The recent volatility in gasoline and diesel prices gives us a reality check as to how quickly fuel can dramatically increase fleet operating expenses. From January 2011 to March 2012, the average nationwide price of a gallon of regular unleaded gasoline increased 25 percent (from $3.08 to $3.84), which represents, on an annualized basis, an average increase of more than $650 per vehicle driving 2,000 miles per month.
A recent GreenRoad survey showed that, for 61 percent of 1,066 fleet leaders surveyed, fuel represents more than 25 percent of their fleet costs, and almost all expect fuel costs to rise in the next year. More than half of the GreenRoad survey respondents cited having goals to lower fuel costs, with the most conservative aiming for a 2-percent reduction and the more aggressive targeting 25-percent reduction over multiple years.
Recurring fuel price volatility has begun to change the equipment composition of many fleet operations. The cyclical volatility of fuel prices during the past decade has been the catalyst for many companies to switch to smaller displacement engines. Engine downsizing is an industry-wide trend, which first gained widespread momentum in 2006. The number of four-cylinder engines in fleet operations has increased every year since.
Switching to four-cylinder engines allows fleets (that primarily operate automobiles) to maintain the same-size vehicles necessary to meet fleet applications without downsizing to smaller vehicle classes. Helping facilitate the migration to smaller engines has been incremental horsepower improvements in smaller displacement, fuel-efficient engines. Some high-volume fleet models are now only equipped with four-cylinder engines, without a V-6 option.
Fleets are also adopting a number of other strategies to mitigate fuel-cost increases. Fleet managers are attempting to offset rising fuel costs by rightsizing their fleets with the most cost-effective class of vehicle per job application, more aggressive vehicle cycling to take advantage of the strong resale market, and exploring the use of hybrids and alternative-fuel vehicles.
One fleet in the midst of a multiyear rightsizing initiative is OTIS. “We started the vehicle downsizing process two years ago. This process will continue and no opportunity will be ignored to downsize vehicles,” said Phil Schreiber, fleet manager, North America for OTIS Service Center in Bloomfield, Conn.
Other fleets have adopted a minimum fuel economy target for new models entering their fleets, such as Red Bull North America, Inc. “We have downsized our vehicles and put a minimum 23 mpg combined restriction,” said David McCauley, fleet manager for Red Bull North America in Plano, Texas.
Another reason to downsize engines has been to achieve goals established in corporate-wide sustainability programs requiring greenhouse gas (GHG) emissions reductions. One example is Merck, a multinational pharmaceutical company headquartered in Whitehouse Station, N.J., which established a corporate-wide initiative to reduce GHG emissions of its global fleet by 12 percent in 2012 from base-year 2005. One prong of Merck’s multipronged strategy is to increase the number of four-cylinder models in its U.S. fleet.
Spec’ing Lighter-Weight Vehicles
Ultimately, fleet application dictates vehicle size. However, it is possible to spec a lighter vehicle without going down a class. When spec’ing vehicles, compare the weight of major components. For example, some engines weigh several hundred pounds less than others with the same horsepower and torque. Some engine pumps are much lighter than others for similar flow and pressure ratings. Aluminum wheels can save hundreds of pounds over steel wheels, especially for trucks, depending on the number of axles.
Every pound of extra weight requires an engine to work harder, decreasing fuel economy. Similarly, every pound deleted from truck curb weight not only reduces emissions, but can be directly converted into revenue-generating payload. Vehicles get better fuel mileage when not loaded with unnecessary weight. An extra 100 lbs. in a vehicle could reduce mpg up to 2 percent. However, rightsizing a payload-carrying truck to improve fuel economy requires caution. Some fleets, for example, have sought better fuel economy (and lower acquisition cost) by replacing larger trucks with lower gross vehicle weight (GVW) trucks. However, this increases the risk of overloading.
