Reducing Fleet Fuel Costs

May 18th, 2017

Even with the current low cost of fuel, fuel continues to account for a large percentage of a fleet’s operating budget. Today, there are a number of strategies companies can implement to reduce the amount of money spent on fuel.

By Eric Gandarilla

Through the implementation of telematics software, retraining drivers, and clamping down on a widespread issue of fuel theft, Steve Doss, the cost control manager of Hammer Construction, was able to reduce his company’s fuel spend by 37% in a little under two years.

Doss said that a large contributor to his company’s fuel cost reduction has simply been the cost of fuel going down. However, a larger reason for the reduction in fuel cost, he said, has been his company’s complete overhaul of driver mentality.

“I would say maybe a third of [the company’s fuel cost reduction] has been due to the cost of fuel actually coming down,” said Doss. “The other two thirds I would attribute to just training drivers, and changing driver behavior, driver mentality.”

Hammer Construction, headquartered in Norman, Okla., is located about 20 miles south of Oklahoma City. The company, which has a fleet of approximately 150 vehicles, has six locations, five in Oklahoma and a single one in Texas.

Doss was hired as the cost control manager in July 2015, and when he joined the company, the biggest contributor to fuel expense was fuel theft. The driver mentality at the time, Doss said, was that being able to gas up their personal vehicles was a “perk of the job.”

“Ninety-nine percent of the fuel theft was misuse of their fuel cards. They weren’t capturing the true fuel spend. Guys would have their wives drive their personal vehicles and meet them at the gas station,” said Doss.

“We had one guy where every time he would fuel up a company vehicle, he would just leave the pump running and let all of his friends who had diesel vehicles fuel up their vehicles.”

At the time, he said, fuel cards were issued to individuals and not vehicles. Shortly after joining the company, this practice was changed. Now fuel cards are issued to vehicles attached to a VIN number. Another tool that has provided a lot of assistance in combating fuel theft has been the use of telematics software that allows them to track their driver’s routes.

Doss, who uses WEX telematics, says that the very fact that drivers learned that there would be telematics software keeping an eye on their driving habits significantly reduced the rate of fuel theft.

“Tracking has been huge for us, to be able to catch fuel theft and for fuel savings. I run the routes these guys are taking and then tell them that if they would have taken this other route, they could have saved 15 miles,” said Doss. “And I tell them ‘this might not sound like a lot to you, but when you start adding up the fuel savings, here’s what we could have saved over the course of the month if we did this every day. Tracking is huge.” However, a longstanding driver mentality was not something that he was going to be able change overnight. Doss said that it took some time to change drive mentality.

For new hires, it was a slightly simpler process. All new hires that were going to be driving a fleet vehicle went through his office. There he has a GPS driving policy that he goes over with them and then talks to them about proper driving procedures.

Existing drivers, on the other hand,have been a different story. It’s taken some extra work to reeducate these drivers, many of which have been at the company for years, long before the company began taking a closer look at fuel expenses.

As part of the reeducation, they also hold periodic meetings about what the proper fueling and driving procedures are. Through the reeducation process, the company also begun charging its drivers for both mileage and fuel if they were caught using their company vehicles for personal use. So far in 2017, there has only been one case of fuel theft. And these days, the company isn’t shy to relieve an employee of his position if he or she is caught stealing fuel.

However, fuel theft and driver mentality weren’t the only areas of the company that needed to be looked at. The company has also been op­timizing routes through the use of telematics. It also uses telematics to reduce speeding. Big fuel savings have also been achieved by reductions in idle time. ­

Doss said that the company allows its drivers to idle if it’s particularly cold in the winter or particularly hot in the summer, where cabin temperatures can exceed 120 F. But, overall, idle time has been vastly reduced through the use of telematics.

STEPS TO CURB FUEL COSTS

While Hammer Construction saw sub­stantial fuel cost reductions from reed­ucating their drivers, not every com­pany is going to face the issue of drivers stealing fuel. Realistically, more companies are going to see fuel cost reductions from some of the other strategies Hammer Con­structions implemented, like opti­mizing routes, reducing speeding, and reducing idling.

“Reducing the idling time of ve­hicles saves fuel while also reducing en­gine wear and associated maintenance costs, which will also help save costs in the future,” said Bernie Kavanagh, senior vice president and general manager of Large Fleet at WEX Inc.

On average, service fleets idle somewhere between three to four hours a day, according to Tom Kanewske, vice president of busi­ness development at Derive Sys­tems. The average fleet vehicle, he added, burns about half a gallon of fuel every hour.

Given this information, it can be cal­culated that a typical service fleet vehi­cle burns between a gallon and a half to two gallons every day – the price of this can fluctuate any given day de­pending on the price of oil. So, if a ser­vice fleet has 100 vehicles each burning two gallons of fuel every day, it doesn’t take long for idling to become a very large expense.

