Best Practices: Reducing Fuel Spend
Fuel prices continue at historic levels, hitting many fleets right where it hurts – in the pocketbook. The question sure to be asked again in fleet managers’ and company executive offices is, “What can we do to reduce our fuel expenditures?” Automotive Fleet spoke with several fleet managers to see what they were doing to save on fuel.
Selecting the Right Station
Sara Lee Foodservice has rolled out a fuel reporting system that helps area managers identify a complete range of fuel prices in their vicinity, according to Pete Nester, senior fleet manager. Nester manages a fleet of 650 vehicles containing small vans and medium-duty trucks.
With the help of the company’s procurement department, Nester began investigating fuel consumption in his fleet. “We looked at what we needed to know to manage fuel expenditures. We consolidated all that reporting with a live-time system that can tell us fuel prices within minutes,” said Nester. “That has helped us with a supplier who can now tell us current pricing, based on what was just bought. The system can drill down to states, cities, and zip codes.”
Local managers can access the system and communicate to drivers in the field the nearest low-cost fueling station.
“We’re already seeing a significant decrease in fuel costs,” said Nester. “Managers have been changing their buying habits. One manager, for example, had been buying at urban fuel stations and has moved to rural locations where the price was better.”
One Fuel Card Works Best
Joe Micari, director, fleet operations, American Red Cross/Biomedical Unit, reports that requiring the use of the same fleet fuel card throughout the 35 Red Cross regions provides several benefits. Where allowed, the cards accommodate deduction of state motor fuel taxes at the pump.
In those cases where the deduction is not allowed, quarterly reports tracking fuel purchases are used to substantiate federal and state refund claims. The card is also an excellent tool to monitor mileage and maintenance requirements. Finally, said Micari, “We have realized administrative savings as a result of paying one monthly invoice for fuel.”
USG Corp. Fleet Operations Supervisor Maria Williams, based in Chicago, Ill., used a fleet management program for six years, and the one operational area she couldn’t measure was fuel.
“Now we have a national fuel card,” said Williams. “It has allowed us to capture all fleet costs and to know at any given time exactly where those costs are.” Drivers are limited to three transactions per day with a dollar limit.
Williams runs total expense reports, accessed through Wheels, her fleet management company, which drill data down to individual vehicles by driver and vehicle class, year, make, and model. “Through analyzing this data, we can see where to trim costs,” she said.
Replace the ‘Gas Guzzlers’
A growing number of fleet managers report the price of fuel is influencing their vehicle selector decisions. Although concerns about fuel prices have been heightened for the past several model-years, it appears that a growing number of fleets now are substituting more fuel-efficient models for low-mpg vehicles on their selectors.
According to Charles Stevenson, CAFM, manager of fleet operations for Aqua Pennsylvania in Springfield, Pa., “The biggest change to our fleet for 2008 is adding more vehicles with better mpg.”
Henkel Corp. is conducting similar deliberations. “We will be making changes in our 2008 buy to include new models that provide improved fuel economy,” said Vinnie Fugaro, purchasing agent for Henkel Corp. in Rocky Hill, Conn.
The sentiments of concerned fleet managers were best summarized by Debbie Mize, fleet/relocations manager for Hallmark Cards in Kansas City, Mo. “Fuel economy is playing an even larger role than normal,” said Mize. “Fuel has always been important, but even more so now that prices are so high.”
A company-wide green initiative led to a planned total replacement of fleet vehicles at Infinity Insurance. To determine how their operation could fulfill the environmental stewardship directive, fleet team members Judith Jones, Chuck Kukal, and Beverly Williams approached their fleet management company and were invited to participate in the Environmental Defense / PHH Arval “climate-neutral” program.
The first step was a fleet evaluation, which pinpointed a selector change from Infinity’s predominantly Jeep Liberty fleet to a more environmentally friendly model, according to Jones. The company began replacing the Liberty with the Jeep Compass 2WD compact SUV, and achieved 21-percent better fuel economy.
Infinity’s insurance adjusters, investigators, and marketing business development staff need the room and flexibility SUVs offer. The vehicles are used as “rolling offices” in 17 states, said Kukal. “By switching out to Jeep Compass, with the new World engine, we are now seeing 21 mpg versus 16 mpg.”
The Compass is also a four-cylinder and requires only unleaded fuel, Kukal noted. The Environmental Defense-PHH Arval program offered other environmental conservation opportunities. “We partnered with a Chino, Calif., dairy farm to purchase greenhouse gas offsets to balance our fleet emissions through investing in the farm’s manure conversion project,” said Jones.
However, there is a limit to how much fuel efficiency you can wring from a vehicle and still have it capable of fulfilling the fleet application, Despite high fuel costs, some fleet applications do not allow the luxury of being able to change vehicles.
Watch Your Speed
Joe LaRosa, associate director, worldwide fleet administration at Bristol-Myers Squibb has a simple solution. In addition to fleet policy mandates and fuel management programs, “How about driving the posted speed limit?” he asks. “I have sent reminders to all drivers to conserve fuel by being more aware of their stops and starts, as well as by slowing down.”
As fuel prices continue to rise, fleets can take many actions to reduce their fuel expenditures. These are just a few ideas. What’s your fleet doing to reduce fuel costs?