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Posted April 10, 2018

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Cutting Fleet Fuel Costs: The Low Hanging Fruit

When we discuss fleet expenses, most often our concerns are with fuel. Although fuel is the number one variable expense in the trucking industry there are other factors that play into reducing the cost of your fleet’s fuel. Let’s look a little closer.

Fixed Expenses:

  • Depreciation
  • Insurance
  • Lease Finance

While fixed expenses are relatively small compared to the variable expenses, these categories can be addressed with proactive and smart negotiations on the part of the fleet manager. Insurance and leasing finance can fluctuate with the market, but if managed properly these fees can be adjusted to save enormous amounts throughout the year.

Depreciation, however, can be managed most effectively though employee resale programs. By implementing a broad reaching and aggressive marketing campaign, offering better than competitive pricing, and potential leasing or financing opportunities, resale can be favorable to both fleet and employee. Companies can benefit from the fast sale and savings while employees benefit from a well-maintained and generously priced vehicle.

By implementing a broad reaching and aggressive marketing campaign, offering better than competitive pricing, and potential leasing or financing opportunities, resale can be favorable to both fleet and employee.

A 500-vehicle fleet, selling half of its 150 off-lease vehicles annually to employees, and increasing the proceeds of these sales by $500 per unit (a very conservative assumption) would realize $37,500 in annual savings. — Government Fleet

Top 4 Variable Expenses:

  • Fuel: 75 percent
  • Oil: 2 percent
  • Tires: 6 percent
  • Maintenance/repair: 17 percent

While each of these categories will vary based on the region, vehicle and mileage, a rigorous preventative fleet maintenance program will help to address the overall condition of the fleet and optimize fuel usage. A preventative fleet maintenance program will also provide valuable data for future management strategies, mitigate downtime from equipment failure and help to retain a high value for fleet resale. A strong maintenance management program can extend the life of the fleet and save thousands of dollars throughout the year.

A fleet of 500 vehicles, each driving 24,000 miles each year, accumulates 12 million total miles annually. A reduction of a mere quarter of a penny per mile will bring savings of $30,000.

A preventative fleet maintenance program will also provide valuable data for future management strategies, mitigate downtime from equipment failure and help to retain a high value for fleet resale.

That said, even with the best preventative maintenance programs in place, fuel still makes up 75% of the total fleet costs – which is why fleet managers across the nation are focusing on fuel management strategies to cut costs and maximize performance.

Simple Ways to Save Through Common Sense Awareness

  • Fuel Only: Whatever method the driver uses to buy fuel, make certain fuel is the only item bought. Unless proper controls are put in place, drivers can buy non-fuel items such as food, beverages, tobacco products, and even lottery tickets using the fuel card. A fleet fuel card program usually enables the fleet to limit purchases to fuel.
  • Capacity: If the driver is assigned a four-door sedan with a tank capacity of 18 gallons, there’s clearly something amiss if a fuel transaction for 30 gallons comes through. Know the tank capacity of your fleet vehicles and be prepared to question transactions that exceed it.
  • Fuel Type: Premium-grade fuel can be as much as 20 cents per gallon more than regular unleaded. Make certain that your drivers aren’t using premium fuel, unless the vehicle owner’s manual requires it.
  • Self/Full Service: Full service is more expensive than self-service. Limit drivers to self-serve only.
  • Monitor bad driving habits: Poor driving can be as expensive as it is unsafe. By monitoring bad driving behavior, fleet managers can track specific actions in order to cut down on driver error and fuel consuming activities.

The Top 10 driving habits that improve mileage and cut fleet fuel costs

  1. Accelerate gradually avoiding jackrabbit starts.
  2. Anticipate stops, letting your foot off the gas as early as possible.
  3. Drive during the cooler parts of the day during summer and in hotter climates. Cooler denser air can boost power and mileage.
  4. Avoid long warm-ups in the morning.
  5. Use air conditioning vents and AC when traveling at higher speeds. Today’s air conditioning creates less drag on the engine than driving with windows open at full speed. Try not to use AC when driving at low speeds.
  6. Maintain accurate tire pressure. Low pressure reduces fuel economy and can damage tires
  7. Keep the air filter clean. Clogged filters reduce fuel economy and increase exhaust emissions.
  8. Plan your route efficiently.
  9. Pay attention to traffic and maintain a safe following distance
  10. Drive the speed limit.

