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Reduce Fuel Spend by Modifying Truck Specs

April 14, 2008, by Mike Antich - Also by this author

 By Mike Antich 

For the first time ever, the price of dieselin many regions of the country exceeds $4 a gallon. Since Jan. 1, diesel priceshave risen more than 19 percent. The American Trucking Associations (ATA) predictsthat truck fleets will spend more than $135 billion on fuel in 2008. Thiscompares to $112 billion in 2007. If the ATA prediction comes true (and thereis no reason to believe it won’t), the amount of money truck fleets will spendon fuel in 2008 is the equivalent to the entire gross domestic product of Ireland!I don’t know about you, but I find this incredible.

Overall operating costs for Class 3-6 trucks increased in calendaryear 2007 compared to 2006. Operating costs (which include fuel, repair, PM,and tire expenses) promise to increase again in 2008 above the 2007 level. Thekey reason for last year’s increase was a more than 3-cents-per-mile (CPM) jumpin fuel costs and a 4- to 7-percent increase in replacement tire costs. All majortire manufacturers increased base tire pricing for fleets in 2007 and are continuingto do so in 2008 to counter rising material costs.

In addition, the mandate to use ultra-low sulfur diesel (ULSD) hasincreased the retail pump price of diesel. The increased cost of manufacturing ULSDhas resulted in an average of $0.06 per gallon increase over regular diesel. Onesilver lining is the anticipated 3-percent decrease in mpg for the new2007-compliant engines did not occur. According to most truck fleets, the newengines have not experienced degradation in fuel mileage.

There has been an indirect impact due to high fuel costs in ancillaryservices such as mobile fueling and towing. Many mobile and towing vendorsadded surcharges to cover higher fuel costs.

Modifying Truck Specs

Fleets are actively looking for ways to minimize fuel spend.Increasingly, they are looking beyond pump prices for fuel savings. One way toreduce fuel expenditures is by modifying truck specs to increasemiles-per-gallon fuel economy. For example, fleets in certain industries aremaking changes to their truck, upfit, and tractor specifications to helpimprove fuel economy.

PHH Arval recently conducted a study that showed fuel costs can bereduced by slightly over-spec’ing a truck.

Fuel economy was improved by as much as 0.3 mpg by slightlyover-spec’ing an engine to run more consistently in the “sweet spot,” choosinga gear ratio low enough to suit a fleet’s application and location and enablingthe correct fuel-efficient, engine-specific parameters.

Likewise, GE Capital Solutions Fleet Services cites four areas toconsider when spec’ing trucks to improve fuel economy:

1. Truck transmission anddrive axle ratio: By gearing a truck so the engine is running at a slowerRPM at a given speed, less fuel is burned. This must be balanced with meeting“startability and gradeability” requirements.

2. Engine horsepower andtorque: When taking advantage of the first point (gear fast, run slow), itmay be necessary to in-crease engine horsepower and torque to meet powerdemands at lower RPMs.

3. Multi-torque or multi-horsepower engines: These engines run ata lower rating when the driver is operating the throttle. When the cruisecontrol is engaged, the engine rating is increased to its higher rating. Thisencourages a driver to use cruise control, which can save fuel over adriver-controlled throttle.

4. Drivers’ influence on fuel economy: Driver training, in-truckdisplays, and telematics are used to modify driver behaviors.

Other specifications to decrease fuel expenditures include specifyingaerodynamic mirrors, moving air filters under the hood, dropping fender-mountedmirrors, and installing in-cab electronics for drivers to monitor fuel economyperformance while driving.

Altering tire specifications is also being investigated, such asusing low rolling resistance tires. However, the best way to reduce tire andfuel costs is to establish a process for drivers to regularly monitor tireinflation. To control replacement tire costs, eliminate driver behaviors thatdecrease tread life of the tires, such as speeding, excessive braking, drivingover curbs, and load distribution. Another cost reduction strategy adopted bysome fleets is the switch to retread tires and/or leasing tires.

A Multi-Prong Cost Reduction Strategy

Fleet managers are looking for relief in operating expenses byidentifying ways to counteract higher fuel costs. In addition to modifyingtruck specs, fleets are also focusing on training drivers to drive for improvedfuel economy. For instance, a controllable fuel expenditure is the eliminationof unnecessary idling. States, such as Californiaand North Carolina,are assisting in this effort by mandating idling limit devices. A growing numberof fleets are also researching, piloting, and implementing telematics solutionsto optimize routes and reduce idling.

In the final analysis, reducing fuel costs involves the adoptionof a multi-prong strategy. One important component in a multi-prong strategy ismodifying truck specifications. This practice has been verified to yieldmeasurable fuel reductions.

Let me know what you think.

[email protected]

Comments

  1. 1. jridings [ April 22, 2008 @ 07:58AM ]

    While modifying truck specs is a way to reduce fuel costs, another way to manage volatile fuel expenses is for fleets to enroll in a fleet card program. Fleet card programs can be part of the multi-pronged strategy described above.

    A main benefit of fleet card programs is to take advantage of negotiated discount rates. For example, one card provider, Comdata, offers both retail less and cost plus. Cost plus provides the lower fuel price, but this is not always the case. Comdata will calculate the better option at the time of the transaction for the customer and then process the transaction accordingly. Comdata guarantees lowest posted cash price, usually $0.08-$0.10 against the credit card price. This helps fleets by maximizing their fuel cost savings.

    Comdata’s Smart Buy solution tracks prices along with routes, then points out how drivers could have saved by fueling or driving in alternate ways. Comdata provides an exact figure including retail, wholesale cost, margin, and discounts.

    During times of high prices, fleets may be better off paying retail than buying wholesale (using bulk tanks). There may be cases in which truck stop discounts coupled with a percentage rebate from the card provider may turn out to be cheaper. Avoiding a significant capital expenditure such as bulk tanks and dispensing island pumps and needless to say the environmental liability could present a business case to fuel at major truck stop chains in lieu of your own storage. If storage already exists it might be held back as strategic inventory in times of short supply. Of course as successful cost saving program this depends on the routes and driver compliance.

    In order to have a best in class fuel program, fleets should look beyond just rebates and discount acceptance networks. They should take advantage of budgeted fuel (ability to cap the ppg) and really understand the margin management program (cost plus or cents off - the better of the two prices).

    Jeff Ridings UPS

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