Since fuel is a fleet’s largest operating expense, it catches the attention of senior management when fuel prices start to rise as they are today. In particular, higher fuel prices often trigger reassessments as to fleet acquisition strategies, vehicle rightsizing, how long vehicles should be kept in service, and types of vehicles to operate.
Appropriate vehicle selection and rightsizing are effective fleet strategies for countering the effects of rising fuel prices. It is common problem at some organizations to either over-spec or under-spec a vehicle for the job. Taking the time to analyze business needs and carefully matching a vehicle’s specifications with the fleet application will yield the most cost-efficient and fuel-efficient vehicle for the fleet application.
Make Drivers More Fuel-Efficient
There is a limit as to how much fuel savings a fleet can wring from the types of vehicles acquired without impacting the fleet application. One of the best ways to control fuel expenditures is to control driver behavior.
Fleets that successfully drive fuel savings keep drivers accountable for how their fuel cards are utilized. The opportunity to conserve fuel should also be reinforced via safety training; many of the same behaviors that are taught as safe driving techniques, such as obeying the speed limit, which contributes to fuel conservation. There is a continuing trend of using telematics to manage driver behavior in order to maximize ROI by reducing fuel spend.
The difference between the most and least efficient drivers is a 30% difference in fuel consumption. Fuel is a fleet’s No. 1 operating expense and the best way to control this expenditure is to modify driving behavior, which is the major variability influencing fuel consumption. Even small increases in mpg can result in substantial savings when extrapolated across the entire fleet. With fuel expenditures representing 60% of a fleet’s total operating costs, what actions can fleet managers take to help mitigate the higher cost of fuel?
Minimize Unnecessary Idling: Reducing unnecessary idling is the simplest and easiest way for a fleet to cut fuel costs and unnecessary emissions. In addition, excess idling also causes needless engine wear-and-tear and unnecessary noise pollution. Instruct drivers to turn off the engine whenever possible and avoid long idling periods. An idling engine gets zero miles per gallon. Also, excessive engine idling doesn’t just consume fuel, it also creates engine hours, which depending on the OEM, are used to determine when the powertrain warranty expires.
Create a Fuel Policy: The basics behind effective fuel cost management remain relatively the same regardless of the price of fuel or the size of your fleet. Organizations should prioritize a well-communicated, written fuel management policy to ensure drivers and fuel card users understand the expectations around card usage and fuel conservation. The policy should be supported by consistent monitoring of mpg performance across asset types along with a focused effort on creating as much visibility as possible around transactions and spending trends at the driver level.
Modifying Driver Behavior: The way employees drive their company vehicles can either increase or decrease fuel economy and greenhouse gas (GHG) emissions. If you change the driving behavior of employees, you have a direct impact on the amount of fuel consumed and the amount of emissions emitted. Even small increases in mpg can result in substantial savings when extrapolated across the entire fleet. Fleet managers, who have implemented eco-driving training programs, report a 5% to 30%reduction in annual fuel consumption by changing driver behavior. The challenge is to make this a permanent mindset of all your drivers. Unless you have an enforcement program, the danger is that drivers will drift back to old behaviors.
Leverage Fuel Card Controls: Companies should leverage fuel card controls, setting parameters to help prevent excessive or unauthorized spending. Fuel cards often include controls that allow you to set daily, weekly, or monthly transaction limits and place restrictions on the types of purchases and the time of day the card can be used. Controls are available to allow you to cue the fuel pump to shut off after a certain dollar amount.
Minimize Fuel Card Fraud: There are a variety of controls fleet managers can implement to enforce proper fuel-card usage and prevent employee theft. When fleet managers establish controls across the fleet and for individual drivers, they can restrict the types of purchases, number of transactions, dollar limits, frequency per day or per cycle, and even the hours of purchase. These proactively help to prevent fraud and misuse, but also protect the bottom line.
Monitor Fuel Exception Reports: Exception reporting including tank capacity violations, fuel type mismatch, non-fuel purchases, and other exceptions must be paired with an active driver for accountability. Fleets can successfully drive fuel savings by keep drivers accountable for how their fuel cards are used. The opportunity to conserve fuel should also be reinforced via safety training; many of the same behaviors that are taught as safe driving techniques, such as obeying the speed limit, also support fuel conservation efforts.
Encourage Drivers to be Price Conscious when Refueling: Fleets need to encourage drivers to continue to be “price sensitive” when refueling, even if prices are lower than normal. Encourage drivers to look for the best net fuel pricing to maximize the benefits of today’s lower fuel prices.
Optimizing Territories and Routes: We continue to see customers introduce more fuel-efficient vehicles to their fleet along with optimizing territories and routes, which have a direct impact on overall miles driven.
Maintain Proper Tire Inflation: One underinflated tire can cut fuel economy by 2% per pound of pressure below the proper inflation level. One out of four drivers, on average, drive vehicles with one or more underinflated tires. When a tire is underinflated by 4 to 5 psi below the manufacturer’s recommended tire pressure, vehicle fuel consumption increases by 10% and, over time, causes a 15% reduction in tire tread life.
