Is it costing you more in diesel fuel prices?

According to the TMC of the American Truck Association only 43.6% of all tires are inflated within five PSI of proper air pressure by fleet management.  In the same study 21.6% of all fleet companies had on tires under-inflated by 20 PSI or more.  How much more in fleet fueling is that costing you in diesel fuel prices running you’re trucks on flats. And you thought your fleet management was on top of this?  Another recent industry study from National Highway Traffic Safety Administration states that 30% of all vehicles including fleet management cars had at least one tire that was 8 PSI or more under-inflated.  As we all know this is not going to help any fuel management systems in getting better mileage.  

Does this cost your company money?  You bet it does.  A lot of money in fuel savings and spending more on diesel fuel prices. Tires that contain too little air can lower your fuel management economy by about .4% for every one PSI drop in pressure.  Low tire pressure affects fleet companies economy by increasing the tires’ rolling resistance, which makes the engine work harder to move the vehicle.  It doesn’t matter what kind of fuel card, mobile fueling, fleet card or fuel companies you have in place, if your fleet management on tires isn’t up to par you’re in the mud. Proper tire inflation can help increase fleet fuel efficiency by up to 3.3%.  You may ask yourself so how do I get there?  Well it depends on what type of fleet analysis you have, but here are some tips from several leading fleet companies use besides trying having lower diesel fuel prices, fuel cards, fleet card or better diesel fuel additives.

• Use a good quality digital tire pressure gauge. Have your driver check the pressure daily as they go through their pre-trip on a truck.  Since your diesel fuel prices are more expense than labor, its better to be safe than sorry.  On smaller vehicles or cars have them check it once per week.
• FMCSA strongly suggests tire pressure monitoring and automatic inflation systems.  The ROI on these devices for an average fleet management was between one and two years but that was when diesel fuel prices were $3.25.
• Alignment- have it checked make sure everything is rolling in the same direction.
• Tread -low tread will not help your fleet fueling economy or your operation.  Also, check for uneven wear, cuts, gouges or bulges in the sidewall.
• Load carrying capacity-make sure the tire matches the job. 
• Tire Replacement- when needed, try to replace a pair if possible.  Clearly, on bigger trucks and trailers, that is not always practical.
• Educate Drivers about tire pressure diesel fuel additives, accurate fuel card – fleet card – mobile fueling information and fuel savings that can occur
• Invest in Technology for your tires, fleet management, fuel management systems will all lead to great fuel savings with your fleet companies
• Buy everyone a digital pressure gauge it shows you really care the same way you should care that a driver enters his miles when using his fuel card – fleet card while helping lower your diesel fuel prices
• Fleet managers you might want to visit Pressure Pro at http://www.advantagepressurepro.com.
• Drive Safely

Always visit us for advice on lower diesel fuel prices, diesel fuel additives, mobile fueling, fuel cards, fleet cards, fleet fueling or anything else that involves your fuel management systems or fleet management solutions.

Diesel fuel prices will go higher.  Look who is in your fuel management pocket.

Oil rose earlier to the highest in two years in New York as the dollar headed for a weekly decline against most major counterparts after the Federal Reserve’s decision to purchase more debt to boost the U.S. economy. Crude climbed for a fifth day, the longest rising streak in seven months. The Fed said Nov. 3 it will buy about $75 billion of Treasuries every month through June. The dollar traded near a nine-month low versus the euro, increasing the investment appeal of commodities. U.S. crude stockpiles rose last week to the highest level since May 2009, according to an Energy Department report on Nov. 3.  “You’ve got to question the ability of crude to stay at this level” because of high inventories, said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “But the problem is you don’t want to bet against it. You’ve got $75 billion hitting the market every month.” Simply put your downstream cost on diesel fuel prices, mobile fueling, truck stop and fleet fueling will soon be going up.

Chinese processing

China National Petroleum Corp., the country’s largest oil and gas producer, plans to continue processing crude at record levels reached on Nov. 3 for the rest of the month to help meet increased year-end demand. The parent of Hong Kong-listed PetroChina Co. will refine about 400,000 metric tons of crude a day, or about 2.9 million barrels daily, CNPC said in a statement on its website today. The company will raise processing volumes by 8.5 percent this month from a year earlier and boost output of fuel including diesel and gasoline by 11 percent, according to CNPC. China is battling a diesel shortage in some regions because of increased use by factories and seasonal demand from farmers busy with the autumn harvest. CNPC said it will expedite operations at new refineries and resume production on time at plants where maintenance is scheduled for the fourth quarter.  Yes, watch China grow.  Remember 2008 when diesel fuel prices hit $5.00 in some areas.  Even the best of your fuel cards could not stop that.  When you have 1.5 billion people a lot of things can happen.  You can only control what you have in front of you and hopefully that is a good fleet management tool that is capable of helping you with your fuel management systems so that you can try and achieve some kind of fuel savings in a crazy fueling market.

