Fuel prices have been on the rise so far in 2019, which is something fleets need to be cognizant of. As of April 22, 2019, conventional retail gasoline prices have been on the rise, with the latest weekly U.S. regular conventional retail gasoline prices resting at $2.84, according to the U.S. Energy Information Administration (EIA).
Fortunately, fuel prices are expected to be down 3% in summer 2019 when compared to 2018 according to EIA, but preparing to manage fuel simply based on tracking trends at the pump isn’t enough. Modern day technology, effective vehicle selection, and driver behavior are major components that also impact fuel spend.
These are tried and true methods that are designed to work in the interest of improving fleet fuel spend, but understanding methods and certain nuances can further help fleet managers curb fuel spend in an area that often shows fluctuation.
Proper Vehicle Selection
Considering the vehicle types a fleet should be incorporating into its overall operations has major impacts on how much fuel is spent, not to mention total cost of ownership (TCO).
Not making intelligent decisions in this area can cause major implications. For example, a fleet utilizing a majority of sedans versus one that has more pickups might end up spending less on fuel as a result of mpg differences. More important, however, is identifying vehicles that are best suited to fit the needs of the organization.
One fleet manager, Peter Belloli, CAFM, associate manager, Sourcing - Fleet - USA/Canada, MilliporeSigma, said his fleet allows drivers to select the type of vehicle that they utilize for work. Reflecting current vehicle purchasing preferences, Belloli said his driver’s typically select SUVs and CUVs, which generally yield higher mpg. He said this has contributed to a rise in fuel spend for his fleet.
“The fleet department is cognizant of mpg ratings but being a pharma company, the need to attract/retain sales talent overrides any approach to offer smaller vehicles,” he said.
Despite this, however, he said that the fleet has been able to offset the costs due the higher resale value that these vehicles types yield. It’s also benefited the fleet in a way that cannot be measured monetarily: driver satisfaction.
“Drivers have been pleased with choices and thus (are) happier,” he said. “Not that many carry a lot of equipment so it is more appreciated from a lifestyle perspective.”
When it’s applicable, fleets should consider rightsizing to help identify vehicles that provide better fuel economy.
“When you’re talking about mpg data, are you identifying vehicles in your fleet that for whatever reason are getting a lower than expected mpg, so that you can use that as a jumping off point to find out why that might be the case, and then to make some changes as is appropriate,” said Larissa Clinard, CAFM, fleet manager, J. F. Ahern Co.
Thurman Register, fleet manager for Southern States Cooperative, said rightsizing was a component to addressing fuel spend in his fleet, though had some caveats.
“Fleet rightsizing – as we continue to right size our fleet we have seen fuel patterns change. In some areas we reduced fleet size, in others increased – however as we move and utilize the assets more efficiently the overall fuel gallons consumed are reduced,” said Register. “We are seeing a trend in tools and equipment used on our trucks to more electric – therefore idle times are being reduced to run things such as compressors for air tools, etc.”
Correct Driver Behavior
But it’s not just the types of vehicles themselves that will have an impact on fuel spend, it’s how they are utilized within an organization.
There are myriad driver behaviors that can have a greater impact on fuel spend more than any other issues, which includes ineffective routing, excessive idling, overspending by purchasing premium fuel types that are not necessary, and fraud.
“Are drivers filling up more than what the vehicles tank capacity is? And is the fuel a different grade than you would be expecting? This could indicate that the fuel card is being used for things other than the vehicle that is assigned to them or could indicate fraudulent activity,” said Clinard.
Excessive idling is a common concern among fleet managers, but being able to identify the reason idling is occurring, whether this means making changes to the fleet policy, such as creating an idling threshold that works best for the company, or identifying problematic drivers where idling is seen occurring the most.
Speaking of problematic drivers, improving driver safety will also have an impact on reducing fuel spend; this includes curbing aggressive driving tendencies.
“Aggressive driving (speeding, rapid acceleration and braking) wastes gas,” according to the U.S. Department of Energy. “It can lower your gas mileage by roughly 15% to 30% at highway speeds and 10% to 40% in stop-and-go traffic.”
The Latest Technologies
When the discussion of reducing fleet fuel spends arises, modern day technologies are also often brought in the conversation. Telematics solutions are far and away some of the biggest drivers that fleets consider when looking to technology to assist, and the technology only continues to get better.
