size, but for those under this $100k threshold, companies typically leave the sourcing to their Travel Management Company, on the premise that the “juice isn’t worth the squeeze.” Even with this hands-off approach, Ground Transportation requires monitoring. Failing to audit this spend category and periodically adjust policy accordingly can result in avoidable costs.
Once you have made the decision to establish your own Ground Transportation program, you will want to repeat this exercise approximately every three years. Programs under $500k in Ground Transportation spend usually source and contract with one rental car company. If your program is over $500k in Ground Transportation spend, you should source both a primary and secondary car rental vendor. There are three major US-based car rental companies: Hertz, Avis, and National. Each has additional brands in their portfolio: Hertz-Alamo and Thrifty; Avis-Budget; National-Enterprise. Most vendors will bring these additional brands into the bid process.
Main Areas of Consideration When Sourcing Ground Transportation Include:
- Base Rates
- City Surcharges
- Insurance Coverage
- Black-out Dates
- Fuel Surcharges
- “Upsell” Language
- Rebate Incentives
- Insurance is an important
Insurance is an important component to every Ground Transportation program. As such, KesselRun suggests negotiating insurance coverage separately. Most rental car vendors will provide base coverage for $1 to $5 per day during the contracting phase. Recently, Hertz has been providing this coverage at no additional cost. Interestingly, KesselRun often finds clients are “over-insuring” their programs. Contracting with the rental car vendor is only one way of providing coverage for their travelers; companies can select coverage provided by their Card Program and any corporate ‘Umbrella Policy” they may have. KesselRun typically investigates and liaises with a client’s Risk Management department to determine the most economical and comprehensive insurance coverage for Ground Transportation.
TRENDS FOR GROUND TRANSPORTATION IN CORPORATE TRAVEL
Ground Transportation as a commodity has remained flat for the last 4 years, with costs fluctuating primarily based on the economy. What has changed is the formalization of non-traditional Ride Share vendors as partner options for corporate Ground Transportation programs. The corporate normalization of companies like Uber and Lyft has allowed companies to make more cost-effective decisions for shorter trips. Risk is mitigated with GPS tracking used by rides-haring platforms, allowing most companies to either add this method of ground transportation to their travel policy or formally contract with these vendors. Black car and limo firms have (finally) begun to compete with the Groundlink platform; however, black-car alternative options available through Ride Share services, such as “Uber Black,” continue to lead the way for younger business travelers.
HOW CAN KESSELRUN HELP YOUR ORGANIZATION
For the past sixteen years, KesselRun Consulting has been helping companies of all spend sizes to source and manage their Ground Transportation programs. We work with clients to achieve their corporate objectives: Cost-Savings, Traveler Satisfaction, VIP, Program Reconciliation, etc. While every client is unique, companies can expect that KesselRun’s efforts can yield up to 10% Cost-Savings on their Ground Transportation program.
FOR FURTHER INFORMATION ABOUT GROUND TRANSPORTATION SOURCING OR TO SCHEDULE A FREE CONSULTATION, CONTACT US ONLINE.