Managing the Financial Side of Commercial Fleets

Alternative Strategies for Reducing Fuel Consumption

Fleets are exploring new strategies to lower their fuel expenses, such as rightsizing vehicles, increasing driver training, improving fuel card compliance, and partnering with fuel management companies.

May 2011, by Staff

The EIA reported average national retail gasoline prices at $3.88 per gallon and diesel at $4.10 per gallon at the end of April.
The EIA reported average national retail gasoline prices at $3.88 per gallon and diesel at $4.10 per gallon at the end of April.

Implementing a new fuel management program isn't always a fast process, but with the rising cost of fuel, fleets are looking at various strategies to reduce fuel spend, including rightsizing vehicles, working with drivers, and implementing fuel caps.

Fleets Reduce Fuel Spend

Three years ago, tests at General Parts, an automotive replacement parts, supplies, tools, and equipment distributor, showed that 85 percent of its vehicle cargo loads did not need to be transported in a pickup truck. The fleet team decided to change its truck-buying habits, replacing many pickups with Nissan Versas.

"That's been a tremendous amount of savings for us [in 2010] and well into this year," a company representative said.

The change was initially met with hesitation from long-time employees. Store managers had a hard time overcoming the perception that cars would be able to do the work pickups did. After showing drivers that 19.9 aggregate mpg was standard across the delivery fleet, the 28 mpg on the smaller vehicles was more than enough to convince them.

For LKQ Corporation, a national parts and replacement products provider, close monitoring of fuel costs helps the company ensure no abuse or fraud is taking place, according to Mike Lahr, director of Logistics. Fuel for vehicles is purchased using an assigned fuel card, and a PIN gives drivers access to any truck.

The gallon maximum per day per fill, fill-ups per day, and hours of use of each card can also be limited, Lahr said.

A list of drivers no longer employed with the company is provided daily to ensure their PINs are deactivated and no unauthorized charges are incurred. In addition, drivers must enter the odometer total, which enables mpg to be tracked for discrepancies. Weekend and after-hours fuel use is also tracked.

For many years, Safelite AutoGlass, a national auto glass repair and replacement service provider, has managed an anti-idling campaign called "Turn it off, idling gets you nowhere." It was recently revamped with new "green" signage and goals, as well as enhanced mileage and exception reporting and field training to support Safelite AutoGlass' overall 2011 fuel initiative to reduce consumption by 10 percent, according to Erin Gilchrist, fleet manager.

In efforts to achieve this goal, Gilchrist­ worked with Safelite AutoGlass' fuel card provider to develop a Web seminar focusing on the key components necessary to maximize overall fuel economy. With the help of its risk management solutions company, new "green" driver training modules and policies have been added to ensure all individuals understand their role in maximizing fuel efficiency. All drivers were required to complete the new modules by April 15. Gilchrist estimated these initiatives will help reduce CO2 emissions by 9,000 metric tons.

Explore Fuel Purchase Agreements

Fleet managers can also curb fuel expenses by working with a fuel management company that can provide a customizable price cap. According to Liat Rorer, vice president of marketing for Pricelock,­ a fuel price cap is another way for fleet managers to reduce fuel expenses.

Managers should look at "improving the mpgs of the vehicles [and] improving the driving pattern of their driver," before selecting a protection price, Rorer said.

A cap covers a set amount of fuel over a specified time period, both of which are determined by the fuel manager. Managers can use caps to cover the duration of a single project or a whole year.

Rorer warned against using fuel locks, which can cost fleet managers extra money if fuel prices unexpectedly drop.

Whether making major purchases or minor adjustments to offset high fuel expenses, fleet managers must do their research before making any sudden changes. The best fuel management strategy for any fleet will ultimately be the option that best suits a fleet's particular needs.

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