Fleet management company Merchants Fleet made plenty of news in 2021, announcing agreements that gave it access to new capital, a series of electric vehicle (EV) reservations, and new fleet electrification tools to help its customers decide when and how to make the switch.
Founded in 1962 as a single automotive dealership in New Hampshire under the name Merchants Motors, Merchants Fleet has grown into one of the largest fleet management companies in North America. Modern Shipper spoke with CEO Brendan Keegan on last year’s significant growth and milestones and what 2022 has in store for the company.
Answers have been edited for length and clarity.
MODERN SHIPPER: 2021 was a strong year for Merchants Fleet and included the closing of several business relationships that provided you access to as much $2 billion in capital. How is that money being invested into the business?
KEEGAN: “This year we are celebrating our 60th anniversary. We had an exceptional year last year, ending the year with $1.9 billion in assets under management, a growing portfolio of 160,000 managed units and 4 million packages per day delivered throughout North America in a vehicle managed by Merchants Fleet. This has helped secure our position as the fastest-growing fleet management company in North America.
“As we expand into new markets, it is important that we align with the right financial partners who share our strategic vision for the future. The major expansion of our core member funding group has allowed us to do exactly that, with support from some of the top banks in the world. Led by BNP Paribas, our expanded financial partner group also includes term investors, banks and lead equity partner Bain Capital Credit. This expansion provides Merchants with access to $2 billion in capacity to meet the rapidly growing needs of our fleet clients who require additional vehicles and equipment to keep their businesses running during the nation’s post-COVID reliance on shipping and delivery. We also continue to invest in technology, with new market-leading features such as connected vehicle capabilities, acquisition process enhancements and a continuously improved TotalView technology platform user experience.
“The expanded funding also allows us to continue executing our extensive EV strategy, with an ecosystem of EV experts that support fleets across the nation as they move forward with plans for fleet electrification — and with the new funding capacity and alignment with our key financial partners, we are on track to achieve its goal of being the most electric fleet management company on the planet.”
MODERN SHIPPER: You have noted that Merchants Fleet expected to double its 2020 results in 2021. What was the key to success and where was the biggest growth area for Merchants Fleet?
KEEGAN: “We attribute our success to our teams’ remarkable ability to innovate even through the toughest of times, including the supply chain and vehicle shortages of 2021, which created enormous challenges for the fleet industry. 2020 was an extraordinary year, as we were named to Inc. 5000’s Fastest Growing Private Companies List. When the pandemic hit, we pivoted our efforts towards those industries that would be moving most — which led to tremendous growth in our last-mile business. We also leveraged innovative programs to help our clients maintain their financial footing during the pandemic and created a suite of new programs designed to provide flexibility and cash flow, which led to retention and growth. The flexible options that we developed in response to the needs of our essential business clients during the pandemic provided a high level of customization and flexibility.
“Throughout 2021, we also continued to look at new ways to innovate during the supply chain shortage. This included the creation of a commercial sales division, which takes vehicles coming off fleet leases from around the nation and makes them available to small businesses that desperately need them. At the same time, the ICE [internal combustion engine] vehicle shortage has also presented us with the opportunity to work with more of our clients on integrating EVs into their fleets and leveraging vehicle-sharing technology. We measure all of these efforts not only in terms of monetary success but relationship success as well.”
MODERN SHIPPER: As you project your 2022 performance, can Merchants Fleet keep up its current growth rate? What areas do you expect will provide new opportunities?
KEEGAN: “We are continuing to work with all major and emerging OEMs to help our clients through the supply chain challenges and the process of electrifying their fleets. We made a $2.5 billion commitment with nearly 40,000 EVs reserved, which ensures our clients will have access to the EVs they need as demand for EVs is predicted to outplace supply over the next five years. EVs are expected to be a large area of growth.
“With the goal of being the most electric fleet management company on the planet, we aim to have 50% of our mobility fleet electric by 2025 and 50% of our clients’ fleet electric by 2030. Merchants also launched the ‘Electrify Fleet’ initiative, which includes a comprehensive AdoptEV program, designed to help guide businesses through each step of their electrification process — from assessing needs to purchasing the right vehicles to charging options and infrastructure support. We have hired a team of EV industry experts and also launched a suite of new EV services like charging financing.
“We are also investing in the next generation of fleet management, with new market-leading technology such as connected vehicle programs, vehicle sharing and acquisition process enhancements which will continue to add value for our clients.”
MODERN SHIPPER: Some companies have been aggressive in pushing for closer to 100% electric vehicles in their fleets by 2030, but you have set 50% of clients’ vehicles in that time frame. Can you explain why you chose that target?
KEEGAN: “Our first priority is to always make sure we are meeting the needs of our clients. With that in mind, when planning the transition of our clients’ fleets to EV, it really comes down to the availability of vehicles and technology to meet our clients’ varying application needs. Once the technology and vehicles are available to meet those applications, then we will be able to fully transition our fleet to 100% EV.”
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MODERN SHIPPER: Merchants Fleet has been aggressive in promoting EVs, announcing intentions to buy nearly 18,000 BrightDrop EVs as an example, as well as building tools to assist fleets in making the electric decision. What role do you see Merchants Fleet playing in the electrification of the nation’s fleet?
KEEGAN: “Fleet vehicles account for over 70% of our country’s freight movements, so to achieve our nation’s sustainability goals, the fleet industry has to adopt sustainable modes of transportation — and the quickest way to get started on that pathway is through electrification. We are providing innovative solutions to quickly meet our fleet clients’ needs — from guiding them through their adoption processes to helping them determine the right EV options and building their charging infrastructure. We also have a vast ecosystem of electrification partners that gives our clients access to an expanded network of best-in-class EV solutions to push the needle forward on sustainability through fleet electrification.”
MODERN SHIPPER: As mentioned, you have announced a large commitment to BrightDrop. Given the multitude of EV makers out there today, why have you made such a large commitment to BrightDrop and do you anticipate utilizing a variety of vehicle providers in the future?
KEEGAN: “We are OEM-agnostic for our clients. BrightDrop is purpose-built for the last-mile space, which is an important part of our client base, and we are continuing to evaluate and bring in new OEMs as new vehicles become available. We have reservations for a wide variety of EV solutions to meet our clients’ different application needs including the Ford F-150 Lightning and E-Transit, the Chevy Silverado, XOS step vans, SEA Electric, and many more whose agreements are confidential.”
MODERN SHIPPER: What mix of vehicle types and models do you anticipate will ultimately make up Merchants Fleet’s EV fleet in the future?
KEEGAN: “Based on our ICE vehicle makeup, our future EV fleets will likely be a mix of light- and medium-duty vehicles for a variety of commercial applications based on a number of variables, including geography, location and industry, to name a few. For example, an urban delivery company will need a lightweight, maneuverable and curb-friendly vehicle, while a construction company may require a vehicle that can carry heavy loads over longer distances. Our clients all have varying needs and our goal is to continue working with all major and emerging OEMs to ensure we have a best-in-class solution for all of them.”
MODERN SHIPPER: Projecting ahead five years, what will the fleet industry be saying about Merchants Fleet?
KEEGAN: “We expect they will be talking about Merchants as an innovator and a catalyst for helping the nation achieve its sustainability goals through the electrification of our country’s fleet network. Hopefully they will also say, today and every day, ‘I saw a Merchants Fleet vehicle.’”