Sometimes we all have short memories; it was two years ago, in 2008, that fuel pump prices skyrocketed to in excess of $4 per gallon, and fleet managers saw their fuel budgets eaten up before Thanksgiving.
In subsequent months, prices fell even more quickly than they rose, and fuel expense rolled back to a more comfortable level. Unfortunately, that laser-like focus on managing fuel costs, for some fleet managers, fell with it.
Though it may not be "déjà vu all over again," nationwide average fuel prices at the pump are creeping up, and they're now bumping up against the $3 per gallon mark. Whether prices are rising or falling, fleet managers must put strategies in place to manage fuel costs, now and always. Here are 10 of them that work.
It is often the first thing that crosses management's mind when fuel costs begin to spike: "Why can't we just use smaller cars?" It isn't a panacea, but if done right, can be a useful weapon in fighting rising fuel prices. Look for models with both cargo and passenger carrying capacity that can handle the driver's mission. Be very careful about dropping more than one class, however (i.e., from full-size to compact, or from 1-ton to ½-ton in a pickup truck). Once the decision is made, it's difficult to turn back, and you'll be stuck with vehicles that can't properly perform the job, but will often end up costing more than those they've replaced. Try to grab a demo from the manufacturer, and have a driver use it for a few months. Get his or her feedback on how it performs, and if it performs well, add the selection for the balance of the current model year, or to the next one depending upon the timing. Track operating expenses carefully - not just fuel efficiency, but tire life, maintenance, and repair as well.
Rightsizing sounds like some kind of business seminar lingo, but what it refers to is the possibility there may simply be too many vehicles in your fleet. This includes redundant territories, surplus vehicles, or vehicles out of service but not sold. Not all use fuel, but some do, which adds to overall fuel expense.
Check with all field locations and ensure the number of vehicles equals the number of drivers. Branch offices sometimes like to keep a surplus vehicle tucked away for use on various company errands. Don't let them. It is the fleet manager's job to track and manage expenses associated with the operation of company vehicles, not to manage how much a clerk in the office is reimbursed for taking a deposit to the bank, or pick up office supplies. Get rid of these surplus vehicles. Their cost goes beyond just fuel; they must be insured, unless fully depreciated, and then there's a lease or finance cost, tags, inspections - do the math.
3. Keep It Clean
Don't let cars go without regular washing. Dirt, grime, oil, grease, and especially salt can damage the finish, but believe it or not, they add weight as well as increase aerodynamic drag, which reduces fuel efficiency.
This is particularly true in the winter. After it snows, ensure drivers clean and de-ice vehicles from top to bottom and bumper to bumper. Accumulated ice and snow on a car or truck can add 100 lbs. or more to the weight, not to mention limit visibility, creating a safety hazard. Keep ice scrapers and snow brushes handy, or provide them for all vehicles.
Proper tire inflation is a critical component, not only in maximizing fuel efficiency, but tire life and safety as well. Under-inflated tires increase rolling resistance, and resistance forces the engine to use more fuel. Tire life can also be shortened. Under-inflated tires have difficulty "getting out of their own way" - that is, the tread can actually bunch up as the engine forces the wheel to turn faster than the tread can move out of the way. Keeping tires properly inflated can increase mileage by as much as 3 percent, equivalent to 9 cents per gallon (at $3 per gallon pump price). Equip drivers with an air pressure gauge, and make it policy to check tire pressure every time a vehicle is used. (Though under-inflation robs gas mileage, over-inflation is not a solution, as it will increase tire wear as well as the possibility of tire failure.)
5. Preventive Maintenance
Put in place a formal, serious preventive maintenance schedule, including regular oil changes, fluid checks, wheel alignments, cooling system flush/fill, and transmission fluid changes. Track driver compliance via reporting, and take swift action when drivers are negligent.
A vehicle's performance can be negatively impacted when not kept in top shape. The older and dirtier oil gets, the harder an engine must work to circulate it, and the more wear on the engine. Use the proper grade of oil; if the manufacturer calls for 5W-30 weight oil, using 10W-30 oil can lower fuel efficiency by as much as 1-1.5 percent. This is especially true in winter, as an engine sitting overnight in freezing temperatures must work doubly hard at circulating the heavier weight oil before it gets warm.
Make certain that filters are replaced according to the manufacturer's requirements. Air and fuel flow can be negatively impacted when filters become clogged, and don't ignore the cooling system; anything that makes the engine work harder wastes gas and increases fuel expense.
