Managing the Financial Side of Commercial Fleets

Real-World Fuel Reduction Strategies

Fleet professionals share their day-to-day and long-term strategies to cut fuel costs through teamwork, efficient operations, and doing a little homework.

January 2014, by Stephane Babcock

Fuel. It gets fleet vehicles going every day by feeding their engines the lifeblood needed to keep products and services moving. But, it is also the bane of many fleet departments’ budgets — rising in cost every year, no matter how fuel-efficient vehicles have become. Next to depreciation, fuel is the biggest operating expense a fleet has to grapple with.

But, this has not stopped companies, and their fleet managers, from trying to lasso fuel savings any way they can. For some, it’s done through research and replacement; for others, it’s trial by technology, or adding some alternative-fuel options to the stable of fleet vehicles.

Relying on the Team

Quanta Services, a provider of specialized contracting services for the electric power, natural gas, and pipeline industries, sees the advantages of reducing its annual fuel usage, which both reduces fuel expense and the company’s carbon footprint.

“More and more of our customers are requiring information about ‘green initiatives’ in their bid packages,” said Butch Christian, Quanta’s fleet manager, adding that many of the best ideas come from inside the company. “Fleets that are looking for ways to reduce fuel costs or any other equipment related cost need to go no further than their own job sites. I truly believe there are a lot of great ideas and knowledge out on the job sites, you just need to get out and ask the questions.”

One of those ideas became a company-wide initiative, which has reduced idle time, as well as fuel costs. By adding Zonar Solutions’ GPS units to many of its vehicles, Quanta has been able to reduce fuel usage by mapping out the most efficient routes to take to project sites. By adding some ample driver education to the mix concerning idling times, Christian believes this allows him to rely on driver behavioral changes without affecting his team’s ability to do their job.

“Educate drivers/operators on how reduction in fuel consumption can benefit them financially — reduction in fuel consumption reduces job costs which increases job margin which increases job bonus,” Christian said.

Vehicle replacement is also another option the company uses to cut down on fuel dollars. Christian is sure to be careful when finding more fuel-efficient models, making sure the replacement can still get the job done.

“If a job requires a truck, then they get a truck; however, we are looking for more opportunities to use cars and SUVs, but, once again, without effecting job performance,” explained Christian, who has also looked at ways to cut costs by reducing the number of vehicles or equipment at the job site. “For example, rather than two regular cabs for a crew of four, use one crew cab; rather than having a backhoe and forklift on a job site, have a backhoe with a set of forks.”

Finding the Efficiencies

As with Quanta, Randy Burwell, lead buyer and fleet specialist at Valero Energy, sees the benefit of adding a little technology to the ongoing quest for fuel reduction. The fleet incorporated a GPS program to assist in tracking vehicle use, harsh acceleration, and braking, while also managing optimal routing, which all assist in saving fuel, while adding to safety, according to Burwell.

“Some drivers have to adapt to the system that watches their many moves. I will say, we have not received as much negative responses from drivers as originally expecting,” Burwell said, adding that most of the feedback has been positive, especially from company supervisors.

Burwell also looked to advancements in fuel efficiency to help Valero’s fleet reduce fuel expenses. By performing an analysis of the Ford Fusion, his team was able to conclude that the four-cylinder vehicle would meet the necessary requirements that would allow the company’s drivers to perform their duties. He continues to keep up with this strategy of selecting fuel-efficient vehicles and properly maintaining them, which, in his estimation, will help the company save $574,600 over a 47-month period by switching more than 100 vehicles to the Fusion.

As with Burwell, Paul Youngpeter, CAFM, director of fleet for pest control provider Rollins, understands why it is so important for fleets to reduce the amount of fuel consumed throughout the year. Youngpeter has transitioned to using more fuel-efficient vehicles, as well as closely monitoring drivers’ fuel purchases.

“Fleet fuel expense now exceeds our lease expense and represents a significant percentage of our total fleet costs,” Youngpeter said. “One of the side benefits of reducing fuel consumption can be the reduction of miles on the current fleet, which then helps reduce other vehicle related expenses.”

But, Rollins hasn’t found the answer in switching to greener alternative-fueled vehicles. Youngpeter explained department’s short cycle time of 36-48 months typically does not support the investment in alternative fuels, as he would not see the return on investment a longer cycle time of several years would require.

Pamlab’s Senior Fleet and Travel Manager, David Anderson, also sees the benefit in utilizing alt-fuel vehicles, but his concerns go beyond return on investment.

“It is a great option for fleets, but it depends on their infrastructure as to what type of alt-vehicle they choose,” Anderson said. “For example, we have flex-fuel vehicles in our fleet, but other types of fuel may not be available in all markets.”

When it comes to saving dollars through fuel economy, Anderson sees the benefit in doing a little research before deciding on which vehicle gets the most bang for the buck.

“Research and drive the vehicles you are considering,” Anderson said. “Just because a four-cylinder vehicle is available in a larger vehicle, it may not be as efficient as assumed, especially if the driver is carrying extra weighted items that affect fuel economy.”

The Pamlab fleet department saved more than $100,000 in 2012 as a result of several fleet initiatives, which included offering four-cylinder vehicles, cutting options to two-wheel-drive vehicles only, and giving drivers a crossover vehicle option.

Anderson was quick to point out that, unlike some fleets that tend to focus more attention on overall mpg when the gasoline prices start to rise at or above $4 per gallon, Pamlab is proactive in its fuel-saving efforts.

“They need to be aware of this at all times of the year. I think when gasoline prices first hit $4 a few years ago, people noticed and stayed with that thought process for future mpg concerns,” Anderson added.

Looking Before You Leap

When it comes to going green, although many fleet managers see and understand the benefits of utilizing alternative-fuel vehicles, they are cautious about jumping head first into the filling their fleets with hybrid, compressed natural gas (CNG), and propane autogas vehicles.

“There are some great options available now for vehicle selections that employ alternative fuels,” said Debbie Struna, fleet manager for Rite-Aid. “When you compare the cost of CNG to gasoline, there can be some significant savings once the cost of the vehicle upgrade is netted by the time in service.”

Fueling Rite-Aid’s 1,700-vehicle fleet costs the company more than $6 million annually, making it one of the largest expenses for the fleet. That’s why Struna stresses the need to choose the rightsized vehicle for the driver, make sure the tires are properly inflated, speed limits are followed, excess weight is kept out of the vehicles, and the vehicles are properly maintained.

An eye must also be kept on fuel usage as well at the driver level, which Struna does through the use of a fuel card program.

“We do exception reporting to verify that drivers are fueling with regular unleaded instead of premium fuels,” said Struna. “The reporting that we’re able to pull from the fuel data has been a real cost saver, because we can see what that driver is doing — and benchmark them.”

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