Individual weight savings start adding up, and proper specifications can eliminate unnecessary weight before a vehicle goes into service. For instance, an oversized fuel tank adds unnecessary weight. Unless the vehicle will be used in an area where fuel isn’t easily accessible, why carry around three or four days’ worth of fuel? A gallon of gasoline weighs 6 lbs. and a gallon of diesel fuel weighs 7 lbs. Factor in the weight of the fuel tank, and carrying 50 extra gallons of fuel could mean needlessly hauling up to 400 lbs. Similarly, look closely at upfit equipment and consider alternative, lighter versions to get the job done, such as lighter-weight bodies using high-tensile steel or composites.
Probably the best strategy to mitigate fuel costs is to maximize the fuel economy of vehicles being placed in service to take advantage of improvements OEMs are making in fuel efficiencies. Utilizing fewer cylinders, higher-speed transmissions, 4x2 instead of 4x4, and smaller vehicles in general are factors widely being implemented.
Another strategy is fuel-price hedging, which is getting interest among some centrally domiciled fleets that buy fuel in bulk for in-house refueling operations. These fleet managers are exploring implementation of fuel-price protection or hedging strategies to protect against future fuel-price volatility.
As fuel costs have increased, many fleets are scrutinizing additional ways to lower their total fleet spend. One way has been short-cycling into new, more fuel-efficient vehicles. Leveraging today’s historically strong resale market has helped companies offset rising fuel costs by cycling older, less fuel-efficient vehicles.
Eliminating ‘Rolling Warehouses’
There’s a direct correlation between vehicle weight, fuel consumption, and GHG. Decreasing the weight of vehicles is a difficult challenge for OEMs, especially when mandated to comply with ever-stricter safety regulations, which require new onboard equipment, such as stability control or stiffer bodies that can withstand tougher roof crash standards. In fact, the average weight of a vehicle in the U.S. and Japan has increased by 10 to 20 percent during the past 10 years, due to safety enhancements and increased onboard content.
The new 2016 and 2025 CAFE standards are forcing OEMs to refocus on vehicle-weight reduction to meet these fuel-economy standards. A recent survey of the members of the Society of Automotive Engineers asked how the automotive industry will meet the upcoming CAFE regulations. The majority (61 percent) said it will primarily involve engine downsizing with power-boost technologies. Other top responses included: hybrid and electric powertrains (51 percent), downsizing vehicles (32 percent), and greater use of lightweight materials (28 percent).
Until these new, lighter-weight vehicles enter the market, fleet managers can do their share by requiring drivers to eliminate weight that accumulates inside a vehicle. Some fleet managers have instituted a program to instruct drivers on a quarterly basis to remove all unnecessary items (weight) from their vehicles. They ask field managers to enforce these fuel-saving tips and discourage drivers from using their vehicles as “rolling warehouses” to carry everything they may possibly need — just in case. Over the course of a vehicle assignment, drivers accumulate a “cargo” of dated sales materials, point-of-sale demos, and seldom-used tools carried in trunks, storage bins, and back seats.
Ask drivers to unload all excess equipment, tools, and shelving, and carry only needed items. It is important to develop guidelines as to what may be carried in vehicles relative to tools, sales material, and payload. Not only does unnecessary weight consume additional fuel, it poses a potential safety risk, and causes unnecessary vehicle wear-and-tear.
It is critical that you make drivers energy conscious. Similar to the habit of turning lights off in unoccupied rooms, drivers should practice comparable energy conservation habits with fleet vehicles. If drivers cleared vehicles of unnecessary cargo, there would be less demand on the engine, increased fuel economy, and reduced tailpipe emissions.
Another effective fuel-reduction strategy has been idle-reduction programs. Fleets are taking steps to reduce the number of idle hours, thereby reducing both fuel consumption and carbon emissions. Reducing unnecessary idling is the simplest and easiest way for a fleet to reduce fuel costs and unnecessary emissions. In addition, excess idling also causes needless engine wear-and-tear and unnecessary noise pollution. A typical goal for many fleets is to reduce engine idling time to less than 5 percent, which is measured using onboard telematics devices.
Idling for long periods of time, whether at a job site, railroad crossing, or pulling off the road to make a cell phone call, consumes gasoline that could be saved by simply turning off the engine. Idle-reduction programs also support corporate sustainability programs. For example, every gallon of gasoline burned idling creates 19.5 lbs. of CO2. Similarly, every unnecessary gallon of diesel burned creates 22.4 lbs. of CO2.
