By Glen Sokolis, Sokolis Group
In 2009, things started off like a lamb and at times felt like a lion, but we certainly didn't see the scary lions in fleet fuel buying, as we did in 2008. The year started with national gas prices at $1.639 a gallon and diesel fuel at $2.405 a gallon, great numbers if you're a fuel manager overseeing your fuel management program. It was also around this time that Barack Obama was sworn into the White House, becoming the U.S.'s 44th president and bearing the weight of the recession on his shoulders. The winter season of early 2009 unveiled a staggering amount of crude oil inventories, so much so that companies were leasing out tankers to store oil out in the sea. The price for a barrel of crude was around $33 a barrel. Things seemed to turn around slowly but surely.
The early spring brought not only unmatched amounts of unemployment, but the gradual rise to $40 a barrel in crude oil. April saw a national average for retail gasoline at $2.04; this was amid news of major car manufacturer Chrysler filing for bankruptcy and other vehicle manufacturers discontinuing unpopular models. A few include the Saturn Sky and possible the entire lineup, Isuzu Ascender, Hyundai Veracruz, Honda s2000 and Hummer H3. With the economy seemingly not back on its feet, a look at oil was the only lifeline to a positive upturn.
Mid-year arrived with oil above $60 a barrel, and the stockpiles kept on building to 4.38 million barrels. With the nation focused on the fuel industry, it's no wonder it was also a tough year for the climate. Getting on board to reduce carbon emissions was a goal of many but a success of few. The thoughts of an emissions cap or tax weighted heavily on the minds of fleets, as a tax or cap would discourage the use of oil and put trucking at the mercy of newer, expensive hybrid vehicles or retrofit current trucks with carbon reducing equipment. With a myriad of hybrid vehicles being tested among the general public, only a select few fleets have dabbled in the hybrid world. For example, Smith Electric Vehicles just last week pulled the trigger with seven all-electric trucks, customers for these zero emissions vehicle include Frito-Lay, Staples and Coca-cola. However, until any of these laws or regulations pass, the fleet world will remain focused on fuel management.
This year has rounded itself out with August showing an increase of 20.2 percent in fuel in a matter of three weeks at one point. But, as with all things fuel related, the markings go down as fast as they can go up. After months of a steady increase, October saw a fall, and it was directly attributed to consumers driving less and cutting back on household energy use. It looks like the demand has fallen as the supply only increased. In fact, Valero Energy Corp. announced it was permanently closing its Delaware refinery, putting over 500 people out of jobs.
As the holidays draw near and people take the time to slow down, oil has remained around the $70 mark, and seems to be holding up nicely there as the inventories still rise. And while there will be much traveling for the holiday, there will also be speculation on the new year. After all, 2009 did start at a low of $33 and is finishing at $70. Here is to a happy new year in fuel management and lower fleet fueling costs.
By Glen Sokolis, Sokolis Group
We are less than a week away from the full-blown holiday season. As part of your company's fleet management program, are your trucks ready to be sitting still for several days during the back-to-back holiday weeks? This time of year, it can be very tricky to predict the weather in most parts of the country, and it's better to be safe than sorry.
Every part of the country has its weather issues this time of year for fleet fuel if you are not properly taking care of your fuel supply. In brief, let's take a look at different parts of the country:
North & Northeast: When not properly treated during the cold weather, ultra low sulfur diesel fuel can gel and leave your fleet standing still.
South & Southwest: During dramatic swings in temperature this time of year, your fuel tanks can pick up extra moisture, causing algae to grow in your fuel tanks.
The rest of the country sits in the middle of both of these conditions, so what should you do before the holidays?
In the South, we would recommend treating your diesel fuel with a fuel additive that takes moisture out of the fuel. This will help microbial (bacteria) from occurring and algae from forming. If you have too much moisture in your diesel fuel, this kind of contamination can lead to fuel filter plugging and can cause equipment failure. In the South, it is always a little easier to take care of fleet fuel over the holiday season.
In the North, there are several steps that each fleet management program should try to use during the holiday season:
These little steps can make coming in after a long holiday weekend a lot easier to deal with. It is always better to be working two steps ahead of the issues instead of one step behind. Remember when it comes to diesel fuel, water is the enemy. The better you deal with it, the easier it will be. Happy Holidays!
