CINCINNATI | Everywhere you turn here at the 2008 National Private Truck Council conference, the conversation turns to the high price of diesel fuel.
“Fuel is the major compelling expense in our lives today,” said Jim Angel, director of business development for T-Chek Systems, during a fuel management presentation. “Two years ago, carriers focused on driver retention and while the driver issue hasn’t gone away, fuel is now the focus of most fleet initiatives.”
Angel said diesel prices soared 250% over the last five years, making fuel not only a higher percentage of fleet operational costs but of transportation costs in general. He noted that fuel has gone from 10% to 15% of a shipper’s overall transportation costs to 35% or 40%.
For fleets, of course, covering their higher fuel bills is becoming ever more difficult. Angel pointed out that while the trucking industry paid $112.5 billion for fuel in 2007, shippers only paid out $65 billion in fuel surcharges.
The spike in diesel is being driven by high oil prices, which are reaching the $120 per barrel mark. That’s pushing up the price not only of fuel but of other petroleum-based products as well – impacting carriers even more.
“Tires cost a lot more now because of high oil prices,” Kevin Phelps, national transportation compliance manager for Pavestone, which runs a fleet of 200 trucks nationwide, told FleetOwner. “That gets added to the higher prices for fuel and engine oil we’re paying. And it’s harder to get decent rate increases from customers to cover all of that.”
“Fuel costs are a call to action for us,” said Fred Hammer, corporate traffic manager for ShopKo Stores, which operates a fleet of 38 trucks and 400 trailers. “It’s forced us to develop much more focused metrics for how we buy and consume fuel.”
T-Chek’s Angel said there are several keys to improving fuel management strategies. “You need to first capture a variety of information on a daily basis – your total annual volume of gallons consumed, the average price you pay per gallon, the fuel economy of your trucks,” he said. “You need to then see how the price you pay for fuel compares to what other fleets are paying. Comparing your fuel bills to everyone else’s will help get a better price. You need to leverage the fuel volumes you buy.”
It’s also critical to get ‘buyin’ from the drivers. “These are the guys shifting the gears and making the decision where to stop to refuel,” Angel said. “The bottom line is if the drivers don’t follow the program, you won’t be getting the savings you need.”
Angel stressed that fleets should be focused on reducing the number of gallons they consume--that’s how big savings are achieved. “The best-priced gallon for a fleet is the one you don’t buy,” he stated. “That should be a core fuel-management principal going forward.”