Until the advent of telematics devices, idling was not perceived to be a major problem for fleets. But, once engine data was captured by fleets on a large-scale basis, it quickly became apparent that idling represented a significant problem. The amount of unnecessary idling varies by fleet, but some fleets have recorded idling as much as 35 percent of the time.
Eliminating one hour of idling per day will result in significant cost savings and emissions reductions over the course of a year. For fleets operating Class 3 and larger trucks, the savings are even more significant. For example, a typical truck fleet burns a half-gallon of diesel fuel for every hour a truck idles, and, in the process, adds the equivalent of 40 miles of wear-and-tear to the engine.
Many fleets have implemented anti-idling initiatives. Sears, which operates a fleet of 11,000-plus vehicles, has implemented a no-idling policy for all vehicles at the distribution facilities for Sears Holdings Logistics Services, headquartered in Hoffman Estates, Ill. Similarly, Ill.-based Commonwealth Edison Co. (ComEd) is engaged in a major effort to reduce idling among its fleet of 3,100 vehicles. According to ComEd, if vehicle idling was reduced by one hour per day among all ComEd fleet vehicles, it could annually eliminate an estimated 4.5 million lbs. of carbon dioxide emissions and save $724,000 in fuel costs.
Many fleets implement anti-idling programs using the “big stick” approach. However, the best (and most effective) way to achieve sustainable long-term results is through driver education. However, educating drivers is not as easy as it sounds. Some drivers mistakenly believe that frequently starting and stopping an engine uses more gasoline and causes additional wear-and-tear on the vehicle. This may have been a legitimate concern in the past, but with today’s fuel-injection engines, starting systems are more efficient and don’t require as much fuel to restart an engine.
Restarting an engine uses about the same amount of gasoline as an engine idling for 30 seconds. When idling for longer than 30 seconds, instruct your drivers to turn off the engine. Drivers should be certain to utilize this strategy only in situations where there is no possibility of collision.
A growing number of fleets are using telematics as the most cost-effective tool to curb “fuelish” behavior. One example is Atlanta-headquartered Genuine Parts, which determined drivers were idling company trucks two to three hours per day. Its drivers make 12-15 stops and deliveries per evening. They idle engines 15-20 minutes at each stop for a combination of reasons. Drivers typically want to maintain cab climate comfort, but many also feared frequent tailgate use would run down the battery if the engine wasn’t running. However, this proved to be a false concern. A test by the company’s liftgate installer determined liftgates could actually be cycled 14 times before the battery ran down.
Another common reason for excess idling is to operate an air conditioning system, so a driver can stay cool in the summer, or to operate a heater to stay warm in the winter.
Fleet managers struggle with this form of idling because they want to reduce fuel costs and emissions, but not at the expense of driver morale. The reality is that, for many employees, their vehicles are also their offices. It is up to the driver to exercise proper discretion. For instance, turning off the engine may disable vehicle safety features, such as airbags.
Modifying Driver Behavior
There’s a limit to how much a fleet manager can modify a fleet selector to decrease emissions and maximize fuel efficiency, especially if the majority of a company’s vehicles are gasoline- or diesel-powered. A fleet manager can only downsize so far before beginning to impact the fleet mission. The bottom line is that you can’t change the fundamental requirements of your business. You need to move employees and cargo in a cost-efficient manner. This necessitates a minimum equipment requirement to do so.
If a fleet is constrained by equipment limitations, the “last mile” to achieving corporate sustainability objectives is modifying driver behavior. This is possibly the greatest opportunity available to fleet managers to green their fleets. Most company drivers average 20,000 miles per year and driver behavior is a major influence in fuel consumption. To be a truly fuel-efficient fleet, you need to change your drivers’ mindsets to make them “energy-conscious” drivers. This must be a top priority. The way employees drive their vehicles can either increase or decrease fuel economy and GHG emissions.
