Putting a virtual lock on fuel

FT. LAUDERDALE . Fuel remains one of the most costly items on a fleet’s bottom line – typically ranked number two, right behind driver wages and benefits – so carriers are deploying an ever-widening variety of methodologies to keep fuel costs under tight control

FT. LAUDERDALE . Fuel remains one of the most costly items on a fleet’s bottom line – typically ranked number two, right behind driver wages and benefits – so carriers are deploying an ever-widening variety of methodologies to keep fuel costs under tight control.

“While negotiated discounts are a good start, making smarter purchases within your network of fuel stops will save you even more money,” said Matt Braslavsky, information technology (IT) director for TL carrier CalArk International. “You also save on making cheaper fuel purchases – you feel that on your bottom line immediately.”

During a presentation here at Manhattan Associates “Momentum 2010” user group meeting, Braslavsky and Nick Cook, vp & CIO for refrigerated carrier FFE Transportation, stressed that even tiny savings in fuel costs on a per-gallon basis can reap big savings for fleets.

CalArk, for example, operates 650 tractors and 2,000 trailers nationwide – consuming roughly one million gallons of diesel per month. Braslavsky said just saving one penny per gallon translates into $10,000 in savings per month on the company’s fuel bill.

“Right now we’re saving between 3.5 to 4 cents per gallon through enhanced fueling and routing optimization,” he noted, primarily by “locking down” CalArk company driver fuel cards so they can only purchase a set amount of fuel at only specific locations.

“It sounds brash and harsh to do that, but it’s the only way we found to maximize our fuel savings,” Braslavsky said, noting that the carrier could only achieve 45% compliance with fueling and routing directives prior to the lock down. Post lock-down, compliance reached 95%, he added.

However, CalArk’s fleet is only 45% company drivers, with the rest owner operators that are only given fuel and route “recommendations” via CalArk’s system. “However, we have 95% compliance from them because they realize just how much they can save off their bottom line by following our system’s suggestions,” Braslavsky said.

FFE, however, has gone a step further by locking down fuel cards issued to its owner-operator contingent, which makes up 20% out of its fleet of 2,050 trucks and 3.780 trailers. “The real commitment to this needed to come from us, not our drivers,” he stressed. “Once we had executive support for this effort and a team leader devoted to monitoring the system and working out bugs reported by the drivers, it started to gain traction.”

The key to making such fuel programs work, however, is to use a system to closely monitor not just fuel purchases but all the factors that affect fuel consumption – tractor-trailer fuel economy, idle time, etc.

Braslavsky said CalArk also keeps raising the bar on such metrics to counteract increases in fuel price. For example, when the company started its fuel and routing optimization effort two years ago, it set minimum average truck miles per gallon at six and idle time at 35%. Today, CalArk demands an average of 6.8 mpg and no more than 10% idle time.

FFE also uses an incentive plan for its drivers and driver managers, paying out bonuses based on attaining fuel mileage goals, said Cook. However, he stressed that drivers are also measured on accidents, DOT violations, and for turning in correct paperwork to obtain their bonuses in order to ensure safe operating behavior.

Such fuel and route optimization methodologies are going to become even more critical in the future, Braslavsky pointed out, as the Federal Motor Carrier Safety Administration’s Comprehensive Safety Analysis 2010 program kicks in.

“There was a time when it was taken for granted that you could tell a driver to get there and he’d make it – those days are long gone,” he said. “Now we must be really, really creative with the time constraints put on our drivers – and better routing is the key to that.”

He also said new functionality such as actual loaded weight is being added in as well to allow for even more accurate fuel accounting. “We all know pulling 80,000 pounds consumes more fuel than pulling 45,000 pounds,” Braslavsky added. “The next level of optimization is going to take that into consideration.”

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