Fleetowner 5453 Fuel Island Opener
Fleetowner 5453 Fuel Island Opener
Fleetowner 5453 Fuel Island Opener
Fleetowner 5453 Fuel Island Opener
Fleetowner 5453 Fuel Island Opener

Are you getting all the fuel you're paying for?

June 9, 2015
"When you’re still using paper and a pen or manually maintaining an Excel file, you can’t be as aware as when you have automated accountability. And a lot of these companies are still using the wooden stick in the tanks." —Julia Kloch, COO of SCI Distribution

New tractors are increasingly fuel-efficient, and trailer aerodynamic add-ons have become commonplace on the highways. But many fleets are wasting this ever-improving mpg by not paying sufficient attention to the total volume of fuel they’re paying for. Simply, not all of that diesel is being used as intended. But new technology at the pump—fuel cards tied to truck telematics systems and driver performance monitors, and all linked to the back office—make for a more precise measurement and better management of fleet fueling and driving practices.

For starters, up to 3% of diesel fuel is lost to theft and fraud, explains Kelly Frey, vice president of product management for Telogis, citing industry estimates. Anecdotally, he’s heard from a customer who noted that fuel is an ideal “liquid commodity”: There’s no tracing it.

“Increasingly, the opportunity for drivers or anyone involved to steal fuel is there—and I’m hearing fuel theft is becoming more organized as it becomes more valuable,” he says. For fleets that maintain and manage their own fuel facilities, the opportunities for theft are even greater.

Indeed, 70% of fuel deliveries go unverified, according to an estimate by SCI Distribution, which makes wireless fuel and fleet management systems.

“When you’re still using paper and a pen or manually maintaining an Excel file, you can’t be as aware as when you have automated accountability,” COO Julia Kloch says. “And a lot of these companies are still using the wooden stick in the tanks.”

Just tracking fuel use and dutifully filling up a spreadsheet isn’t a solution.

“Fuel will do nothing but nickel and dime you to death,” adds Jeff Champa, Omnitracs senior director for product management. “If you’re a fleet operator, you’ve got to manage it at all levels. It’s not just measuring the consumption of the vehicle; it’s about why.”

Frey points to three key areas in the ongoing evolution of truck technology:

  • Telematics systems are increasingly being embedded by vehicle manufacturers. Volvo and Mack tractors and Ford and GM medium-duty trucks, for example, roll off the assembly line with a Telogis system installed. And that’s driven by truck makers’ focus on fuel efficiency and the “very granular data” telematics can provide.
  • The “proliferation of mobile,” meaning the expansion of the use of smartphones by truck drivers, opens the market for a whole range of in-cab applications based around fueling and driver performance.
  • The evolution of “vehicle as a hub” technology, which essentially opens up a “hot spot” to allow multiple devices and sensors to share one Internet connection.

So the good news for fleets is that plenty of options for getting a better handle on fuel costs are on the market, and more are on the way.

Careful measurement

The obvious way to check for fuel fraud is to compare vehicle mpg to fuel receipts. But instead of a paper trail audit weeks or even months later, technology now can track, identify and automatically alert the fleet to exceptions and outliers, Frey explains.

Telogis offers a range of fleet management tools and data integration suites, but “the really neat stuff” is happening at the fuel island.

“There’s quite a lot of innovation that’s happening around the pump,” Frey says. “Not only do we tie into the major fuel card providers like WEX, Comdata, and FleetCor so we can get a near real-time feed of the transaction information, but we’re tying that data with the telematics information.”
For instance, the technology can verify that a specific vehicle was at a specific pump at a specific time. And access to the vehicle diagnostic data, for example, means the user can verify fuel levels.
“Say the guy wants to put 100 gals. of fuel in, but he was full when he was at the depot and he’s only consumed 60 gals.,” Frey explains. “So where did the other 40 gals. go?”

Services are also being developed around near-field communication technology, which turns a smartphone into the equivalent of a “tap-and-go” credit card, so drivers won’t even have to swipe to begin fueling. Similarly, Bluetooth and Wi-Fi connectivity will be increasingly used to verify and authorize transactions.

The smart shopper

Among the offerings from Omnitracs, the Exact Fuel application is designed to provide fleets timely fuel-level information to more efficiently plan fuel stops. Given the variation in fuel prices and fuel tax implications across state boundaries, visibility into fuel consumption can help better manage fuel stop decisions.

Additionally, Champa emphasizes the range of operational factors that fleets cannot overlook, otherwise the savings generated from precise measurements at the pump will go right out the exhaust pipes. Specifically, government figures show that 8% of fuel consumption is devoted to idling, meaning that of the $70,000 in yearly fuel expense for a typical truck, $5,600 will be spent on idling alone. Therefore, anti-idling strategies remain critical.