By simply reducing idle time fleets can begin to see measurable cost savings. Another step fleets can take in their effort to reduce fuel costs is rightsizing. Rightsizing not only brings the potential of improving fleet mpg by switching to more fu­el-efficient vehicle, it can also cut down on idling costs since more fuel-efficient cars will also burn less fuel in while idling.

“One of the easiest options to imple­ment for our clients is rightsizing their vehicles. What I mean by that is that they’re going to get the lowest weight, lowest cost, most fuel-efficient vehicle for the appropriate job application. So instead of having a medium-duty truck, where they can, they would implement a light-duty vehicle that could perform the same task for the company,” said Vincent Raynor, director, strategic con­sulting, Element Fleet Management.

Additional fuel cost reduction strate­gies that companies can implement are incorporating alternative-fuel vehicles into their fleets. Right now since costs are relatively low, Raynor noted, many companies have not put much consider­ation into alternative-fuel vehicles, but as fuel costs increase, the viability of alter­native-fuel vehicles in a fuel-cost reduc­tion program also increases.

And while not as common of a strate­gy, another strategy that some fleets have incorporated into their fuel cost reduc­tion programs to reduce fuel cost is tun­ing / programming how their vehicles operate. Companies, Raynor said, can use software to modify the idling RPMs, limit the maximum speed a vehicle can reach, and optimize transmission shift points, which can result in fuel savings.

MODIFYING VEHICLE BEHAVIOR TO REDUCE FUEL COSTS

Safelite, a Columbus, Ohio-based glass and claims management company, used software provided by Derive Systems to optimize its vehicles’ to deliver optimal performance while at the same time re­ducing fuel costs.

“The OEMs produce great vehicles, but they design them for every scenario, think of this as generic. But, because of that, they’re not designing and building efficiencies that are tailored to the specific operating practices of individual compa­nies,” said Kanewske. “Derive addresses this idea of going from generic to specific by building upon an OEM base calibra­tion and finding a greater level of savings.”

The main issue Safelite wanted Derive Systems to tackle was its idling issue. Safelite’s drivers truly use their vehicles – primarily Ford Transits – as mobile offices, Kanewske said. What this means, is that, by necessity, their drivers are go­ing to be idling for a portion of the day, and m1ss10n effectiveness depends upon it.

“So our goal, because they need to idle, was to reduce the amount of fuel they’re burning during this phase of vehicle operation,” said Kanewske.

Through the use of Derive’s soft­ware, Erin Gilchrist, director fleet, Safelite, said that her fleet has experi­enced an 8.5% reduction in fuel con­sumption while idling.

And limiting idle RPM, Kanewske said, is only one of the ways that his company’s software can help reduce fuel costs. As Raynor of Element Fleet Management noted, companies can use Derive Systems to limit the maximum speed a vehicle can reach, optimize shift points, optimize torque, and right size off-the-line power to moderate heavy-footed drivers.

“These features serve as a moderating force to address the harshest drivers, which are consequently also the largest fuel consumers within your fleet. Ulti­mately, our optimizations mitigate for their most costly and adverse driving habits, bringing them more in line with your other more conservative drivers and helping fleet to save a hundreds of thousands, if not millions, a year on fuel,” said Kanewske.

IMPLEMENTING A FUEL COST REDUCTION PROGRAM

Even with the current cost, fuel remains one of the biggest expense for any fleet, according to Andy Hall, assistant man­ager, Fuel & GMS for ARI. For many fleets, fuel costs can account for as much as 60% of a fleet’s operating budget.

Whatever the fuel cost reduction program a company decides to imple­ment, it is imperative that they begin with a written policy, said Andy Hall, assistant manager, Fuel & GMS for ARI.

“A written policy defines the expec­tations for drivers around fuel and sets the parameters around acceptable fuel practices,” said Hall. “Communicate the policy to your driv­ers-both new drivers as they join the company and existing drivers on an annual basis. Additionally, make the policy and tips for reducing fuel consumption part of any routine re­quired driver training.”

Once the policy is in place, he noted, the company should then implement a safety program.

“It turns out that many of the same behaviors that a comprehensive safety program would encourage and reinforce also support fuel conservation. By ensuring your drivers are observing the posted speed limit and avoiding aggressive maneuvers, you will not only have a safer fleet, you will help your organization use less fuel and improve the bottom line,” Hall said.

Adopting a driver scorecard can also yield fuel savings benefits, Hall noted. Through the use of scorecards, drivers can identify their unsafe driving habits and habits that lead to excess fuel consumption.

And, he added, companies should also not ignore simple steps such as in­centivizing drivers with rewards if they reach a set fuel reduction target. Drivers have the biggest impact on a company’s fuel costs, Hall said, so going to them and providing them with motivation to think about their behavior can lead to noticeable fuel savings.

This article originally appeared in Fleet Financials, May 17, 2017

 

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