The Car and Truck Fleet and Leasing Management Magazine

How To Select A Fleet Fuel Card Program

January 2004, by Bob Cavalli

It stands alone as the single-largest variable fleet expense, by far. Fuel dwarfs all other operating expenses and can also be the most fertile ground for administrative efficiency and cost control. Savvy fleet managers use a fleet fuel card program to make it simple for drivers to fuel up, collect and mine key expense data, and provide expense data to management. But not all fuel card programs are the same, and not all fleets are the same. Before implementing a program, it is important to review your fleet’s mission, geography, composition, and your administrative and management needs. Then choose the program that best fits your fleet profile and meets management needs.

Types of Fuel Programs

Three primary types of fleet fuel programs are available.

Branded. All major oil companies offer fleet fuel cards for use at their own fuel locations.

Universal. Universal fuel cards are offered by an independent company or a fleet service provider. The independent providers (such as WrightExpress and Voyager) negotiate agreements with many suppliers, and the cards can be used at any supplier location. The same goes for fleet service providers that offer fuel programs (LeasePlan USA, PHH Arval, Wheels, ARI, GE Fleet Services, etc.). In some cases, however, the fuel card can be a major credit card (Visa, MasterCard), acceptable wherever those cards are.

Cardkey Programs. Cardkey providers operate their own gated fuel sites and purchase and sell their own fuel. The card provides entry to the facility and access to the pumps.

The Basics

It is often believed that the application of fleet service programs, including fuel cards, is a function of fleet size, with larger fleets being better candidates than small ones. This, of course, isn’t true. A fleet program’s effectiveness is more a function of geography than size. Many very large fleets (municipal and county fleets are prime examples) are centrally garaged or operate in relatively small areas. These fleets can more easily negotiate agreements directly with local vendors for fuel and maintenance and repair services. Similarly, a much smaller fleet that operates over a multi-state area can far better serve its drivers by using a fleet service program. The same is true with fuel programs. If your fleet, large or small, operates within a small area, the universal card is really something of overkill. A localized fleet can use a cardkey program very efficiently. Branded cards are also useful for local fleets. It can be just as effective; however, to negotiate agreements with local suppliers, often in return for discounts. The primary drawback of such agreements is that they often cannot provide the kind of data and detail a fleet manager needs. Nearly all government and utility fleets, and some private commercial fleets, use alternate-fueled vehicles. Whatever fuel program option is used should include ample availability of such fuels and a means by which drivers can quickly and easily access them.

Dispersed Fleets

Although any of the three major fuel card options can be considered, fleets whose vehicles are geographically disbursed over an entire state, several states, or nationwide, cannot take full advantage of the development of local sources. When vehicles are not centrally garaged and are assigned directly to drivers, a fuel card program requires either smaller local offices or negotiated agreements with individual drivers. The primary difficulties in such an arrangement comes with payment of charges and collection of fuel cost data. The relative advantages and disadvantages of fuel management programs for dispersed fleet categories include:

Single State. Any of the three options can be used. Many cardkey programs have enough locations to provide excellent coverage for a statewide fleet. Universal cards, whether credit card- based or independent, provide more than enough coverage at multiple locations. If using a branded card, however, keep in mind that some oil companies are more predominant in particular regions of the country. Make certain that the brand chosen has adequate coverage in your state.

Multi-State/Regional. Again, all three options can, and should, be considered. However, as the size of the area in which your fleet operates increases, cardkey programs become more difficult. Although many such programs have coverage in broad regions of the country, clearly you should match their location grid with your own vehicle locations, to make certain that drivers aren’t forced to travel great distances to obtain fuel.

National. The suitability of the programs begins to narrow when the fleet is dispersed nationwide. Benefits of cardkey programs begin to decline when fleet vehicles are located across many states in different regions of the country. For these fleets, both branded and universal cards provide the kind of national coverage required.

Administrative Requirements

An effective fleet management program extends beyond simply driver convenience in purchasing fuel. Fleet managers cannot manage fuel costs without proper and timely data, and companies must be able to establish security and use limits on credit cards issued to drivers. Areas that should be addressed are:

Billing. Make certain that the vendor can provide billings you can use. Most companies require at least a centralized bill for the fleet department. Many others require that at least an information billing is sent to field locations or division offices. Key information, such as location codes, vehicle number, and driver name should also be available.

Data. Fleet fuel purchases generate a great volume of data, including gallons purchased, cost per gallon, total transaction cost, date, day of the week, time of purchase, odometer reading, vendor name, and more. This data is indispensable to manage fuel costs. The vendor should be able to provide this data either directly to the fleet, or downloaded to a fleet management system. If the fuel vendor provides data directly, fuel management reports, from basic cost-per-mile to sophisticated exception reports, should be available. In many fleets, the regular updating of odometer readings is necessary to manage all fleet expenses; thus, this fuel data should be updated regularly.

Security. It is important to remember that a fuel card is a credit card. The possibility always exists that drivers will either purchase items other than fuel, or fuel for other than a fleet vehicle. A fuel card program must minimize such use to protect the fleet from unauthorized expense. This security issue can be handled in a number of ways. Many fuel cards require a unique PIN before allowing fuel to be pumped or a transaction authorized. Others place dollar limits on individual transactions or screen out certain vendors.