By Glen Sokolis, Sokolis Group
In last week's Friday Fuel, we talked about how to put your fleet fueling policy in place. Today, we have eight tips that will make your fuel management program more effective:
1. Once your fleet fueling policy is in place, the next step is to communicate the new policy clearly to every driver in the fleet. Let them know that all fleet fuel purchases will be monitored and that all exceptions, especially repeated infractions, will need to be justified.
2. Set up the desired grade of fuel for each vehicle. Every time a fleet driver fills the tank with a premium or mid-grade fuel, the company wastes as much as 10 to 25 cents or more per gallon. This can add a lot of money to your fuel management program, so make sure you have controls in place and are watching.
3. 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 even allowed. For example, if you restrict transactions to two per day, the third transaction will be declined at the point of purchase.
4. Restrict non-fleet fuel products and services. Many fleet managers find it helpful to place restrictions on the kinds of products drivers may purchase. These things could be soda, coffee, car washes, etc. This helps to control costs, quality and consistency.
5. Control the location, days, and time of day for fuel purchases. Frequent fuel purchases made with the company's fleet fuel card outside of business hours are a sure red flag of possible fraud and abuse. Make sure your drivers purchase fleet fuel only during business hours, look for fuel purchases that exceed fuel tank capacity, and eliminate multiple purchases in a single day whenever possible.
6. Mandate one or more fuel brands to help control quality, consistency and the cost of fuel and services your drivers purchase. Take a close look at fueling stations in your area, and select those that offer the best quality for the best price. Those that offer bio fuels and bio diesel can also help lower your carbon footprint, which is becoming a large national topic.
7. Encourage fleet drivers to buy fuel at locations with pay-at-the-pump. Drivers will save time and get on the road faster by fueling at only pay-at-the-pump locations. It will also further reduce any chance of non-fleet fuel purchases inside the store.
8. Most importantly, you need to account for every fleet fuel card every day. Losses can be staggering if just one card falls into the wrong hands. A termination of an employee may occur, or a truck gets put out of service. Be certain to account for those cards. At a small company the loss could be small, but at a large company the loss could top six figures with the rogue use of just one card. These figures are not made up; we've seen it. Losses like this can not only be eye opening to fleet fuel managers but also devastating to a company's financial stability.
If you want to make 2010 a winner for your fleet management program, it is critical for every fuel manager to look at your fleet, identify the areas where you have the most problems and work through them. Having a fleet fueling policy at your company will ensure that your fuel management program is in good shape for the New Year.
By Glen Sokolis, Sokolis Group
As a new year quickly approaches, it's an ideal time to review current policies that your company has in place. I can't think of a policy that can help your fuel management program better than reviewing what you are doing now for fleet fueling. And if you don't really have a policy, now is the time to start your fleet fueling program.
Establishing a fleet fueling policy makes sense. After all, fuel is usually the single largest variable expense for a fleet of any size. A fleet fueling policy-carefully planned, implemented and enforced can be a company's most effective tool in the battle to reduce unnecessary overspending. In this day and age, saving money and cutting costs are a great way to survive and to add to your company's bottom line.
We have talked about fleet fuel cards before, and the electronic capturing of fueling data at the pump through the use of electronic fleet fuel cards. By doing this, fleet managers now have timely, accurate data they can use to battle waste, abuse, theft and fraud. It is a very important tool in helping to control your fleet fuel spend. People are always surprised to learn that, on average, over 1.5 percent of a company's fuel budget is lost to fuel theft. We are talking about the kind of fuel theft that happens when employees at your company steal fuel from you. Employee theft accounts for 81 percent of the fuel that's stolen. The other 19 percent of the time, an outsider is stealing from you through siphoning or using your fleet fuel card without proper authorization.
If a driver makes a purchase outside parameters set by the fleet manager, such as when a driver buys premium rather than regular gasoline, this information is recorded instantly and appears on a regular billing statement along with the individual driver and vehicle number. Through the use of tools like exception reporting and purchase alerts, fuel managers can enforce cost-saving policies quickly, not weeks after the fact. Hours make differences, and as a fleet manager, you want to be able to quickly enforce your fleet fueling decisions.
We have all heard of management by exception, and when you're dealing with hundreds to tens of thousands of fleet fuel transactions, it is really the best way to go. For many, highlighting problem areas is a very cost-effective, accurate and efficient way to implement, manage and enforce a successful fleet fueling policy. With exception reporting, fleet fueling information is funneled through the company's policy parameters and is sorted to show where, when and by whom fleet fueling policies are being disregarded.
In next week's Friday Fuel, we will provide you with seven tips for an effective fleet fueling policy for your company in Part II of this series.