OPEC

The Organization of Petroleum Exporting Countries raised estimates for global oil demand through to 2014 on growth in Asia, and forecast that alternative supplies will restrain the world’s need for its crude.

OPEC, responsible for 40 percent of worldwide crude production, expects oil consumption to increase 5.1 percent to 89.9 million barrels a day by 2014 from this year. That’s 800,000 barrels a day more than it predicted last year. OPEC cut the demand forecast for its own crude by 900,000 barrels a day on rising use of natural gas liquids and non-conventional oils such as biofuels. “A swifter-than-expected recovery from the global recession has led to positive impacts upon oil demand,” the group’s Vienna-based secretariat said in its annual World Oil Outlook report today. “The expanding role that non-crude forms of liquid supply will play in satisfying demand is an important feature.” Producers outside OPEC will increase output of crude, natural gas liquids, and non-conventional oils by 2.2 million barrels a day to 53.3 million a day by 2014, limiting the need for extra supplies from OPEC. The growth is driven by Canadian oil sands projects and Brazilian biofuels.

Spare Capacity

The organization cut its 2014 forecast for consumption of its own crude to 30.6 million barrels a day. That means it will still need to increase crude production by 1.3 million barrels a day in four years’ time from 29.3 million a day this year. OPEC’s current spare production capacity would allow it to provide nearly four times that amount. Idle capacity was at 5.8 million barrels a day last month, down from a seven-year high of 6.8 million in March 2009, according to a Bloomberg News survey. China’s demand for crude will increase 21 percent to 10.5 million barrels a day in 2014, and then to 10.9 million a day in 2015, from 8.7 million a day this year, according to the report. Global consumption will reach 91 million barrels a day in 2015, it said.

In this day and age of high priced fuel fleet managers need to have a fairly comprehensive knowledge of the fuel market.  This was not always the case.  Years ago when diesel fuel prices were considerably less expensive than it is today, and market instability was a daily move in the wholesale market of less than a penny, the fleet manager considered fuel as just another operating expense.  After all a price increase of less than a penny was not going to bankrupt his company.

Fast forward to the present.  Over the past few years we have witnessed daily moves in the wholesale price of fuel of 10, 15 and even 20 cents per gallon.  Multiply that by the volume that many fleets consume on a daily basis and it adds up to real dollars very fast.  Many people say that we have no control over the price of fuel.  For the most part that statement is true.  It is especially true for the small to medium fleet operator.  They don’t consume enough volume to leverage that volume to negotiate discounts at truck stops, card locks, with mobile fueling, or even bulk deliveries, unless they have some means to aggregate their volume with other similar operations.  Large fleets have that ability and are courted by suppliers to purchase diesel fuel at their locations at a discounted price.  In most cases, depending on the volume these discounts can be very aggressive.  With that said there is some control over at least a percentage of the price of fuel, that being the margin charged, or mark up, over daily wholesale charged by the supplier, vendor or retailer.

Many, not all, fleet managers only look at the price of fuel and not the true cost of diesel fuel prices. A prime example of this is the consideration of utilizing the services of a mobile fueling company that fuels the fleet at the customer’s facility during their down time, usually during the over night hours.  Many fuel mangers will ask for a price quote on a daily basis and compare it to what they are paying when their drivers fuel at their normal retailer, truck stop or card lock.  The majority of time the mobile fueling price will be higher than the local retail price.  This is where the comparative mistakes begin.  The fuel manger is comparing what he considers “apples to apples” price and not considering the true cost of fuel.  That cost includes his driver’s non productive time while either he or an attendant is fueling the truck as well as possible out of route miles.  This can add 25 cents or more per gallon to the true cost of fuel.  Another mistake is getting a price quote based on the mobile refueler’s price compared to the retail price charged on any given day.  The fleet fueling price should always mirror the wholesale market, whereas the retail market will always have a lag time in directly mirroring the fuel market.  Therefore it is impossible to do a true “apples to apples” price comparison between the two methods on your diesel fuel prices.