Keep Trunks Clean: Company vehicles get better mileage when not loaded with unnecessary weight. Every 200 pounds of additional weight trims one mile off fuel efficiency. Most drivers accumulate material in their trunks, much of it unnecessary. Instruct drivers to remove all unnecessary items, such as unneeded tools or materials.
Fuel Reduction Strategies
Across the country, fleet managers are looking for opportunities to reduce their expenditures ranging from rightsizing, route optimization, telematics, personal use, and modifying driver behavior training.
As vehicles become more efficient, it sometimes justifies retiring borderline vehicles and replacing them more fuel-efficient models. Beyond vehicle specifications, many fleets are taking a more broad-based approach to reducing their fuel spend.
More fleets are spec’ing their vehicle selectors to take advantage of fuel-efficient technologies, weight reduction measures, higher-speed transmissions, and appropriate drivetrains to meet their business application. Engine efficiency and advanced engine technology will continue to be an effective way to counteract higher gasoline prices.
Best-in-class fleets have already done an effective job in wringing out as much fuel inefficiency as possible. As a result, these fleets tend to view fuel price increases as being beyond their control and the higher fuel spend as simply the cost of doing business.
A growing number of fleets are focused on mitigating fuel spend and/or reducing carbon footprint by shifting to hybrids, using telematics to improve driver behavior, reducing mileage accrued and idle time, maintaining tire pressure, and using fuel apps.
Many vehicle manufacturers have now set goals for widespread use of electric powertrains in the coming years. This will have transformative effects on our current transportation model and fleet KPIs.
There are three strategic areas by which a fleet may reduce fuel spend. These focus on reducing mileage, improving fuel economy, and the price paid at the pump. For example, analytics and technology have allowed for increased focus on retail price paid at the pump. This occurs by understanding fueling habits and at what price fuel is purchased, then correcting or changing habits where needed using technology.
Another key factor moderating fuel spend is to decrease fuel consumption by increasing the fleet’s overall vehicle fuel economy by eliminating older, higher-mileage vehicles that have lower fuel economy. As fleets continue to replenish their portfolios with newer assets, the replacement assets are more fuel-efficient, which serves as a natural hedge when fuel prices rise.
The basics behind effective fuel cost management remain relatively the same, regardless of the price of fuel or the size of the fleet. Companies should focus on a well-communicated, written fuel management policy to make sure drivers and fuel card users understand the expectations around card use and fuel conservation. The underlying expectation should then be supported through constant monitoring of mpg and cost per gallon performance across asset types along with a focused effort on creating as much visibility as possible around transactions and spending trends at the driver level. Exception reporting including tank capacity violations, fuel type mismatch, non-fuel purchases and other exceptions must be paired with active driver accountability.
Fleets should also evaluate new technologies on the market and determine if they are a good fit for their needs.
Fleets now have the option in many cases to set parameters that will help to control excess or unauthorized spending. Fuel cards can come with controls that set daily, weekly or monthly transaction limits and restrictions on the types of purchases and the time of day the card can be used. New technology also allows fleets to cue the fuel pump to shut off after a certain dollar amount. All of these options allow for better management of costs.
Implementing Telematics
A comprehensive telematics program has the potential to significantly improve fuel efficiency for many fleets.
A growing number of fleets are embracing telematics as a way to help significantly improve fuel efficiency, and in turn, reduce their fuel spend. Specific to fuel costs, telematics allows fleet operators to monitor driver behavior to ensure they adhere to eco-friendly driving habits, gauge vehicle idling in an effort to combat excessive idling and the associated fuel consumption, and provide dynamic routing to optimize productivity and fuel efficiency.
More interest is being centered on the benefits of telematics platforms. Fleet managers are utilizing the devices to monitor idling time, trip history, and route optimization to identify risks and reduce overall fuel expenditures. Furthermore, vehicle rightsizing continues to be an emphasis, as well as taking advantage of new fuel-efficient technologies that are increasingly available throughout different segments.
Service fleets are utilizing routing and telematics by optimizing their fleet size to reduce unnecessary miles driven. Most fleets need certain vehicles to support their job needs and are just budgeting more realistically for fuel costs.
The real-time optics telematics delivers can transform performance and benefit most organizations across virtually all areas of fleet. Specific to fuel costs, telematics can help fleet operators monitor driver behavior to ensure they adhere to eco-friendly driving habits, measure vehicle idling in an effort to combat excessive idling and the associated fuel consumption, and provide dynamic routing to optimize productivity and fuel efficiency.
A key advantage to telematics is the ability to have real-time insight into fuel management. With telematics, fleets now have more knowledge to reduce operating expenses – including fuel – than ever before. Telematics solutions offer the capability to review and monitor items such as idling time, vehicle diagnostics, route planning, driving habits, and dispatching.