Bigger Picture Savings: Fuel Management Tools and Fuel Cards

While vehicle maintenance and driver behavior are critical in fuel conservations, understanding the vehicle-fueling pattern is also important, and can provide even more data on how to address fleet fuel efficiencies and fuel savings. More and more fleet managers have implemented fuel management software to help track how fuel is purchased, routes are planned, and maintenance is scheduled. These programs are as beneficial to the bottom line as they are to the safety of the driver. They can provide even more savings in the efficiencies they bring to the operations through automation and data analysis. Fuel management reporting can provide MPG and other areas of efficiency measures for your entire fleet, along with GPS tracking data that can provide visibility on areas of high fuel consumptions, challenged driving behavior and potential theft. Fuel management programs can also aid in more effective dispatch deployment helping to optimize routes and cut down on longer trips.

While vehicle maintenance and driver behavior are critical in fuel conservations, understanding the vehicle-fueling pattern is also important, and can provide even more data on how to address fleet fuel efficiencies and fuel savings.

Fuel cards are invaluable in tracking costs and potential abuse or theft while simultaneously providing benefits and savings. By offering a fuel card, fleet managers can track unauthorized fuel purchases and eliminate non-fuel purchases if need be. Fuel cards and management programs help to avoid unauthorized purchases and allow for fleet managers to control exactly what the driver is able to buy. Fuel cards also give fleet managers the ability to limit the type of fuel drivers are using. Restricting the type of fuel purchased can save an abundance on fuel costs.

But not all fuel cards are the same. It is important to make sure you choose the right card and/or card provider that will allow you to track expenses online and provide fuel cost savings in other ways. The best fleet cards offer fuel discounts and possible discounts on food, entertainment and lodging. Even the smallest percentage saved can add up over time, particularly with large fleet expenses. Most importantly, fuel cards provide visibility and data that can help to optimize purchases and inform strategies for efficiencies and growth within the fleet. Trucking payment experts EFS have made a concentrated effort in developing the right card for any fleet, regardless of the size. The benefits each card offers helps fleets collect priceless data, manage expenses with detail, and save money.

Fleet One Edge Card

  • Largest nationwide fuel discount network at over 3,600 sites – average savings of 12 cents per gallon1
  • No fuel transaction fees in network2
  • Universal acceptance at over 8,000 truck stops nationwide
  • Nationwide discounts on major tire brands – save an average of $40 per tire
  • Thousands of additional savings on wireless, equipment, maintenance, parts, breakdown, hotels, and more
  • Credit to fund your operations and financing solutions to help you grow

EFS Fleet and Fuel Card

  • Best-in-class purchase and financial controls
  • Consolidated transactions on a single card
  • Better authorization controls
  • Fuel Card-level programming
  • Superior fraud prevention tools
  • Controls fuel spending
  • Real-time online account reconciliation
  • 24/7 online and mobile access
  • Seamless system integration with leading third-party software providers

EFS Mastercard® Fleet Card

  • Accepted wherever Mastercard® is accepted for Purchasing and/or T&E expenses
  • Cash price for fuel in the EFS truck stop merchant network
  • Superior purchasing controls
  • MCC/TCC Categories/Velocity Limits in Mastercard® network
  • Level III+ data

Fuel cards are invaluable in tracking costs and potential abuse or theft while simultaneously providing benefits and savings.

In the end you can reduce your fleet size, cut the number of miles traveled, get more MPG by preemptive maintenance, reduced weight and modified vehicle specs, but when it comes down to it, the most effective strategy for savings is the transparency and control that comes with technology, reporting and tools like fleet fuel cards. The most successful fleet is the fleet that is constantly learning from their own spending, leveraging controls, optimizing mechanics, and influence positive behavior. Lowering the cost of fuel is bigger than the fleet that you are filling — it is also in the management systems and tools used to optimize that fleet’s performance.

 

Resources:

 

http://www.fleetfinancials.com/article/story/2014/02/10-ways-to-reduce-fleet-costs.aspx

http://www.government-fleet.com/channel/operations/article/story/2008/01/proven-strategies-to-reduce-fleet-costs.aspx

http://www.automotive-fleet.com/channel/fuel-management/article/story/2016/05/50-ways-to-reduce-fuel-spend.aspx

https://www.shipleyenergy.com/energy-101-guides/guide/2017/05/08/ways-to-reduce-fleet-costs

https://blog.capterra.com/reduce-your-fleet-fuel-costs/


EFS

EFS


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