Getting With the Program - Carlson Wagonlit Travel

CWTvIsIon Issue 3 - January 20081A simple example in rental car might be ensuring that all suppliers responding to astrategic RFP provide rates that include a loss damage waiver and a collision damagewaiver on all rate types (i.e., the company is exempt from some or all costs incurredthrough loss or damage to a vehicle). Another detail that can make a big difference isrefueling rates—a lot of people do not know that these are negotiable. At CWT, we havemore than 25 years of experience in ground transportation sourcing and informationon tens of thousands of contracts. Suppliers know we have this expertise and thereforewe start negotiations on behalf of our clients from a strong position.CWT Vision: What kinds of companies are most likely to benefit from a closerlook at ground transportation?Dave Kilduff: Even companies with large, well managed travel programs can benefitfrom specialists reviewing their strategy. The only prerequisite is a minimum volume,to reach the threshold at which clients are eligible for corporate agreements and rateincentives. In the United States, for example, you need US$100,000 in annual volumeto get the most out of rental car negotiations.CWT Vision: What can companies gain?Dave Kilduff: The main benefit is cost avoidance and savings: not just better rates upfront,but the ability to stabilize prices and reap benefits over the duration of the contractto avoid major price hikes as the market evolves.The car rental market is particularly volatile. Worldwide, the cost of car rentalcontinues to grow in response to rising fuel prices and interest rates, higher pricesfor new vehicles and increases in local taxation in some countries like the UnitedStates.In the rail market, companies can significantly reduce spend on routes where railcompetes with air. 2 The opportunities to do so are increasing as the high-speed railoffering develops, particularly in Europe and Asia Pacific. In Europe, for example,the network will increase by 15 percent by 2010 and a new rail alliance, Railteam,promises to boost services for business customers.In the chauffeured black car, limousine and taxi markets, suppliers are alsodealing with rising fleet prices, as in the rental car industry. Companies may find itworthwhile to look more closely at limousine deals, which are typically overlookedin the program. Car rental giant Avis may begin to bundle black car, limousine andrental car together, following its acquisition of a major stake in Carey International,the world’s largest chauffered car company.An effectively managed ground transportation program can also provide “soft” benefits.In car rental, for example, frequent renters may be offered extra features like timesaving,pre-printed contracts, meet and greet services, and upgrades.2Please see Issue 2 of CWT Vision (September 2007) for a discussion of the benefits of high-speed rail.