As the auto industry evolves so too does the world of fleet, including the way fuel is managed. Indeed, with the likes of improved vehicle safety technology, the advent of telematics and the subsequent data it provides, fleets are finding these burgeoning technologies are helping how they manage their fuel spend.
How fleets have handled fuel spend has changed overtime, though it remains a big concern for many fleets, even with the aforementioned technologies, since fuel is one of fleets’ largest expense categories. Whether this means considering rightsizing, the continued utilization of fuel cards, or other relevant techniques, fleets are constantly looking for ways to keep fuel costs low to support the overall bottom line.
Rightsizing the Fleet
As mentioned, one approach to curb fuel spend is the effective application of fleet rightsizing, which is a management practice that can help fleet managers build and maintain more fuel-efficient fleets, according to the U.S. Department of Energy. This includes the removal of assets that are rarely used or unsuitable for current fleet applications, and/or with a higher fuel economy
Many fleets have looked into this practice and are implementing it into their operations, not only for achieving corporate sustainability initiatives, but to better manage fuel spend. Indeed, one fleet manager who spoke to Automotive Fleet on the condition of anonymity said that this was something his fleet utilized.
“We have been rightsizing our fleet for several years now, removing/reallocating underutilized vehicles and replacing trucks with subcompact higher fuel economy vehicles,” said the fleet manager.
Another example of a fleet utilizing rightsizing for the benefit of its fleet is AutoZone. AutoZone transitioned its fleet to one that consists primarily of small cars, pickup trucks, cargo vans, and passenger vehicles. Prior to this, the company had a fleet entirely made up of trucks. Clay Gaudet, fleet manager for AutoZone, said that, when this rightsizing was taking place with his fleet, that the company took into consideration how its drivers felt about the application of the newer vehicles, during the decision making process.
Reflective of this mentality, the U.S. Department of Energy said fleet managers should consider soliciting input from drivers when conducting a rightsizing review, as they can be very knowledgeable about how vehicles are being used to support operations. One fleet manager for a utility company, who requested anonymity, also factored in when his fleet turned to rightsizing the fleet.
“When you look at fuel spend for example, when you have managers in light-duty pickup trucks, and they really don’t haul anything, you’ve got to ask yourself why do they have light-duty pickup trucks? Why aren’t they in a sedan or an SUV for example?” said the anonymous fleet manager.
This is where driver input came into play for his fleet, said the fleet manager. This fleet has heavily turned to utilizing sedans during this rightsizing process, which the company has referred to its “fit by function” strategy.
“The conversation starts around sedan first, and if the sedans won’t work, we need to understand why it won’t work and we start understanding that job function that way,” said the anonymous fleet manager. “So we’ll hold one of those conversations about our light-duty trucks, for example, and we’d say to that our recommendation is to use a sedan. From there we ask them to help us understand their job function: what you haul, what you carry and why it can’t fit in a sedan. And we’ll start moving up from there, and that really gives us our baseline to start with the sedan and work our way to the SUV or why they need to stay in a light-duty truck.”
An essential part of any fleet is a standardized preventive maintenance regimen; its necessary for fleets to undergo regular periodic preventive maintenance checks to ensure that their assets don’t experience any major hiccups. With that, fleets have observed that when it comes to properly managing fuel spend, preventive maintenance is another important area to consider carefully.
The anonymous utility fleet manager noted that, with preventive maintenance, his fleet focuses heavily on asset needs based on mileage, as well as amount of hours and days the vehicle has run between PM checks.
“We follow those preventive maintenance schedules. A lot of times I’ve seen where companies will service a vehicle strictly by the mileage,” said the fleet manager. “But because we’re in a utility company, we’re watching the engine hours as well as the miles and then the days. So even if it doesn’t hit miles or hours, we’re at least going to bring that vehicle in and service it because it’s due by a time and date. So we want to make sure that’s complete.”
He also noted the significance of properly inflated tires during this process.
“Tire inflation is a big deal when you’re managing a fleet,” he said. “You’ve got to make sure you have proper inflation and recommended inflation for the application, but as well as the tire you choose to put on a vehicle and how it wears and how it affects the drivability of the unit, which could reduce your fuel mileage.”
It may also be worth noting that, when considering preventive maintenance in terms of fuel costs, maintenance expense during calendar-year 2017 had increased year-over-year, according to a report in the March 2018 issue of Automotive fleet.