Also, driving techniques that limit hard braking and truck speed, along with modern adaptive and predictive cruise technology, help improve driver fuel use performance. Likewise, route mapping and GPS greatly reduce wasted miles and travel times.

And tire pressure management systems ensure proper inflation.

“Without the right data points, you can’t tell the driver what he’s doing wrong to make it better,” Champa says.

Telogis also suggests that, more than just monitoring transactions and consumption, technology can reduce fleet fuel expenses by tying navigation systems to a fuel purchasing plan, locating the lowest prices along a route and directing the driver.

Of course, simplifying various systems and apps to minimize driver distraction is critical.

“I spend an awful lot of time around our product strategy, trying to focus on the driver experience—empowering the driver without annoying the driver. We want to get some value for the fleet; we want the driver fueling in the right location and paying attention to speeding,” Frey says. “But we’ve got to do it in a respectful way. You don’t want to inundate the driver with buzzers and lights; you don’t want to distract the driver from his primary job.”

He mentions the “safe view” setting in the Telogis navigation solution, which is designed to give the driver “just the information he needs to know.”

“When you start to layer on things like this when it’s time to fuel, this is where all of it has to be done in a respectful manner for the driver,” Frey continues. “Our app allows for driver input; the place with the lowest price may not be the best place to stop. We have a way to allow the driver to get that input back to us. Drivers are human, though sometimes it seems like the technology doesn’t treat them that way.”

Old school, new tool

Ryder is rolling out a new handheld computer system to streamline the fuel transaction process. The units are capable of reading RFID and scanning barcodes. The device captures the vehicle ID and odometer reading, among other data, and relays it to the reporting system, explains Scott Perry, Ryder’s vice president of supply management and global fuel products.

The irony is the tool is going into the hands of someone many truckers might have thought no longer exists: the attendants of a full-service fueling facility.

“What’s unique about our model is we’re one of the few remaining full-service fueling networks,” Perry says. “We have company employees who are actually manning our service islands, interacting with our customers’ drivers, validating information around the vehicle being fueled, and then actively fueling the vehicle while they’re also performing other safety and maintenance checks as a walk-around inspection. We find that definitely leads to a higher level of checks and balances around the transaction.”

The Ryder network has more than 400 fueling locations open to lease customers, to commercial rental fleet customers, and to contract-maintenance customers. Attendants pumped 300 million gals. of fuel for Ryder customers last year, Perry notes. Ryder’s been doing it this way for 83 years, he adds, and still sees it as an important service. The inspection points—whether engine fluids or trailer lights—all contribute to customer uptime.

And while it’s admittedly “old school,” the complex technology that comes with modern trucks demands more expertise than was required of a corner service station attendant a generation or two ago.

“They definitely play a role in helping to support the proper use of diesel exhaust fluid, for instance, and they often get asked about lights that may come up on the dash. They definitely get asked a lot of questions about the performance of the vehicles, and they play a role in our environment of creating a write-up or a service order if they find something out of compliance,” Perry says. “They really are the eyes and the ears for interacting with the drivers, the intermediary between the driver and the shop to expedite the engagement and make sure we get that truck back on the road as quickly as possible.”

Pick a card

Technological changes at the pump also are coming with the cards themselves.

“Closed loop” cards, such as fuel cards, have long used what is known as Level 3 data, meaning they incorporate the most detailed information in purchase processing, much more than simply the merchant name and purchase amount typically reported for a consumer credit card transaction, Frey explains. The data fields required for Level 3 processing include detailed merchant information along with item product codes, item descriptions and quantities, item tax rate, discount rate, and more.

“Increasingly, with ‘chip-and-pin’ smartcard technology on Visa and MasterCards, they now have this same level of data and the prompting capability that the fuel cards have had—and that’s opening up an opportunity for the open-loop cards to move into the fuel card business,” Frey says. “We think that’s an interesting area of opportunity that’s emerging for fleets. They’ll have more options as to what cards to put into the hands of drivers. There’s more innovation coming within the next couple of years because the technology landscape is changing.”

These smartcards, he suggests, will be used to decrease costs and to empower drivers with more fueling options.

“It all becomes a new and exciting world,” Frey says.

And U.S. Bank is counting on it.

With an October regulatory deadline, smartcards will become standard in the U.S. soon, although they will not be required for closed-loop fuel cards until 2017, explains Ramel Lindsay, who oversees strategy, profitability and product development for U.S. Bank’s fleet programs.