While fleet managers say they are very fuel-focused, according to the GreenRoad survey, 44 percent feel their drivers don’t care about reducing their fuel consumption or improving mpg. Fleet managers realize the importance of modifying driver behavior and route optimization and have created platforms for their drivers to utilize. These platforms, primarily onsite and online safety training and vehicle telematics devices, have had great success influencing the way drivers behave while behind the wheel.
According to the EPA, a driver can impact the fuel efficiency of a vehicle by as much as 33 percent. Fleets are providing guidance to drivers on how even minor changes to driving behavior can have a big effect. Implementation of driver behavior training to reduce speeds, idling, and increase fuel economy awareness have gained momentum.
Fleet managers have turned to technology to help educate drivers on how to locate the lower-cost providers in their area. Fleets are beginning to utilize fuel locator and pricing applications found on smartphones, which identify recent pricing by local fueling stations, making it easier for drivers to locate the lowest fuel provider.
If you change the driving behavior of your employees, you have a direct impact on the amount of fuel consumed and the amount of emissions emitted. Even small increases in mpg can result in substantial savings when extrapolated across the entire fleet.
Fleet managers, who have implemented eco-driving training programs, report a 5- to 30-percent reduction in annual fuel consumption by changing driver behavior. In essence, the concept of eco-driving is changing driver behavior. Eco-driving refers to specific driving behaviors that can improve fuel economy, reduce operating expenses, decrease GHG emissions, and promote safe driving. In fact, eco-driving practices, by default, make employees safer drivers by discouraging aggressive driving and speeding. Many fleets correctly view eco-driving and safe driving as being intertwined. Besides decreasing fuel consumption, eco-driving also helps to lower other operating costs by extending the life of wear items, such as tires and brakes.
Basic eco-driving practices include knowing the proper way to accelerate and brake, using synchronized traffic lights to a driver’s advantage, driving at the optimum highway speed, and understanding when to use air conditioning. For example, aggressive driving (such as speeding, rapid acceleration, and braking) can lower fuel economy by 33 percent at highway speeds and by 5 percent on city streets. Minimizing unnecessary idling and maintaining proper tire pressure are other eco-driving practices. A typical fleet sedan consumes half a gallon of fuel for every hour spent idling. The modification of driver behavior is not a one-time effort; it is an ongoing, never-ending process.
Major fleets, such as Wal-Mart, Xerox, Schindler, Veolia Transportation, FedEx, and UPS have implemented eco-driving programs designed to modify driver behavior. For instance, FedEx is investigating the integration of five eco-driving practices into its online fleet management system reporting.
The five eco-driving practices, which FedEx successfully tested in Japan, include:
- Minimized idling.
- Gentle acceleration.
- Maintaining a steady speed.
- Easing off the accelerator early before braking.
- Judicious use of A/C.
In fact, tests conducted by Isuzu show that a single truck, averaging 35,000 miles per year, can reduce fuel consumption by more than 1,200 gallons by simply using eco-driving techniques. At an average $3.92 per gallon for diesel (as of press time), that would translate into annual savings of $4,700 per vehicle. For a 50-truck fleet, it would be $235,000 per year.
The challenge is to make eco-driving the permanent mindset of all your drivers. Unless there is an enforcement program with incentives, the danger is that drivers will drift back to old behaviors. It has been proven that by using more “carrot than stick,” these efficiencies can be maintained over the longer-term. To maintain driver motivation, there needs to be an ongoing eco-driving training program for new hires and periodic refresher courses for current drivers, offering tangible incentives for employees who perform well.
With the decreasing cost of telematics and GPS products, fleets have been more willing and able to adopt this technology to optimize fuel efficiency. By using telematics and GPS route optimization products, companies have seen a 10- to 15-percent decrease in fuel cost by significantly reducing the miles driven, route scheduling, reduced speeds, and idle shut-off tools. The expansion of telematics solutions supports efforts to minimize fuel consumption by reducing idle time and personal use. Telematics are also being used increasingly to geo-fence vehicles to reduce their use in unauthorized areas.
Some fleets are leveraging the data captured through telematics and integrating it with routing programs to minimize miles driven. In addition, they are looking for opportunities to monitor idling time and decrease it where feasible.