“The evolution of telematics into a powerhouse tool set for fleet managers can be a business differentiator for those that embrace the technology and mine the data for actionable events,” said Register.
The implementation of fuel cards also plays a huge role in helping fleets address fuel spend. Belloli mentioned that having a more robust fuel card system has helped him provide a more detailed analysis of payments on fuel card. He detailed the benefits of Level 3 fuel card data, which incorporated into his fleet operations.
“Level 3 data includes more info as to station address, quantity purchased, fuel grade, date/time, PIN and can also include more detailed description of non-fuel items purchased inside station (i.e., windshield fluid vs. candy bar) if fleets allow non-fuel purchases. Level 3 just means more detailed data sent by card company vs Level 2 being more bare bones,” said Belloli.
Register also utilized a fleet fuel card program which has helped create new goals for his company to achieve with regards to fuel spend.
“We have an ongoing fuel management strategy – piloting several things such as driver push notifications for lowest cost fuel options based on their location, we challenge our divisions to reduce idle time percentages by asset type and function,” he said.
But beyond what fleet vendors and suppliers can offer, contemporary vehicle technologies are also something that fleet managers might want to consider when looking to curb fuel spend.
“The single thing we consult with fleets about to reduce their fuel spend, is to modernize their fleet, because those older vehicles are polluters. You’re not taking advantage of the technology that’s happened in the last several years,” said Saltzgiver, CAFS, Mercury Associates, Inc., director business development. Saltzgiver was also previously VP of fleet operations for Republic Services and the Coca-Cola Company.
Considering the aforementioned ideas related to vehicle selection, for example, fleets might want to consider utilizing vehicles that have built-in stop and go technology.
“On average, every hour of idling is a gallon of fuel used,” Saltzgiver said. “That idling adds up, and that’s how the automotive manufacturers are combating it.”
According to Belloli, other technological advancements that has helped curb fuel spend in his fleet also includes low-resistance tires, active grill shutters, better vehicle aerodynamics, smaller engines, and light weighting of frames/parts.
Get With the Program
Much of the aforementioned practices cannot simply be done independently by the respective fleet manager. This is where third-party help is necessary, and is ultimately aimed to provide an ideal ROI, beyond just saving fuel costs.
“Do you have a partner or program in place where you are getting good data from whoever you are using to manage that fuel spend? For a lot of people that’s a fuel card company or FMC with a fuel card program in place. And are they giving you reliable data that you can drill down and take a look at to make improvements?” said Clinard.
These companies are also designed to help fleet professionals stay abreast of the changes happening within the industry.
Technology exists to make our lives easier and managing fuel spend for fleets is no exception. It’s easy to acknowledge how much fuel spend can help fleets, but staying current as newer technology is implemented and leveraging the capabilities of said technology can be tough.
“Our industry is evolving at such a rapid pace in the technology space it’s easy to get left behind if you are not staying current. The best way to approach that is through key business partners (vendor relationships) – once they understand your business you can quickly develop and adapt a technology solution that will provide the best ROI,” said Register.
Should You Utilize Alt-Fuel Vehicles?
Considering alternative fuels is also a route for fleets to consider when looking to cut back on fuel spend, but there has to be a realistic feasibility to incorporating the technology.
“Due to our wide variety of fleet vehicle types and the rural settings we operate in there is a very limited use case in our fleet for alt-fuel vehicles,” said Register. “Where it makes sense in our footprint - in the urban, densely populated areas where our vehicles territory is smaller and there is greater infrastructure to alt-fuel sources. Currently we utilize propane autogas as an alt-fuel source in a small portion of our fleet.”
There is consideration by fleets to factor in alt-fuel vehicles, e.g. if the company has a sustainability initiative and is trying to meet its goals, but for some implementing alt-fuels is considered on a case-by-case basis.
“We have offered hybrids in the past but they don’t always make financial sense as we are on a 36-month replacement cycle. It’s a case-by-case basis when new models come out,” said Belloli.
Alternative fuel vehicles are, on average, more expensive to acquire, and factoring in maintenance and other unique challenges are things to consider.
“I think the biggest issue you have with alternative fuels right now is the incremental cost on the purchase,” said Saltzgiver. “Those become pricey, and it’s hard to distribute that over the life of the vehicle. When the pricing becomes more competitive, or when fuel costs go higher than they are now.”
He added, however, that there are legitimate applications, for instance, if the fleet is domicile and the vehicles need to return to a central location at a certain time, for example, refuse fleets.