Building a Fuel Management Toolbox
An effective fuel management program takes a holistic approach, involving the fleet manager, drivers, vehicle manufacturers, and alternative-fuel producers.
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Executing a successful fuel management strategy requires a toolbox of tactics that, in combination, can help control or mitigate the escalating - and fluctuating - costs of a top fleet expense. This tactical approach involves the fleet manager, drivers, vehicle manufacturers, and alternative-fuel producers.
In addition to best practices, out-of-the-toolbox thinking is often effective in minimizing the impact of prices expected to rise again this year near, if not beyond, the $3 per gallon milepost.
Fuel Card Capabilities Expand
Often, new ways to deploy familiar and proven tools help in the ongoing effort to manage fuel costs. Developed 25 years ago, fleet fuel cards initially provided wide accessibility, expense controls, and Level III data, which includes line item detail, fuel grade, cost per gallon/unit, odometer reading, and driver/PIN/vehicle number. The cards now are commonly used expense management tools integrated in fleet management programs. Today, with increasingly advanced technologies, these tools offer critical data mining and control capabilities.
"Fleets that are most efficient in the marketplace are taking advantage of real-time data capture to monitor fleet activities," said Bernie Kavanagh, VP, corporate payment solutions for Wright Express, a fuel management services company.
"The tools available range from alerts to fuel-price mapping...[with] immediate impact on the bottom line for a fleet," noted Kavanagh.
Much of the new fuel card technology is integrated with mobile communications systems. GPS programs providing real-time vehicle location can pinpoint the nearest low-cost fuel station.
Card controls are growing more sophisticated, according to Bob Cavalli, VP sales, indirect and cobrand, U.S. Bank Voyager Fleet Systems Inc.
"The ability to control purchases at point of sale is far more extensive than five years ago," said Cavalli. "Fleet managers have a huge menu of card controls to pick and choose those that best suit their fleet."
These controls could go beyond time of day, week day, daily purchase limits, non-fuel purchases, and fuel grade to GPS real-time data and authorizations.
"I can see GPS technology tied into a driver using other than a low-cost provider. The fleet manager would get a report and the driver is held responsible," said Cavalli.
Controls can be "hard" or "soft," he explained. A soft control would authorize two purchase swipes a day, but require a phone call for an exception on a third swipe. A hard control would simply prohibit the third swipe altogether.
Cavalli recommended capturing the fuel card Level III data and, "using all card controls available, determine what factors can't be controlled and create daily exception reports."
The caveat in structuring fuel card controls and exceptions, noted Cavalli, is to "remember the driver's mission. You don't want to make the driver's job more difficult."
As technology progresses, Kavanagh envisions such new fuel management tools as RFID, single-source data warehousing, and advanced telematics solutions.
Exploring Out-of-the-Box Solutions
Some creative fuel management tools aren't found in the traditional toolbox. Karen Healey, PHH Arval director of product management, responsible for environmental, risk, and safety services, cited one such creative solution.
According to Healey, one company's truck fleet supports service technicians who carried product parts and equipment in their vehicles. By shipping service parts directly to the customer, the company downsized to smaller service trucks, saving vehicle and fuel costs.
Healey also described expanded use of routing software to trim fuel costs. Companies have mined deeper into the software to identify rush-hour bottlenecks and reroute service and delivery drivers to less-congested streets. Another company schedules its product delivery fleet trucks to store sites during off-peak hours.
"The driver isn't sitting at the store waiting a turn to unload the product," said Healey. The trucks avoid costly idling time, and improved efficient delivery times can add an extra stop to the truck's daily schedule, Healey noted.
To uncover wasted fuel expense, BNSF Railway in 2009 piloted a "grass-roots," one-on-one program with drivers, reported Todd Nicholson, director of strategic sourcing and supply.
BNSF, through its principal operating subsidiary, BNSF Railway Company, operates one of the largest North American rail networks, with about 32,000 route miles in 28 states and two Canadian provinces.
The nearly 7,800-vehicle BNSF fleet of light-, medium-, and heavy-duty trucks supports crews that maintain the company's rail infrastructure.
With the help of its fleet management company Automotive Resources International (ARI), the BNSF pilot program targeted 1,000 vehicles. Drivers with high mpg or cost-per-mile records were identified through fuel card reports and exceptions.
An ARI staffer personally contacted each identified driver to review fuel expense-related issues, such as tire pressure monitoring, fuel type, non-fuel purchases, idling, maintenance, and cargo weight.
"It was a normal discussion with each driver to learn what's going on and suggest best practices," explained Chris Bartley, assistant manager, account management at ARI.
"Fuel card programs are data-rich, but you can't just send exception reports," said Nicholson. "The key was reaching out and talking to the person individually. You really have to have a real human being sitting down in conversation to change driver behavior. Drivers forget e-mails and other non-personal communications. A personal discussion has greater and lasting impact."
In the first six months of the pilot program, vehicle mpg increased and premium fuel and non-fuel purchases decreased.
"One of the areas that we targeted had a history of fraud incidents involving the fuel card. After the pilot program, we have had no incidents of fraud," said Brenda Thowe, BNSF vehicle fleet manager.
"Word spread like wild fire" among drivers that someone was watching and their personal actions mattered, Thowe explained.
The pilot program produced $50,000 net savings in the first six months, according to Bartley. "And those savings occurred when fuel prices were lower. With this year's increased gas prices, the savings should be more."
The program population will expand to 2,500 vehicles, said Nicholson.
Reducing fuel-consuming unnecessary vehicle idling simply through driver "counseling" proved more difficult for the BNSF fleet operation.
"We've been working on idling for some time, initially through communication," said Bartley. "Now, we're going to more of a technology fix."
BNSF vehicles are upfitted with power-on-demand engine features and idle technologies that slow the engine to regular idle rather than the faster rate PTO requires, Bartley explained.
Green initiatives often provide fuel cost savings. The general contracting and construction company DPR instituted a corporate green policy targeting a 25-percent reduction in the company's carbon footprint by 2015.
To help meet the goal, fleet administrator Terri Smith partnered with fleet management company Wheels Inc. to develop a vehicle selection program, expected to also produce significant fuel savings. The Redwood City, Calif.-based DPR will replace the company's Ford F-150 trucks (about two-thirds of its total 456-unit fleet) with Ford F-150s equipped with EcoBoost engine technology. The first replacements are expected to begin by early 2011.
All company vehicles must meet a 20-mpg mandate, said Smith. Drivers in large and mid-size SUVs will transition to more fuel-efficient vehicles, and all sedan drivers will be moved into hybrid vehicles, including Ford Fusion, and Toyota Camry and Prius models.
Switching to EcoBoost technology is expected to pay for the advanced engine in fuel savings in one year. Future savings will help fund the transition to hybrid vehicles, according to Smith.