For 2017, one of the key areas where maintenance costs increased was with labor rates, especially at service facilities located in high-cost-of-living metro areas. This was the opposite from what was found in the same study conducted the year before, which found maintenance expense, on average, declined.
Another option that some fleets consider when reducing fuel spend is turning to alternate-fuel vehicles. However, a major concern for fleets implementing alt-fuel assets is whether the investment in this segment is ultimately justifiable.
“The tough part about that, with fuel prices and oil being affordable today, the ROI is hard to justify when you’re looking at alternate fuel vehicles,” said one fleet manager from a utility company who wished to remain anonymous.
However, fuel prices have started to rise after remaining stable for the past five years.
Another fleet manager mentioned that while his fleet has not ruled out future implementation of alt-fuel vehicles, the current costs do not make it a justifiable option.
“The higher cost of some alt-fuel vehicles are the reason we haven’t considered them lately. We will continue to look at them in the future,” said a fleet manager for a pharmaceutical company who spoke under the condition of anonymity.
While corporate sustainability initiatives may result in some fleets utilizing alt-fuel vehicles, many fleets may struggle to find ways to appropriately implement. Range anxiety and the assets application are also key concerns fleets consider
“We are currently testing some markets for electric vehicles for delivery purposes, as we still have range anxiety for our sales force, other alternative fuels are more commonly available on vehicles much larger than what our fleet is currently using, so we have not pursued those alternatives,” said an anonymous fleet manager for an automotive replacement parts organization.
As mentioned earlier, the advent of fuel cards has greatly helped how fleets manage fuel spend. This has helped significantly with fleet managers properly managing fuel spend in their organization, especially since some fleets have experienced fuel fraud within their organizations.
The anonymous utility fleet manager said his fleet uses a WEX fleet fuel card, and the payment process is managed by the company’s fleet management company. However, the company’s fleet professionals create reports from this data, which has allowed them to monitor the transaction history, fuel capacity violations, premium fuel spend, and other key elements.
“Our internal fleet managers and fleet supervisors have monthly reports to push out and any violation is pushed out into our reports daily,” said the fleet manager. “So if we have capacity violations, such as more than three transactions in a day, we’re able to see that right away and we’re able to trigger out our fleet management dashboard, and it will set an alert to those supervisors and managers saying, for example, if they’ve had four trucks today that had more than three fuel transactions.”
Other fleets, such as MasTec AT, have found fleet fuel fraud to be a big concern for their operations but the implementation of fuel cards have greatly reduced the issues related from this.
“We have virtually eliminated fraud as an obstacle in the last year using data from systems like our fleet management company, human resources management, fuel card provider and telematics provider to detect theft and alert appropriate managers on a transaction by transaction basis, and in near time,” said Jeremy Muoio of MasTec AT.
However, Blair Schober of Red Hawk Fire and Security stressed that, should a fleet discover any driver dishonesty regarding fleet fueling, that disciplinary action should be considered.
“Typically, managers don’t take employee theft as seriously as they should,” said Schober.
“It usually results in a write up and behavior being corrected for a few months before the employee deviates again.”
Fleets have also noted idling is something that they factor in when it comes to reducing fuel spend, as this is generally considered a wasteful resource practice on the part of the company drivers.
“I think its fair to say any utility company, or any fleet of any kind of size, has issues with idling,” said the anonymous utility fleet manager. “What we have to understand is it idling? Is it a PTO idle? What’s causing the idle situation? It’s really more about us bringing awareness to our drivers around what’s an acceptable idling procedure and when it’s okay to idle, and what we call smart idling. We just want to bring more awareness to it and try to be prudent about what we’re doing.”
A PTO (power take-off) Idle, refers to the process through which power is taken from a running engine to operate a vehicle attachment or non-driving related application, according to Movolytics.
One way that fleets have looked to curb this, and other poor driver practices, is via telematics data. Telematics data can not only track idling, but it can also monitor vehicle speed and routing to provide further fuel savings.
Indeed, Muoio of MasTec AT said that telematics is the No. 1 tool that his fleet utilizes to curb fuel spend, but noted that proper business or administrative applications utilized from the data is necessary to effectively get the most out of these systems.
Beyond just fueling needs, some fleets are finding telematics have also curbed safety issues in their operations, which also reduces company costs via a reduction in vehicle damages and costs related to liability.
“We are currently testing event recording devices as a driver safety initiative, as an additional benefit with safer driving behavior we are seeing increased fuel economy,” said an anonymous fleet manager for an automotive replacement parts company.