10/30/2009 Fleet Fuel Card Shopping
By Glen Sokolis, Sokolis Group
Your company has decided to get its first fleet fuel card, or perhaps you are tired of your current vendor. How do you go about shopping for the right fuel card?
There are many different fleet fuel cards out there, but like most things not everything is created equal. On the surface for most people they all look the same and all work the same. But do they?
When looking for a fleet fuel card, the first thing to do is determine what kind of card you need. There are cards that work better for over-the-road truck fleets. The card is used at truckstops such as Pilot, Travel Centers of America, etc. The king in this area is Comdata. They were the first to market in that area and control about 70 percent of that market segment.
The other area is what is considered retail fueling. These would be your more typical retail locations like BP, Chevron, etc. The maker in this market is Wright Express (WEX). They made their business from small fleets that needed controlled spending at retail fuel locations.
These two fleet fuel cards aren't the only ones in the market; you might have heard of FleetOne, Voyager, EFS, T-Chek, 360FuelCard.com, and Fuelman, to name a few. A few have connections with MasterCard, which makes those cards more flexible and more widely accepted.
What you want the fleet fuel card to provide to you is information about your fuel transactions and controls over your fuel spend. When speaking with these companies, it is important to find out what they have to offer to you on their fleet card.
The other areas to which you want to pay close attention are the fees the fuel card company is going to charge you each month. Will it be a flat monthly fee per card, a transaction fee when you fuel, an account fee or do they have high late fee charges or charges to process your invoices? Another area of cost is what they will charge the vendor that accepts their fleet fuel card. The higher the fees the fuel card provider charges the vendor in transaction fees the less likely it is that you will be able to negotiate a discount.
Think of the fleet fuel cards like Visa, MasterCard, and American Express as far as cost. If you currently use one of these cards for buying things other than fuel, not all merchants accept American Express. It is not that they don't like AMEX, they don't like the higher transaction fees that they charge them.
The same holds true for your fleet fuel card. Certain cards like Voyager and WEX have higher transaction fees than other cards like Fuelman and Comdata. If you go to your retail fuel location and ask for a discount, the difference for them to accept one card instead of the other might be six cents a gallon or more. They just don't have that much profit margin, and you will pay the full retail price.
Another thing to consider: several fuel companies have fuel discounts built into their card so you might get a penny to five cents off. Review and check their list of accepting locations to determine if they are logistically a good fit for your operation. The best advice is to review at least three different companies to see what they have to offer. In summary look for:
• Best acceptance for your operation, retail or over-the-road (truckstops).
• Research the different cards out there. Just because they are the biggest doesn't mean they are the best for you.
• What controls do they have available on the card to control theft?
• How much are the transaction fees for all involved?
• What kind of discount fuel network do they have?
Here is a quick reference to a few of the fuel card companies' websites: www.fleetone.com; www.comdata.com; www.fuelman.com; www.360fuelcard.com; www.wrightexpress.com; www.tchek.com; these should give you a good start. Are you fueling good today? We are.
10/23/2009 The Bees Are Still Buzzing: Handling Fuel on a Daily Basis
By Glen Sokolis, Sokolis Group
Summer may be over, but our offices are still beehives of activity. In the fleet fuel management business, it never seems as if there are enough hours in the day or days in the week to handle all of the tasks and issues that crop up daily. As I said in an earlier edition, a company's fuel management program is a living, breathing animal.
With the volume of fleet fuel that we manage for companies, sometimes that animal can be ferocious and unruly. I feel like a lion tamer, whip in one hand, pistol on my hip, and a chair to calm the unruly beast, the ever-changing fuel market. Some days we get a breather and the fuel market and vendors are as calm as a kitten. I don't want to make fuel management sound like it should be a highly stressful portion of your day, but it does need your attention to some degree on a daily basis. With the fuel markets as volatile as they are, some days require more time, energy and expertise than others.
In many companies, the fleet manager handles fuel management, while many large companies have a fuel manager and some a fuel management department. Smaller companies can do just fine delegating fuel management duties to their fleet manager if he or she has some level of knowledge and expertise of the fuel markets. They should be familiar with fair and equitable pricing for delivered fuel and have the ability to negotiate pricing discounts for over-the-road fuel. These individuals should also have the resources and capability to track, monitor and audit all of the transactions for compliance. This is in addition to all of the other duties that require their constant attention. Unfortunately, in the real world, you can seldom find such as person.
Even in large companies that consume large volumes of fuel, you would be hard pressed to find a person that can handle all of those duties with any degree of proficiency. In addition, the fleet or fuel manager has to be a tax expert or spend the time to do the research to ensure that fuel suppliers are collecting the proper taxes. Believe me, in the fuel management business we see enough instances where they are not.
