The Car and Truck Fleet and Leasing Management Magazine

Issues to Consider When Managing Fuel

April 2007, by Christine Erice

The cost of fuel is an ever-present concern. Fuel savings continue to be fundamentally important in running a fleet operation. With most fleets, fuel accounts for the largest percentage of operating costs, so fuel management is the logical place to start on the road to efficient fleet operation.

It is impossible to predict crude-oil prices accurately with so many unpredictable factors at work, including geo-political instability, global demand, and policy decisions on production volumes by major oil-producing countries.

Over the past year, the price of fuel has risen faster than general inflation. If this trend continues, the improving fuel efficiency will grow more critical. Even slight adjustments in fleet fuel handling can produce cost savings.

Whether with a fleet of 500 or 25 vehicles, a fuel management program can significantly cut needless paperwork alone. Tracking fuel costs and exceptions through a fuel mangement program simply makes a fleet manager’s job easier.

Many factors influence fleet fuel consumption, and the awareness of these factors, at all levels, is important to make real changes in managing fuel costs. Managing fuel use must be undertaken in a structured way with a clear monitoring process in place.

The main factors that impact fuel efficiency and the financial aspects of a fuel management program should be considered in the decision to institute such a program.

What is a fuel management program and who are the providers? A fuel management program (FMP) is a method to enable fleet managers to monitor and control fuel use and consumption for each fleet vehicle and the fleet as a whole.

A FMP encompasses many aspects, but essentially it recognizes that fuel is a precious environmental and operational resource. The right FMP allows tracking vehicles, drivers, and fuel usage at all times.

Before choosing a fuel management provider, properly calculating a fleet’s fuel needs and rate of consumption is important.

Applied Knowledge = Fuel Savings
From the beginning, understanding the factors that directly affect fuel consumption is critical.

Some factors are outside a fleet manager’s control, but it is helpful to understand their effects. However, other factors can be managed by the fleet manager’s choices and decisions. The most influential factor on fuel consumption within a business is people.

The driver has the most significant impact on fuel consumption and understanding drivers’ daily activities is vital to a successful FMP. Improved communication and focused training on such issues as idling, tire pressure, and cargo load can promote a more fuel-efficient fleet. Additionally, personal items (i.e. food, drink, etc.) charged on a company credit card while a driver fuels up easily adds unnecessary expenses. Such practices can be eliminated with a fuel management system.

Vehicle Choice Impacts Fuel Cost
The choice of fleet vehicles can significantly influence fuel performance. The following factors must be considered to minimize this impact:

  1. Vehicle specification: total vehicle weight, size, engine specs, engine power and torque, and drive ratios.
  2. Vehicle age: mpg and age of vehicles may vary between different makes and models.
  3. Vehicle condition: engine transmission, axles, and tires.
  4. Equipment and products: lubricants, telematics, and aerodynamics.

How Heavy is the Cargo?
What vehicles carry and how heavy the cargo significantly affect fuel consumption. Total weight is the critical factor, and this often changes during the journey as cargo is picked up and dropped off. Every additional axle increases weight and fuel consumption.

Strategic loading decisions improve efficiency, for example, weight distribution. If a driver organizes cargo correctly, the engine works less, and thus conserves fuel.

Weight is not a new issue in fuel consumption but, taking the time to sit down and crunch the numbers can put a tangible dollar amount on the decision between overloading and reorganizing.

Road Conditions and Weather
Routes, traffic, and road conditions are all important issues to consider in calculating fuel consumption and deciding which FMP work bests for a specific fleet.

Slow routes through hilly terrain drag down fuel performance in even the most efficient vehicles. A busy urban environment also impacts fuel consumption due to the amount of stopping and starting.

Weather is an uncontrollable element in dealing with fuel costs. Statistics reveal more fuel is consumed during winter months, a factor fleets in severeweather states must consider. Colder and shorter winter days can result in greater use of auxiliary equipment as drivers leave the engine idling to keep their cabs warm when parked.

Fuel Management Providers
The reality in choosing a fleet fuel provider is that it is not a competition. It is about choosing the proper method for the fleet’s fuel needs and concerns. An FMP must be customized to the fleet operation. Many companies offer services that help consolidate paperwork and adopt a more concise and organized system of operation. A provider should offer exactly what a fleet needs with an easy-to-understand system.

“It is simply the best option for fleets, large and small,” said Denise Cross, purchasing manager for United Technologies Corp. (UTC). “We operate a fleet of over 4,000 vehicles. It is impossible to monitor and manage our fuel consumption without a management system in place. It simplifies a large amount of work and makes it easier for us to track our fleet fuel consumption and find indiscretions with drivers,” said Cross.

Fleet Fuel Cards Offer Value
Fleet managers have long recognized the value of fuel cards in fleet management. Drivers do not have to carry large sums of cash; computer management programs detail how each vehicle is performing; and fuel can be purchased at better-than-pump prices.

Activity Reports Consolidated
Another perk of an outsourced FMP is the ease of operation. Most providers supply a monthly report, tracked by vehicle. Automatically deliverered, the reports can be custom-formatted with exceptions easily identifiable and viewed.

“Our fuel management provider takes care of everything for us. They have eliminated the guesswork by consolidating all of our information into one report,” said Cross. “Previously, we used several different cards, and it just caused us more headaches. We could not monitor mpg or fuel grade and we were noticing a lot of miscellaneous purchases made on the cards by our employees. We had no way to keep track of each vehicle,” said Cross.

Vehicle Tracking a Benefit
Another advantage of a management system is vehicle tracking. Most fuel management providers offer more than fuel management services; vehicle diagnostics monitoring is an added bonus.

Spotting irregularities in vehicle performance can help extend vehicle life and increase fuel savings. ‘Red flags’ on fuel consumption reports can be early warnings of oncoming maintenance problems. If a vehicle’s mpg appears inconsistent, another problem may need to be addressed. These situations can be easily tracked with the help of the proper fuel management program.

Justifying the Investment
Achieving fuel savings requires an investment of time, money, and effort. Financial expenditure on a fuel management program is easy to quantify. Establishing these costs at the beginning helps determine budgets, a benefit when monitoring program performance.

Costs, including investment in management, administrative, and operative time and training, can be eliminated when outsourcing these jobs to a fuel management provider. FMP systems make fleet operations easier and more accurate. Additionally, some companies accept a longer payback period than others.

A little investigation into fleet fuel consumption can educate fleet managers on the fuel management program and provider right for their fleet at the right price.

Every fleet investment should be researched thoroughly but, with fuel prices in constant flux, it is cost- effective to invest in fleet fuel management technology. On every level, it’s a no-brainer.

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