Keys to Success

Several keys to the selection of a fuel management program can help you ensure success:

  • Know the options available. Cardkey, branded, and universal programs are available.
  • Know your fleet. How geographically dispersed are your vehicles? What kind of fuel do you require and in what volume? What kind of security best suits your needs?
  • Know your data requirements. Will you depend on the fuel vendor to provide data directly? Do you have an in-house fleet management system, or do you use a Web-based system provided by a lessor or other fleet management vendor? How often and in what form do you need data updates?
  •  

    Careful preparation, knowing what you need and where, will make the task of choosing your fuel management vendor fast and effective. It is often believed that the application of fleet service programs, including fuel cards, is a function of fleet size, with larger fleets being better candidates than small ones. This, of course, isn’t true. A fleet program’s effectiveness is more a function of geography than size. Many very large fleets (municipal and county fleets are prime examples) are centrally garaged or operate in relatively small areas. These fleets can more easily negotiate agreements directly with local vendors for fuel and maintenance and repair services. Similarly, a much smaller fleet that operates over a multi-state area can far better serve its drivers by using a fleet service program.

    The same is true with fuel programs. If your fleet, large or small, operates within a small area, the universal card is really something of overkill. A localized fleet can use a cardkey program very efficiently. Branded cards are also useful for local fleets. It can be just as effective; however, to negotiate agreements with local suppliers, often in return for discounts. The primary drawback of such agreements is that they often cannot provide the kind of data and detail a fleet manager needs. Nearly all government and utility fleets, and some private commercial fleets, use alternate-fueled vehicles. Whatever fuel program option is used should include ample availability of such fuels and a means by which drivers can quickly and easily access them. Dispersed Fleets Although any of the three major fuel card options can be considered, fleets whose vehicles are geographically disbursed over an entire state, several states, or nationwide, cannot take full advantage of the development of local sources. When vehicles are not centrally garaged and are assigned directly to drivers, a fuel card program requires either smaller local offices or negotiated agreements with individual drivers. The primary difficulties in such an arrangement comes with payment of charges and collection of fuel cost data. The relative advantages and disadvantages of fuel management programs for dispersed fleet categories include:

    Single State. Any of the three options can be used. Many cardkey programs have enough locations to provide excellent coverage for a statewide fleet. Universal cards, whether credit card- based or independent, provide more than enough coverage at multiple locations. If using a branded card, however, keep in mind that some oil companies are more predominant in particular regions of the country. Make certain that the brand chosen has adequate coverage in your state.

    Multi-State/Regional. Again, all three options can, and should, be considered. However, as the size of the area in which your fleet operates increases, cardkey programs become more difficult. Although many such programs have coverage in broad regions of the country, clearly you should match their location grid with your own vehicle locations, to make certain that drivers aren’t forced to travel great distances to obtain fuel.

    National. The suitability of the programs begins to narrow when the fleet is dispersed nationwide. Benefits of cardkey programs begin to decline when fleet vehicles are located across many states in different regions of the country. For these fleets, both branded and universal cards provide the kind of national coverage required.

    Administrative Requirements

    An effective fleet management program extends beyond simply driver convenience in purchasing fuel. Fleet managers cannot manage fuel costs without proper and timely data, and companies must be able to establish security and use limits on credit cards issued to drivers. Areas that should be addressed are:

    Billing. Make certain that the vendor can provide billings you can use. Most companies require at least a centralized bill for the fleet department. Many others require that at least an information billing is sent to field locations or division offices. Key information, such as location codes, vehicle number, and driver name should also be available.

    Data. Fleet fuel purchases generate a great volume of data, including gallons purchased, cost per gallon, total transaction cost, date, day of the week, time of purchase, odometer reading, vendor name, and more. This data is indispensable to manage fuel costs. The vendor should be able to provide this data either directly to the fleet, or downloaded to a fleet management system. If the fuel vendor provides data directly, fuel management reports, from basic cost-per-mile to sophisticated exception reports, should be available. In many fleets, the regular updating of odometer readings is necessary to manage all fleet expenses; thus, this fuel data should be updated regularly.

    Security. It is important to remember that a fuel card is a credit card. The possibility always exists that drivers will either purchase items other than fuel, or fuel for other than a fleet vehicle. A fuel card program must minimize such use to protect the fleet from unauthorized expense. This security issue can be handled in a number of ways. Many fuel cards require a unique PIN before allowing fuel to be pumped or a transaction authorized. Others place dollar limits on individual transactions or screen out certain vendors.

    Keys to Success

    Several keys to the selection of a fuel management program can help you ensure success:

    • Know the options available. Cardkey, branded, and universal programs are available.

    • Know your fleet. How geographically dispersed are your vehicles? What kind of fuel do you require and in what volume? What kind of security best suits your needs?

    • Know your data requirements. Will you depend on the fuel vendor to provide data directly? Do you have an in-house fleet management system, or do you use a Web-based system provided by a lessor or other fleet management vendor? How often and in what form do you need data updates?

    Careful preparation, knowing what you need and where, will make the task of choosing your fuel management vendor fast and effective.

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