6. Use a Fleet Fuel Card
As the saying goes, you can't control an expense unless you know what it is. Today's fuel merchants sell a great deal more than just fuel, and the fuel they sell provides a number of options. Unless it's possible to control these purchases at the pump, the fleet fuel expense will inevitably rise. Fleet fuel card programs offer the Level III data needed to manage this expense after the fact, and sophisticated controls that will help manage it at the pump. Among the controls available are:
■ "Velocity" limits are controls that limit how often, or for how much, a card can be used.
■ Fuel-only options prevent drivers from adding food, tobacco, or other non-fuel purchases to their visit.
■ Use limits can limit the days of the week or hours of the day the card can be used.
■ Geographic limits, for fleets operating in a limited geographic area, can pinpoint by zip code or other means where the card can be used.
These and many other types of controls can help a fleet manager be precise as to when, where, and what types of purchases can be made by a driver. The Level III data that these programs capture at the pump includes critical odometer readings, fuel grade, self-/full-
service, vehicle number, date, time, and merchant information, all of which will provide a database that can be mined for savings opportunities. Controlling purchases at the pump, taking action on activity after the fact, and detailed reporting all add up the most powerful tool a fleet manager can have in battling rising fuel expense.
7. Put Vehicles on a Diet
Cleaning snow and ice off your vehicles is one proven way to eliminate weight and save gas. But overall, weight is the enemy of fuel efficiency, so it's a good idea to put the entire fleet on a diet. Excessive weight is a drag on fuel consumption; each 100 lbs. of additional weight can cut fuel efficiency by up to 2 percent. Conduct an audit of what drivers must carry in the normal course of the job, i.e., product, parts, POS material, etc. Is all of it absolutely necessary, or is some of it merely convenient, or carried simply because "we've always done it this way"? It should be policy that personal effects should not be loaded into or onto a vehicle. Be sure to engage field management, as well as drivers, in the effort. Get everyone in the habit of keeping any excess weight out of company vehicles.
8. Driver Behavior
There is nothing a fleet manager can do that is more effective in managing fuel expense than guiding driver behavior. Auto website Edmunds.com, in testing various gas-saving techniques, concluded driver behavior accounts for as much as 37 percent of fuel consumption. There are a number of driver practices that should be highlighted here:
■ "Jackrabbit" starts and stops. Drivers will often pound the gas pedal when a light turns green, when passing slow-moving vehicles, or just when starting out on a trip. They'll do the same to the brake pedal when stopping. Both waste gas, expose the engine and drivetrain to excessive wear and tear, and can often result in a few traffic violations as well. Teach drivers to accelerate smoothly, and keep their distance so emergency stops are minimized.
■ Speeding. Drivers know full well they're supposed to stay within the posted speed limit; however, they often do not. The faster a driver drives, the more fuel the vehicle burns; although vehicles differ, fuel efficiency will begin to decline at around 60 mph or so. It should be policy (though it is common sense) that drivers obey speed limits. Speeding can also result in sudden stops, exacerbating the waste and further increasing fuel costs.
■ Excessive idling is a tried and true fuel waster. After all, when a car is idling, fuel efficiency is 0. If a driver is going to be in one place for more than a minute, two at the most, he or she should turn off the vehicle. Excessive idling is particularly acute in truck fleets, where deliveries, loading, and unloading are common.
■ Use the cruise control. Cruise control isn't just a convenience; setting the cruise control will help drivers maintain a steady, consistent speed. These and other driving behaviors can crush fuel efficiency, not to mention pose safety risks and increase wear and tear. Aggressive driving, jackrabbit starts and stops, and a cavalier attitude toward idling are driver behaviors which can, and should, be changed.
9. Trip Planning/Routing
Drivers often drive a regular route, or at least cover a territory. Planning trips carefully helps keep miles driven down. Make sure your sales drivers "pack" their trips - that is, don't drive 100 miles each way to make a single sales call. Obviously, this isn't always possible (when the "hot" lead comes in; time kills all deals, as they say), but for the most part veteran salespeople know how to make the most out of a trip.
