<font color=blue>INDUSTRY BUZZ:</font> Fuel Management

As fuel costs have continued to increase over the past eight months, you have seen your bottom line reduced. With prices well over $3 per gallon in many markets, fuel is justly being referred to as liquid gold. The current fuel climate now forces companies to monitor these expenses much more closely than in the past. 

There are a few basic steps you can take that will easily save your company between 5-10 percent or more, depending upon what types of controls you have in place today. These are real savings, and they will go a long way in helping you protect your bottom line. Let’s take a look at the different areas:

Theft Reduction

You are not alone in feeling the pain of the high price of fuel. Your employees feel it as well, perhaps more than you. This added burden can make honest employees do things they would not have considered in the past. Then there are always the employees who feel they’re entitled to a few gallons to fuel their truck or to warm their homes. They’ve always just helped themselves; they’ve considered it just another company paid benefit. 

Unfortunately, with the fuel costs as high as they are, theft continues to climb and becomes increasingly more difficult to control because of the amount of theft that is taking place. There are a few ways to control theft, depending on how you are fueling your fleet.
 
Retail gas station or card lock: Consolidating all fueling to one fuel card provider.  We would recommend going with a major national card provider like Comdata, T-Chek, or WEX, to name just a few. Using these card programs will give you more flexibility than just choosing a fuel location.  By having everything with one card provider it will be easier for you to track gallons and MPG’s (miles per gallon) on a single bill. These card providers all offer something a little different, but with all major providers you will be able to put controls in place. Examples being: spending limits, user id’s, pass codes, required odometer readings, transactions per day, after hours fueling and enable you to view information such as time, where and who fueled the truck. The more controls the less likely theft is going to occur. 

Additionally, all major fuel card companies offer their customers, free of charge, a “best buy program.” These programs allow you to put in your zip code and they will tell you what retail station has the lowest fuel cost in that area.  In some markets you can see a difference of 20 cents or more on a given day from the lowest to highest supplier.

Bulk fuel:  If you are fueling your trucks at your location from your own bulk fuel tanks, have a card reader system installed on the tanks and put the same controls in place as mentioned above under retail fueling.  Too many companies allow their drivers to handwrite how much fuel went into their trucks.  This allows drivers to “fudge numbers” on what they really put into your trucks and allows them to fuel their own vehicles.  If you are using paper you are probably having fuel stolen from you.
 
Mobile Fuel: This is also referred to as on-site fueling, when a company comes out and fuels your trucks during their down time. Get references from other companies they fuel, insurance certificates in the event of a spill so that you know you’re covered, a picture of their sealed meter or certification from the state that their truck has been through weights & measures so you know a gallon is truly a gallon. Consider using a mobile fuel company that has electronic technology on board its trucks. A report can be provided on what trucks were fueled at your site, what time each truck was fueled, and how many gallons went into each truck. If you are getting handwritten information, review above under "bulk" and see what is probably happening.

Detailed information is knowledge and having the right controls and processes in place will help you reduce or eliminate theft. With having controls in place that the employees are aware of, it allows them to know that you are watching right from the very beginning.

Idle Time

On a cold morning when its -10 degrees in Chicago or 45 degrees in Atlanta, its not uncommon to see drivers start their trucks and let them idle for 15-20 minutes before they start their routes. This occurs even in the summer time to keep the truck cool.  In most cases that truck won’t get turned off again until your driver is done their shift. Yes, we all know how difficult it is to get good quality drivers, but you need to put some good idling rules in place. 

If you look at the numbers, trucks, while idling, will burn anywhere from ½ gallon to 1 gallon per hour depending on the size of the truck. If your driver idles for 15 minutes before they leave your site in the morning and lets the truck idle for 5 minutes between each stop, making an average of 20 stops per day that is almost two hours of idle time. That means you burned between 1 to 2 gallons, at $3 per gallon, which is $3.00-6.00 per truck on the road.  If you take that number and multiply it by an average fleet size of 20 trucks that is $60-$120 daily, $300-$600 weekly or $15,600 to $31,200 yearly that is going up in smoke. 

Additionally, your company is adding extra pollution to the environment and extra maintenance costs to your fleet. With idling rules in place, we recommend additional reminders posted in driver’s rooms, signs in the trucks and reminders at driver meetings.

Maintenance Program

With fuel costs continuing their unprecedented upward behavior, having a solid preventative maintenance program in place to make sure your trucks are running at peak performance is another key to saving. Make sure that your trucks are set up to have maintenance performed at the manufacturer-recommended intervals. 

Be sure the mechanics understand the importance of keeping the fleet up to date with PM’s. Have tire pressure be a key element in the preventive maintenance (PM) program. Under or over-inflated tires can take a real toll on vehicle performance. This will not only save you money on your fuel, but will also help keep your equipment operating at peak efficiencies and better resale value.

A truck not running at peak performance can loose over 5 percent of its fuel economy. If your trucks are averaging 12 MPG, losing 5 percent for a bad PM program would pull your mpgs down to 11. If your routes are running 20,000 miles a year that is an additional $453 a year per truck. On that same 20 truck fleet that is an additional $9,060 year.

OFF-Highway Fuel Cards

If your operation includes trucks tor equipment that is used off-highway your company is probably entitled to tax credits. These credits can range from .18 - .60 cents per gallon.  If your company is burning 5,000 gallons of fuel per year in an off-highway capacity that would translate into roughly $900 – 3,000 returned to your bottom line.

MPGs

We have talked about a few different topics and there is one common denominator to help a fleet operator know how well their program is going. The answer is MPGs, if you have or can get a solid MPG number for your fleet you will be able to see possible theft, long idling, poor maintenance or lastly poor driving habits that are occurring. Poor driving habits are a major cause for bad fuel economy.  Speeding, improper shifting, excessive accelerating and/or braking all contribute to poor fuel economy.

With a good MPG Management program in place you will be able to drive the behavior you want from your drivers and mechanics. Additionally, you will be able to catch a few thefts along the way. Some companies offer MPG bonuses if they outperform the company standard. This kind of program will save you money in the long run.

Let’s review the numbers:

• Fleet of 20 trucks with fuel at $3 a gallon traveling 20,000 miles a year, averaging 11 MPG
• Idle time saving $15-30,000 yearly
• Maintenance program $9,000 yearly
• Total cost before saving $ 109,080
• Total cost after saving (averaging idle time to $23,000) $77,080
• Percentage of saving improvement 29 percent 

Additionally, you will reduce or eliminate theft which is usually around 1 percent of your cost for fuel or another $1,090 savings.  Plus if you’re not using a major fuel card provider you are missing the chance to save up to 20 cents per gallon with their “best buy program.”

Fuel costs are not going back to $1 any time soon, if ever again.  As a fleet operator, you’re going to have to make sure you are getting your money’s worth when it comes to fuel. 

Glen Sokolis is the President of Sokolis Group, a fuel management and consulting company. The company can be reached at 267/482-6155.