In the recently published “The Fleet Managers Guide to Better Cost Containment”, fuel expense was identified as the leading opportunity for fleet managers to contain costs, either by reduction or by avoidance.
An FTA survey conducted prior to 2012 revealed that respondents agreed that “there isn’t a silver bullet to reduce fuel spend. It [is] the combination of a range of measures which produced real results.” This article will share some actions that can help fleet managers bring operating costs specifically related to fuel spend under better control.
Statistics from the U.S. Department of Energy clarify the effect that speed has on MPG, which, along with the actual cost of the fuel, is one of the largest variables in any formula to control fuel efficiency. The Department indicates the following increases in fuel costs as vehicle speed increases above 50 mph.
MPH Increase in Fuel Cost 55 7% 60 14% 70 23% 80 34%
Suppose your drivers are accustomed to traveling at 80 mph on the interstates. Limiting their speed to 60 mph should yield a 59 percent fuel cost reduction, much greater than the 20 percent that some would assume. The formula for calculating savings is:
(Current percent – new percent) / current percent
Although provable statistics are not readily available for RPM limiters, there is reason to believe that a fuel cost savings could be realized. Limiting RPM, however, may not be feasible for vehicles climbing long, steep grades such as the Donner Pass between Reno, Nevada and Truckee, California.
Vendor management and control is a key element of the ISO 9001 quality management standard. One authority on the subject notes that “cost is an important criteria (sic) for selecting a supplier.” Seeking the lowest fuel price should not be the only objective. It is also worth noting that “It’s not just the product you need to think about – consistent lead times, good customer support, delivery, and business stability are important, too.”
Gaining the greatest overall savings involves a consistent relationship based on quality product and excellent service as well as a fair price. Some fleet managers may wonder if any actual cost savings can be gained through supplier consolidation. According to Next Level Purchasing, Purchasing 101 asserts that “the more volume of business you do with a supplier, the higher discounts you should be eligible for. With the same volume being supplied by fewer suppliers, you should be pushing for and receiving lower prices.” Reducing driving speeds is a faster way to cost containment, but vendor consolidation provides additional benefits in other scenarios as well.
Change the Tires
Why do some fleet managers ignore the role that tires play in reducing fuel consumption and costs? Perhaps it is because the initial expense is so prohibitive it would make a CFO want to ship by shoe leather express.
The folks at Tire Rack explain that “A vehicle’s fuel economy is the direct result of its total resistance to movement.” This is where a local, metropolitan area fleet may find more potential fuel conservation than over-the-road fleets.
“During stop-and-go city driving, it’s estimated that overcoming inertia is responsible for about 35 percent of the vehicle’s resistance. Driveline friction is about 45 percent, air drag is about 5 percent and tire rolling resistance is about 15 percent.”
While tires with low rolling resistance can save on fuel economy and therefore costs, the potential savings may not be as great as reducing driving speeds. They are nonetheless calculable.
On the subject of urban driving, the idling that is part of the stop-and-go activity is also a fuel waster. Just ask UPS why they make so many right-hand turns.
Controlling where and at what price fuel is purchased (consolidated suppliers) goes hand-in-hand with controlling what is purchased. Implementing the use of fleet cards allows managers to better control how much is being spent and on what. Fleet cards allow managers to compare fuel consumption and spend across all vehicles, drivers, and locations. It is in the mountain of data available from an effective fleet card program that the gold can be mined.
Why is Driver A spending so much more on fuel than Driver B? Why are the fuel costs inconsistent on the same route week after week? All of the answers to these questions and more become apparent when a fleet card program is implemented and managed with the express purpose in mind of controlling fuel spend.
Though fuel spend accounts for a huge part of fleet management costs, the reality is that much can be done to reduce fuel spend. By controlling speed and RPM, fleet managers can net cuts in fuel spend. Changing tires regularly and consolidating vendors also plays a role in cost reduction. The final piece of the puzzle is to control purchases by utilizing fleet card programs. By taking these proactive steps, fleet managers can take firm control of fuel spend and reap the rewards.