Also, try to have drivers avoid high traffic areas and rush hours. Use alternative roads, and drive off-hours (midday, very early, or in the late evening). Traffic will force all sorts of bad driving behavior: excessive braking, idling, stop-and-go driving, all of which hurt fuel efficiency. It also contributes to aggressive or frustrated driving, a safety risk. Use routing software to find the most efficient routes for drivers who drive them. GPS devices can help drivers, particularly when they're in an area with which they're not familiar, or when they're visiting someone for the first time. Reducing miles driven, and making sure that idling and stop-and-go driving are eliminated or minimized, are tried and true ways to manage fuel costs.
10. Shop Around/Buy Smart
Fuel pump prices can vary widely within only a few miles. Buying fuel near an airport can cost as much as a dollar per gallon more than buying it from a local merchant. Most fleet fuel card programs include a merchant locator, which can help drivers know where the lower-priced fuel can be had.
Check with fuel locations near a branch or regional office; sometimes if the company agrees to buy fuel there, the retailer will provide a discount. Some of these same merchants are often owned by a single licensee or franchisee, who will do the same for multiple locations. A fleet fuel card provider can often bill a net of such negotiated discounts.
Instruct drivers to stay away from full-service or mid-grade and premium fuels (unless the vehicle calls for them). Both will usually cost several cents per gallon more than self-service or regular unleaded. Encourage field locations to communicate to each other where lower cost fuel can be purchased. Use the reporting tools provided by the fuel card supplier to track and find individual low-cost merchants, as well as chains and oil companies.
A Full-Time Job
Sometimes, it seems as though managing fuel costs is a full-time job. Since fuel expense can often be as much as 80 percent of variable costs (depending upon pump prices) this isn't far from the truth, and it is time well spent. But fleet managers must be careful not to focus on fuel only when prices are rising. Managing fuel costs should always be the single most important process in the fleet manager's day, as it pertains to variable or operating costs.
A recap of the 10 tried and true strategies to manage fuel costs includes:
■ Downsize: Use the smallest, most fuel-efficient vehicle that can do the job. Track expense by model, and use the data to form the selector.
■ Rightsize: Get rid of surplus vehicles and ensure every vehicle is needed and every driver qualifies.
■ Keep vehicles clean: Have drivers wash cars once or twice each month. Clean cars are more aerodynamic, lighter, and will get better mileage.
■ Tires: Keep tires properly inflated and wheels aligned. Increased resistance is the enemy of fuel efficiency.
■ Preventive maintenance: Institute a formal PM schedule, and make certain drivers adhere to it. Cars kept in top running condition will get better mileage than those that are neglected.
■ Fleet fuel card programs: Use the tools available to you to manage fuel costs, including a fleet fuel card program. Drivers will be able to get fuel wherever and whenever they need it, and fleet managers will have the data and the tools they need to track and manage fuel expense. Use the controls available to stop wasteful expense before it happens.
■ Lighten up: Keep excess weight out of company vehicles. Limit personal items that add weight and make sure everything in the vehicle that is job-related is necessary.
■ Driver behavior: More money can be saved by changing driver behavior than any other means. Drivers should avoid aggressive driving and excessive idling, and obey speed limits, .
■ Trip planning/routing: Drivers should make the most out of miles driven. "Pack" trips with as many calls or meetings as time allows. Use routing software and GPS devices to keep drivers on the move. Avoid high traffic areas and times of the day.
■ Shop around: Give drivers the tools to find lower cost retailers. Negotiate discounts where possible.
Don't wait until prices spike sky high; make managing fuel expense a routine part of the job, every day.
SIDEBAR: Fuel Saving "Tips" That Don't Work
When fuel prices rise, the media are full of "tips" on how to save fuel. Keeping in mind that there is no "magic bullet" to fuel savings, here are some that don't work:
● To A/C or Not to A/C: One side says to use the A/C, that the aerodynamic drag caused by open windows robs fuel. The other advises opening the windows and that using the A/C wastes fuel. The bottom line: Neither strategy will have much of any effect on gas mileage. Use common sense; don't run the A/C when you don't need it, but don't sit sweltering in a hot car in the summer with the windows up, nor freezing in January with them open. Be comfortable.
● Downsizing for the Sake of Downsizing: Don't downsize your fleet just because some executive said, "Why can't we just use smaller cars?" Downsizing can be a boon, but only if done right. Look into it, but only downsize to a vehicle that is capable of doing the job it's meant to do. Just replacing midsize cars on your selector with subcompacts can be a disaster.
● Coast Down Hills in Neutral: You hear this one often when fuel prices spike. Don't do it: It doesn't save fuel, and can be both dangerous as well heck on your transmission if you suddenly have to put it in gear.