The cost of fuel has always been one of the greatest expenses for fleets. Between record-high fuel prices and “going green” incentives, there is a tremendous amount of pressure on fleets to control fuel consumption. Add to the mix a world full of customers clamoring for lower fuel surcharge rates to combat the impact of pass-through fuel costs, and you have an intensifying need for fuel management strategies. So you can embrace the definition of insanity – doing the same things the same way and expecting different results – or you can embrace business analytics and seize the opportunity to positively impact your fuel spend and consumption.

Where Do I Start?

There are two primary areas of opportunity for impacting your total fuel spend: purchasing and consumption. Breaking down the measurements into manageable areas will not only help you track your progress but also make it easier to assign roles and accountability more effectively. Consider the following diagram:

 

Purchasing

The importance of pricing negotiations and where you choose to fuel is obvious. But how do you determine what a good negotiated discount should be?  Which and how many fuel vendors should you partner with?  Which and how many fuel stops should you include in your fuel network?  When should you fill up or buy just enough to get your driver to a cheaper fuel stop?

The best way to answer these questions is to combine proven fuel optimization, business analytics, and benchmarking. Fuel optimization helps you make the right fuel decisions at the point of impact. It takes into consideration your negotiated discounts and the current rack prices, as well as state taxes. It also considers the driver’s route and on-hand fuel quantity. Combining these variables with proven algorithms enables fuel optimization to find you the best price on a route that meets your requirements.

What’s the point?  The point is fuel optimization alone can help a fleet with 100 trucks save hundreds of thousands in fuel purchases per year or a fleet with 1,000 trucks to save millions. The payback on the investment is mere months, which makes it pretty easy to cost justify.

Some quality business analytics can be invaluable as well. Thematic maps and drillable operational reports allow you to quickly see where problems exist and manage exceptions with ease. You can discover bottle necks in your fuel network, heavy traffic at non-network fuel stops and price anomalies.

Benchmarking allows you determine whether or not you are as good as you think you are. That cost plus or retail minus discount may not be quite as beneficial as your fuel sales vendor leads you to believe. How do you know?  If you think there is no variation in discount pricing from one customer to the next, even customers with similar purchasing volumes and patterns, then you are mistaken. Be careful about throwing all your volume at one fuel vendor. Leverage the sale and let them compete. You should do this on a regular basis to continually ensure you are getting the best deals, especially if you are growing.

Consumption

Even if you have the best discounts in the industry, there is still ample opportunity to curb your fuel spending by managing consumption. Miles per gallon (MPG) may be the gold standard for fuel efficiency, but how do you effectively impact your MPG?  If your MPG is maximized, what else can you do to reduce fuel consumption?

MPG is dependent on a range of variables, and some are more easily controlled than others. You can spec different equipment, from the original equipment manufacturer (OEM) to the engine or even to the add-ons, such as in-cab heaters and auxiliary power units (APU’s). Just make sure the ROI considers the total cost of ownership over the lifecycle.  APU’s can dramatically reduce idle, but they can also be costly to maintain, increase mechanical downtime and add little to trade values. Do not misunderstand.  APU’s have been employed in several fleets with great success, but just like anything else, diligence in purchasing is required. Factors such as geography, cargo weight, weather conditions and traffic conditions can make measuring MPG a bit more challenging, not to mention the fact that aerodynamic devices and even different tires can have an impact.

One of the easiest, most direct ways to improve consumption is managing engine idle time. This is where equipment add-ons such as APU’s have great benefits. However, reducing idle time can also be accomplished through old-fashioned communication and accountability. An idle dashboard by driver can really pinpoint behaviors that are needlessly costing you money. Wouldn’t you like to know if any driver idles his truck over the weekend just to keep his mini-fridge cold?  The bottom line is there is a reasonable threshold for idle time in a day, for typical weather conditions. It is very simple to set an exception limit and manage the outliers towards the middle. Every hour a truck idles, you burn roughly a gallon of fuel. Do the math.

An often-overlooked area for reducing fuel consumption is out of route variance. Comparing the miles you dispatched against the total miles driven will frequently reveal a significant amount of extra miles. Each of those extra miles costs you fuel, maintenance and possibly even time. Try not to lose any sleep thinking about the fact those miles have no fuel surcharge to help you recover any of that extra fuel expense. This is another great opportunity for some drill-down details highlighting exceptions. Determine an acceptable out of route threshold and manage the driving behaviors of the main offenders. On the flipside, see if some of your drivers beat the route provided and consider adjusting your routes to shave some miles on every trip.

Summary

There are many effective ways to mitigate fuel expenses. Not only will it save you a ton of money, but it will also improve your carbon footprint and contribute greatly to your going green initiatives. Fuel optimization, business analytics and benchmarking for both purchasing and consumption focus areas will make you more profitable, more competitive and more environmentally friendly. You can be a fuel miser or a gas guzzler. With really no incentive to be the latter, economically or environmentally, there is no reason not to adopt some new practices to minimize your fuel spend.

Recent articles by James Langley

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