“But we want to use that technology for fleet cards because the thought process is fraudsters will migrate to the weakest link in the chain,” Lindsay said. “And we already have experience doing that on the corporate card side.”

The fleet programs include the U.S. Bank Voyager Fleet Card for Class 1-6 cars and light-duty trucks as well as the Over The Road Card for Class 7-8 heavy-duty trucks -- the latter based on a platform acquired from TransCard and developed over the past two years.

The heart of the program is the web-based portal that allows fleet managers to monitor the transactions in real time, and to ensure compliance with company policies.

The U.S. Bank fleet cards come with seven basic prompts, such as driver, vehicle, and trailer ID; trip number; odometer reading; and reefer hours.

Additionally, the system maintains the latest pricing information with regular updates from the Oil Price Information Service to ensure pump prices and discounts are in line with negotiated rates.
“Our ability to integrate with dispatch systems provides the fleet with a holistic way of managing their units and their drivers,” Lindsay says. “We’re directly connected to the truck stops, so as soon as the information is posted, the fleet can see exactly what occurred. You’re able to do some real-time management of your fleet by way of that portal.”

Lindsay emphasizes that as a highly regulated third party, U.S. Bank can offer great transparency and reliability to its system, to the data and to pricing.

Expanded capabilities of the platform include card loading features that allow a fleet to push funds out to drivers in real time. Additionally, the fleet card services group at U.S. Bank “works very closely” with the freight payment group.

Lindsay specifically notes the “virtual pay” feature of the fleet card; in essence, the ability to turn on credit-card functionality. This provides a single-use MasterCard account number for purchases where the fleet card might not be accepted. As an example, the standard Over The Road Card is fuel-only; should the need arise for a driver to use the card away from the truck stop, the feature offers greater flexibility.

“Some fleets are really hesitant to issue cards with a MasterCard bug on it,” Lindsay says, referring to a branded credit card. The feature has typically been used to pay for repairs or other emergencies.

Additionally, the card can be used for cash advances and convenience checks within the network, he adds.

The Over The Road Plus Card “is a true MasterCard,” and the fleet customer can schedule funds for prepaid, non-fuel use. At the fuel desk, it works as a fleet fuel card with all of the transaction prompts, but other uses are processed like regular credit card transactions.

Terminal fueling issues

SCI uses proprietary technology to prevent, detect and verify all processes of the fuel buying, delivery and dispensing process, Kloch explains.

According to the company, fuel fraud manifests most often in three ways—and criminals have created countless tricks to deceive in each area.  SCI has studied this extensively and put controls in for each of the areas to stop fraud:

  1. Credit card misuse, when drivers swipe company-issued cards for personal use
  2. Shortchanged deliveries, when fuel delivery drivers covertly deliver less gas than ordered
  3. Hot fuel, when a depot dispenses fuel to a tanker at the warmest time of day, the tanker can receive up to 6% less fuel than ordered.

Kloch points out that a system such as that of SCI constantly monitors tank levels and issues daily exception alerts, compared to manual reporting, which often is done weekly or even monthly.

She tells of a recent fuel theft incident in which an employee bypassed the pumps and siphoned fuel directly from the storage tank, the sort of “inside job” that can be detected by a tank monitoring system.

SCI’s suite of products, which also feature a number of dispensing controls, is designed to monitor fuel usage from the time of delivery to reconciliation and typically generates savings of 5 to 15% in fuel costs. The payback, depending on the size of the fleet, is one to two years, Kloch says.

Data distress

Still, just more data—reports that won’t get more than a cursory glance—likely isn’t what fleets are looking for. But there will be a price to pay for those slow to adapt.

“Big data is great. People have been talking about big data for years. Transportation is kind of catching up. You can almost view it as a problem: You have all this data and you don’t know what to do with it. Five years ago you didn’t have that problem,” explains Champa of Omnitracs.

The real problem for those fleets that resist learning to gather, analyze and use that data is increasingly one of competition. The largest fleets have long since invested in developing their own systems—and have improved their operational efficiency because of it.

“Because it’s available, you have to do something. You can’t just ignore it,” he says.

Frey of Telogis agrees.

“What you really want is to bring actionable information back into an analytics engine or a chart. You want to kick off an email or a text message when something goes on that needs to be acted on,” he says. “The value proposition is not just cost savings. Telematics help fleets be more productive. It’s not just knowing what happened in the past, or what’s happening in the present. The real opportunity is in using the data to better plan for the future.”

About the Author

Kevin Jones 1 | Editor

Kevin Jones has an odd fascination with the supply chain. As editor of American Trucker, he focuses on the critical role owner-ops and small fleets play in the economy, locally and globally. And he likes big trucks.

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