It's important to look back at 2021 because it sets the table for ground transportation in 2022. We see rental car companies filling stadiums and fields with sidelined fleet due to the pandemic. We see chauffeur driven suppliers selling off fleet and mothballing fleet. What happened next was the perfect storm if you were rental car company. Pent-up leisure travel demand in Summer 2022 skyrocketed beyond the available fleet. Vehicles had become scarce because of the semi-conductor shortage, and service levels suffered due to an employee shortage. This challenging convergence resulted in older—and in some cases dirty—cars on the rental lots. Worse, sometimes, no cars on the lots and long lines. Leisure car rental prices were the highest in my memory. 

Then a minor miracle occurred for rental car companies: The used car market caught fire. Car rental companies were able to sell hundreds of thousands of vehicles and at the same time raise leisure prices to levels never seen before. The result: Hertz comes out of bankruptcy with new owners and less debt. The entire rental car industry goes from crying poor to massive profitability. Avis posted their best quarter they ever had in 2021. Its stock price on Dec. 29 was $208.86). Twelve month prior on Jan. 4, 2021 it had been in the mid-thirties. 

On the other hand, the tale of the chauffeur driven world is quite different. There is not a record-breaking financial outcome. Covid-19 resulted in a systemwide reduction of suppliers and those left reduced their fleets, selling off assets and mothballing vehicles while waiting for business to come back. With demand now emerging, providers are finding it hard to ramp up. Vehicles, drivers and employees are difficult to come by and are costing more. As a result, prices to the consumer are rising. 

Gasoline prices, on average, 49 percent more than it did a year ago at $3.41 a gallon in December 2021, versus $2.28 in December 2020, according to the federal Energy Information Administration. Insurance costs are skyrocketing, and some suppliers are opting for less coverage, others are closing their doors as they cannot afford the coverages as insurance companies raise premiums.

Thoughts Our Current Condition

On the upside: Car rental companies are flush and ready to invest. Hertz made a big deal out of its deal with Tesla to purchase 100,000 M series by the end of 2022. Other car rental companies are making significant EV investments as well. I was speaking with one of them the other day, but they are not announcing publicly their electric vehicle purchases. In fact, they are very cautious about promotion. But why? 

The downside: The current infrastructure for charging EVs—everything from location of charging stations to type of charging stations (some charge much faster and get a more complete charge) isn't there. Depending on charger type, it takes a long time to charge a vehicle. Plus, the cars themselves have vastly different charge duration. The shortest drivable mileage is 84 miles, mid length is 194 miles and the longest 396. The supplier I spoke to said their game plan was to use EV fleet for long-term rentals where the renter charges the vehicle at home and understands the mileage limitations. Given those parameters, the crossover with typical business travel rentals may not be there in 2022. But EVs are here to stay, and manufacturers are converting their fleets, not least toward the ultimate goal of supporting autonomous vehicles. But that's another story.

Another downside (unfortunately): All ground suppliers—whether a rental car or chauffeur driven supplier—still face a semiconductor shortage in 2022. This has resulted in only a trickle of vehicles from manufacturers. Suppliers have ordered vehicles (including EVs) based on anticipated uptick in business, but there are no guarantees the fleet will arrive. This means they will need parts to repair vehicles. Economists at Cox Automotive do not expect the wholesale car market to reach pre-pandemic and pre-chip crisis levels until at least 2025. As companies prepare for their business travelers to experience acceptable service levels in 2022, they will need to do their due diligence on which suppliers and mobility offerings have adapted to the ever-changing paradigm.

And finally (it's the reality, folks): If travelers who haven't been on the road for a while think transportation network companies will be the viable alternative to shore up some ground transportation woes, they may be surprised. TNCs like all other forms of chauffeur driven suppliers have had to deal with driver shortages and a goal of profitability. Uber and Lyft rides are more expensive than ever because of a driver shortage. The cost of a ride from ride-sharing apps increased 92 percent between January 2018 and July 2021, according to Rakuten Intelligence. Many riders have also noticed increased wait times for rides. This will also push companies and travelers to re-examine the price of a TNC versus taxi, black car another limo services. The other difference is in duty-of-care and Covid-19 protocols for duty-of-health-and-wellness. TNCs cannot guarantee the same level of safety or cleanliness.

Where Have All the Fleets Gone? 

Despite the omicron surge, there's a lot of hope for a strong return to business travel for 2022. But will the auto manufacturers keep up the pace and will the drivers and employees come back? 

I thought of Pete Seeger who wrote one of the greatest folk songs of all time “Where have all the flowers gone?” It came into my mind as I was writing… I adjusted it slightly: 

Where have the drivers gone? / Long time passing. / Where have the fleets gone? / Long time ago. / The virus has infected them, every one. / Oh, when will we ever learn? 

In 2022 we should be prepared so that “when will we ever learn” does not apply. Here's what I recommend:

Car rental due diligence: Corporate buyers should understand no rental car company will be immune to these issues. Do the due diligence with existing suppliers to determine whether they can service your travelers. If not, explore adding new suppliers, especially if you currently have only one. 

Pricing: Be sure all travelers are enrolled in expedited programs with your existing providers to ensure they get corporate pricing and they avoid standing in line. Regarding pricing, corporate rates that were protected last summer may not hold. Fleets will be more expensive as will be the supplier's overall operating expenses. However high leisure prices may take the pressure off corporate rates, we'll have to see. 

Chauffeurred ground due diligence: Shortages in chauffeured ground transportation will vary by vehicle type. Maybe the hardest hit will be van/sprinters as delivery companies like Amazon are buying up much of the supply. Corporates must re-examine existing suppliers to ensure they can deliver the service levels expected by traveling employees. Suppliers will need conduct continuous vetting to ensure viability. 

Pricing: As costs rise, so will price. Buyers will need to determine justified increases by identifying the competitive price in the marketplace. Then, continuously monitor service levels because a price increase does not guarantee good service. 

Sustainability goals: It's still worthwhile to pursue sustainability goals. Ground is a really good place to start because you can achieve progress without carbon offsets. Buyers will need to be realistic, however, about EV availability and infrastructure. It will be limited in 2022 but ramp up in 2023. For now, look at back-to-office shuttles as an effective way to bring employees back to the office with a reduced carbon footprint. 

All this forecasting makes me feel like a weatherman on TV. Weather predictions are based on science and a lot of different factors, but we all know just like this forecast we won't know what will actually happen until that day comes.