Overall, there has been a continuing trend in the use of analytics and technology to understand fueling habits and to manage fuel spends. There is an increased use of analytics to understand where fleet vehicles are fueled and at what price in relation to fuel prices in the surrounding area. The use of analytics is coupled with a continuing trend within fleets to utilize tools like phone apps to manage fuel spend. This happens because the app is used to identify best fuel value.
In addition, an upward trend in scheduled maintenance compliance, which includes not only oil change compliance but also tire inflation and rotation compliance, has worked to improve MPG. In turn, the uptick in fuel economy has worked to reduce fuel spend.
Lightweighting Vocational Trucks and Upfits
A growing trend in second-stage manufacturing is light-weighting, which involves specifying lighter-weight materials to achieve an overall weight reduction to an upfitted vehicle. The increased use of lightweight materials in upfit packages has been on the rise for several years and there are many advantages to doing so.
First, specifying lighter-weight upfit materials decreases the vehicle’s curb weight, which, in turn, lowers operating costs by reducing fuel consumption. In addition, by reducing fuel consumption, fewer greenhouse gases are emitted, which contributes to meeting corporate green fleet goals. Similarly, many lightweight materials used in upfits are recyclable, further contributing to a corporation’s overall sustainability initiatives.
A second benefit to reducing GVW is that it creates the potential opportunity to downsize to a smaller vehicle. In certain situations, the lightweight upfit may enable the fleet to select a smaller chassis that not only improves fuel economy, but also lowers initial acquisition cost. A corollary benefit to lightweighting is the ability to increase the legal payload of the vehicle without having to migrate to a larger truck. The decreased weight from lighter service bodies, racks, bins, and shelves is reciprocally converted into increased payload, allowing fleets to carry more cargo and accomplish more with the same vehicles. Similarly, the additional capacity may result in fewer trips per day because the vehicle can carry more payload. It is important to note, that while lightweighting may allow a fleet to increase payload or reduce fuel consumption, it cannot achieve both simultaneously.
A lightweighting strategy is designed to take weight out of the vehicle by specifying upfit components built from lightweight materials, such as aluminum, fiber-reinforced composites (FRC), or fiber-reinforced plastic (FRP) composites. Similarly, today’s cargo van interiors feature increased use of lightweight materials to reduce overall vehicle weight. Upfitters are transitioning from steel racks and bins to heavy-duty plastic composites and aluminum. Lightweighting also extends to auxiliary equipment mounted on a service body, such as aerial platforms and other equipment, that use high-strength steel, which is thinner and lighter than traditional steel, but with comparable strength. “The point of using high-strength steel is to use less material by having thinner walls. The same aerial boom made of high-strength steel is lighter than the thick-wall version made of a lower strength steel. Over the past five decades, the use of steel in the automotive market has stayed largely the same, about 75% of the vehicle; yet, as the stronger grades became available, the sheet metal got thinner.
Corrosion resistance is another benefit of some lightweight materials, specifically aluminum, fiberglass, and plastics, which helps extend the service life of an upfit, especially those operating in Snowbelt states and coastal regions.
Steel is the material of choice for the understructure of a service body, especially in utility applications, because of the twist and torque of the body when a truck travels off-road or is mounted with a crane or aerial device. However, there are opportunities for lightweighting a service body at nonstructural areas in the body, such as side compartments, doors, floor pan, aluminum tool boxes, ladder racks, and other service-body-mounted equipment.
Many truck fleet managers recommend a “blended approach” to lightweight material and steel selection to provide a balance between weight savings, strength, durability, and cost. Conventional steel continues to be the predominant material used in service bodies because of its relative low cost and its durability under severe work conditions.
Lightweight materials aren’t appropriate for every application. Lighter-weight materials, in many cases, have a lower strength compared to steel. Also, lightweight materials, for the most part, have a higher initial cost relative to conventional steel, depending on the type of material and amount of that material used in the upfit design. While lightweight materials may increase fuel economy, will the vehicle travel a sufficient number of miles per year to recoup the higher materials price? In a low-mileage duty cycle, the total cost of ownership (TCO) of steel may pencil out better because the vehicle won’t be driven enough to justify the higher materials cost. Some lightweight materials do not have the same durability as steel, which are required for extended lifecycles or severe-duty applications.
When used in the manufacture of truck bodies and van equipment, lightweight materials, such as thinner gauge high-strength steel, aluminum, fiberglass, and plastic composites, enable fleets to reduce vehicle weight to improve fuel economy, increase legal payload, and even drop down to a smaller (often more fuel-efficient) vehicle.
Another area gaining greater attention among vocational fleet is aerodynamics.
Interest in stowing methods for ladders in cargo vans has ramped up, fleets are paying attention to properly identifying the need for long ladders that require roof stowage versus deploying shorter ladders that can be stowed inside a van,
CUT COTS OF THE FLEET WITH OUR AUDIT PROGRAM
The audit is a key tool to know the overall status and provide the analysis, the assessment, the advice, the suggestions and the actions to take in order to cut costs and increase the efficiency and efficacy of the fleet. We propose the following fleet management audit.