The better way to compare the two methods is to get a pricing based on margin charged over daily wholesale. However, with this method the fuel manager must know what margin he is currently paying for fuel.  90% of fleet managers have no idea what margin they pay.  Most fleet mangers don’t have the time, resources or knowledge to be able to determine exactly what margins they are charged. In the retail market one word can describe margins, inconsistent. A reputable mobile fueling company will charge consistent, mutually agreeable margins, which can equate to lower overall diesel fuel prices.

Some fleet fuel managers have the expertise and knowledge of the fuel markets to make the decisions that best benefit their companies and operations and reduce fuel costs.  Many that don’t either need to gain the knowledge or seek the assistance of professionals that have the expertise to identify areas of fuel cost saving opportunity.  As we can see there are ways to control at least a portion of fleet fueling cost, remember, gain the knowledge, or seek help, it’s foolish to overspend on your diesel fuel.  Get your fuel management system in place and start saving today.

People are always surprised to learn that over 1.5 percent of a company’s fleet fueling budget goes to theft and that eighty-one percent of fuel thefts are an inside job, with the other nineteen percent being an outsider siphoning off fuel or using one of your fleet fuel cards without proper authorization.

Through the use of tools such as exception reporting and fuel purchase alerts, fuel managers now have the tools to enforce cost-saving policies quickly, not weeks after the fact.  If a driver makes a purchase outside parameters set by the fleet manager, (buying premium rather than the specified regular) this information is recorded instantly and appears on a regular billing statement, along with the driver’s name and vehicle number. Hours can make all the difference; as a fleet manager, you want to be able to quickly enforce your fleet fueling decisions.
We’ve all heard of “management by exception” and when you’re dealing with hundreds, or even tens of thousands of fleet fuel transactions, it’s really the ONLY way to go.  For many, highlighting problem areas is the most cost-effective, accurate and efficient way to implement, manage and enforce a successful fuel management policy. With exception reporting, fleet fueling information is funneled through the company’s policy parameters and sorted to show where, when and by whom fleet fueling policies are being disregarded.

These are seven tips to putting together an effective fleet fueling policy for your company to help control your diesel fuel prices:

• Once your fleet fueling policy is in place, the next step is to clearly communicate the new policy to each and every driver in your fleet. Let them know that all diesel fuel purchases are being monitored and that all exceptions, especially repeated infractions, will need to be justified.
• Every time a driver fills a tank with a premium or mid-grade fuel, it costs the company as much as 10¢ to 25¢ or more per gallon. This can add a lot of money to your fuel management program, so make sure you establish the desired grade of fuel for each vehicle and have controls in place to monitor it. The same can hold true if a location offer premium diesel fuel prices.
• Enforce limits at the time of purchase. The most effective way to enforce a fleet fueling policy is to set limits so that purchases outside the limits are not allowed. For example, if you restrict transactions to two per day, the third transaction will be declined at the point of purchase.  This will help your fuel management systems and controls.
• Restrict non-fleet fuel products and services. Many fleet managers find it helpful to place restrictions on the kinds of products drivers may purchase with their diesel fuel card: soda, coffee, car washes, etc.  This helps to control costs, quality and consistency.
• Control the location, days, and times of fuel purchases. Frequent fuel purchases made with the company’s fleet fuel card outside of regular business hours can be a sign of waste and abuse. Make sure your drivers purchase fleet fuel only during business hours, look for fuel purchases that exceed fuel tank capacity, and where possible, eliminate multiple purchases in a single day.
• To help control quality, consistency and cost, mandate the fuel brands your drivers can purchase.  Take a close look at fueling stations in your area and select those that offer the best quality for the lowest diesel fuel prices or gas prices. Those that offer biofuels can also help lower your carbon footprint, which is becoming a large national topic.
• Encourage fleet drivers to buy fuel at locations with pay-at-the-pump as they save time and will get your drivers back on the road faster. They will also further reduce any chance of non-fleet fuel purchases inside the store.

If you want to ensure your fuel management program is a winner, it’s critical to get every fuel manager at your fleet to identify the problems areas and work through them. Remember, having your fueling policy in place will ensure you’re not spending more than you should to meet your fuel needs.  I solid foundation for your fuel management starts with a policy and follow through.