Given the high cost of fuel, drivers operating below your fleet’s average mpg cost more money and ruin the pricing advantages you need to survive when margins are tight.
To illustrate, assume ABC Trucking averages 5.7 miles per gallon for over-the-road operations. At a cost of $4.65 per gallon, the fleet spends about $0.81 per mile for fuel. In the competitive truckload market, this company’s linehaul revenue and assessorial charges total $1.47 per mile on average. Fuel surcharges are $0.547 per mile for total average revenue of $2.02 per mile.
The company’s best drivers get an average of 6.48 mpg, and the fleet needs only $1.92 per mile in revenue to achieve the same level of profitability with them as it does with $2.02 per-mile revenue for the average driver. On the other hand, its worst drivers average 4.49 mpg, and the company needs $2.24 per mile to keep the same margin – a difference of $0.32 per mile.
The variance in mpg among similarly spec’d and dispatched vehicles nearly always is due to driver behavior, mostly regarding shifting, speed and idling. Significantly improving mpg requires engaging drivers in the process.
One proven path to successful mpg improvement and incentive programs is to begin by establishing baselines for each business group and equipment type. Baselines create different categories or groups for measuring mpg. Examples include terminal locations, sleeper cabs, day cabs, trucks with and without auxiliary power units (APUs), etc.
Next, set goals and incentives for the entire group based on the actual results from the top tier of drivers. Shaw Transport, a division of flooring manufacturer Shaw Industries, sets its mpg goals based on what 25 percent of drivers in each group already have met. Its goals aren’t limited just to mpg; they also include idle time.
“That gives (drivers) room to attain that goal,” says Randy Black, e-business manager for the Dalton, Ga.-based company. “If a quarter of the fleet is already meeting the goal, they don’t have an excuse in their group.”
The company also uses descriptive statistical analysis to determine what vehicles fall outside the 95th percentile of predictability. For each group or baseline, drivers’ mpg follows a normal bell-shaped curve. Statistically, the few trucks that fall outside of the 95 percentile are in the same group, but they are the special cases you should really look at, Black says.
Trucks on the low end of the mpg curve might have a mechanical issue or a mismatch of horsepower for the loads they are pulling. In this case, you could make the operational adjustments and remove a driver’s mpg data from the time period in question, thus returning his average to normal. On the high end, you’ll want to locate the driver or equipment that is performing well, determine why, and then roll out these best practices to the rest of the fleet, Black says.
Shaw Transport uses PeopleNet’s PerformX, a reporting tool that pulls mpg data from the vehicle’s electronic control module (ECM). Drivers are familiar with the PeopleNet system and can monitor their own mpg in the cab, Black says.
Friendly competition is also an essential ingredient. Shaw ranks each distribution center by mpg performance. The bottom dwellers are called “the catfish,” and moving on up, “the snails, the lions and the cheetahs.” Since staring a driver mpg incentive program, Black says that Shaw Transport’s regional distribution group alone has increased mpg by 4 percent and saved more than a half-million dollars.
With the right technology tools, analytical skills and even some creative competition, you too can have an effective driver incentive program, attain significant fuel savings and leave no room for driver excuses.