The taxes can boggle one's mind. Take Ohio for example. If you are using dyed diesel in that state, there are five different sales tax rates depending on where the fuel was purchased. New York can drive a fuel manager insane trying to determine the correct fuel taxes for on-highway fuel. The local tax portion can be in a percentage or in cents per gallon, and rates depend on the county, the city or the town. As you can see, the process can be extremely difficult and unwieldy for even the most expert fuel or fleet manager, particularly for those managing a large decentralized operation.
For those of you who do your own fuel management, if you are not an expert in all fields described above, you must either become one, hire one or outsource this important aspect of your business to a fuel management firm. Your bottom line will certainly become healthier, albeit a little fatter. But then again, that is a good thing.
10/16/2009 Mobile On-Site Fueling
By Glen Sokolis, Sokolis Group
10/9/2009 Fleet Fuel Price Negotiating: Details, Details
By Glen Sokolis, Sokolis Group
Many companies large and small have no idea how to negotiate fleet fuel prices and discounts. Those that do may or may not do a very good job with those negotiations, not realizing the amount of detail needed to make smart decisions and the need to follow up on those negotiations.
Take bulk fleet fuel, for instance. Many will have daily pricing faxed or e-mailed to them from one or more suppliers daily. But they have little or no knowledge of what makes up the price, and purchase from the vendor with the lowest price that day. Or a company may have gotten set up with one vendor years ago to supply a tank at the company's location and still fuel that vendor-owned tank based solely on the fact he offered the lowest price years earlier. Or they may have negotiated a set margin over a benchmark such as OPIS or DTN if they were smart -- but more often than not, they haven't.
They will negotiate a margin set to the vendor's "cost plus" or "rack plus" and feel that they have gotten a great deal. What exactly is cost plus or rack plus? I'm a fleet fuel consultant, and I couldn't tell you if either was a good deal. What is cost? What rack? Cost could include anything. Is your vendor's wife's Mercedes lease payment part of the cost? How could you possibly track it? How could you track it if you are a fleet manager of a large decentralized company even if you negotiated the margin to a benchmark such as OPIS? How would you have the time?
During a recent fleet fuel audit for a potential client, I came across an invoice on which the local branch manager had proudly made the notation, "renegotiated pricing to 8 cents over rack," and sent the invoice off to corporate for payment. Our data analysts ran all of the month's transactions through our database. I looked at the real numbers for that particular transaction, and the subsequent transactions after this local manager's expert renegotiation of the margin to 8 cents over rack. The margin prior to his talks with his vendor were 8 cents. After employing his expert negotiating skills the actual margin jumped to 23 cents. They couldn't know that unless they tracked and checked it daily and compared it to a visible benchmark.
Effective fleet fuel management is not "set it and forget It" like a programmable thermostat. It is something that requires commitment, resources, expertise and diligence daily. Who's watching your bottom line?
10/2/2009 How Do You Audit Your Fleet Fuel Invoices?
By Glen Sokolis, The Sokolis Group
The Sokolis Group performs a lot of audits of fleet fuel invoices, reviewing hundreds of thousands of fuel transactions a month. Hopefully, your company has some good processes in place for your fuel transactions. If you don't, here are some solid tips and examples of the errors that we see companies make that you can prevent.
Bulk Fuel Buying:
* A common problem is too many fuel suppliers' price quotes come in each day. Solution: cut down on your suppliers.
* Another problem: The fuel price quotes go to someone who is too busy and may not even look at the quotes. Solution: Make sure your key person has time to review; fewer fuel vendors should help.
* The person who gets the fuel price quote and places the fuel order should be the same person that gets the fuel invoice. Make sure the dots connect. If not, the person approving the fuel invoice is doing it in the dark.
* Have two people review the fuel invoices for accuracy. We have seen many invoices that were signed off for payment that had the wrong gallons by more than 1,000 gallons and the wrong fuel price by more than $3 a gallon. There are a lot of numbers with fuel which can make it confusing.
* Benchmark your fuel price to some industry index. If you don't, how will you know what you're paying for?
Truck Stop Buying:
* Use a fleet fuel card that is widely accepted at truckstops. We see many companies use a fleet fuel card for truck stop purchases that is usually issued for local use such as WEX (Wright Express), Voyager or American Express.
* If you're using fleet fuel cards such as those mentioned above, you're paying a premium over the cash price. This credit fuel price is typically 7-12 cents a gallon more expensive than the cash fuel price. This is an expense that most companies don't even know that they are paying. (Try one of these fuel card companies: Comdata, FleetOne, 360FuelCard.com, T-Chek or EFS)
* Quantity brings better prices. There are many companies that buy tens of thousands of gallons a month from many different fuel suppliers. This might not tie directly to fuel auditing but it will improve your fuel program. (Try to consolidate your fuel purchases to a limited number of fuel suppliers directing more volume to fewer suppliers. This will enable you to talk to your fuel suppliers and possibly negotiate better fuel prices)
Take these fuel management tips and improve your fuel program. Your bottom line will love you; your company will love you.
Next week, we talk about fuel planning. Does mobile fleet fueling make sense for your company, and how do you know you are getting what you paid for?