IT may not be very glamorous, and fleet management systems may not make hearts beat fast, but some fleets are finding that their mild-mannered technology tools are real super heroes when it comes to saving money on fuel. Best of all, they are right there in the backroom just waiting to be put to work.
“What tends to happen with technology is that people will buy a system for a very specific reason,” says Dave Stitt, senior sales engineer for Cadec Global (www.cadec.com). “The system is used for that purpose, but all the other functionality is not fully utilized or utilized at all. In other words, many fleets have powerful, sophisticated tools bought and paid for at their disposal right now that can help reduce fuel costs. They just have to be deployed.”
“Probably less than 5% of our customers are real power users of our driver monitoring system for instance,” says Norm Ellis, general manager and vp of transportation and logistics for Qualcomm Enterprise Services, a division of Qualcomm Inc. (www.qualcomm.com). “Another 30 to 40% are good users, but overall, there are still opportunities to improve, to save more money.”
WHERE THE OPPORTUNITIES HIDE
“There are absolutely still opportunities for savings,” notes Monica Truelsch, director of marketing for TMW Systems Inc. (www.tmwsystems.com). “Not all motor carriers are using mobile communications, for instance, which allows you to communicate with the driver and the equipment in real time. Today, you can get a route plan, with the fuel purchase plan included, over a cell phone.
“Live communication is the most powerful tool, but even just taking advantage of the data you already have can be a great help,” she says. “Just looking at your miles per gallon by truck can tell you a lot. Maybe it's time to retire your oldest equipment, for instance, and upgrade to something more fuel-efficient. If you know what is going on, you can see where the problems and opportunities lie.”
“Just being able to see what is actually going on with your fleet in real time makes so many things possible,” agrees Stitt. “If you can monitor driver activities like speed, rpm, idle time and out-of-route miles, for example, you can very quickly begin to reduce fuel costs by reducing the amount of fuel wasted. Lots of fleets are not using driver performance standards at all or have set the bar too low. Moving your standards up lets you see what can be achieved and who is performing well.
“We are big believers in using ‘scorecards’ to make opportunities clearly visible and to drive change,” he adds. “At Cadec, we use a simple color-coding approach for ranking performance — green for good, yellow for marginal and red for problems.”
“Visibility, being able to see what is going on in real time is a huge advantage,” notes David Custred, director of sales service for McLeod Software (www.mcleodsoftware.com). “Driver managers, planners, administrative staff and others need a system with good visual indicators and other alerts that make it easy for them to keep track of what is happening in real time so they can respond quickly.
“For instance, appointment scheduling is a big trend right now,” Custred continues. “In the past, many carriers and shippers were more casual about pickup and delivery time windows, but waiting is not acceptable anymore because it costs time and fuel as well if the truck idles. Real-time visibility enables fleets to take the slack out of schedules.
“We are also seeing customers use data from our fleet management system to reduce the number of stops a driver makes along a route and the distance of those stops from the planned route,” he adds. “Fleets are really looking for ways to consolidate stops yet still get the lowest fuel prices and allow drivers to stop at the places they prefer because of the amenities.
“Customers are also doing more to improve equipment utilization,” Custred says. “You don't want equipment to pass by in the night, for instance, and if you can see where every truck is all the time, you can do things like set-up relays to improve efficiency.”
Many fleets are also discovering new ways to save fuel by combining technology solutions, such as pairing a route planning and optimization system with a fuel purchase management system, an onboard monitoring system and an idle reduction system. Solutions like Xatanet from Xata Corp. (www.xata.com), for example, are designed to enable fleets to gather information about fuel consumption, including where, when and by whom.
“Our system captures data about every drop of fuel burned, including during idling, and how it impacts miles per gallon,” says Tom Flies, senior vp, product management for Xata. “This enables fleets to set idle reduction goals and identify specific opportunities for improvement. Sometimes, for instance, excessive idling is not the driver's fault. It may be a warehouse worker idling the truck during loading.
“It is also a good coaching tool,” he adds. “The data from the system can be used to help educate drivers concerning the impact of their choices on fuel costs, engine life, maintenance, and so on. We have some day cab customers who have been able to achieve their idling targets with Xatanet alone.”
If you have underutilized IT tools waiting on the shelf, but are not sure just what they might be able to do to help you reduce fuel costs, consider giving your IT supplier a call. Many companies offer free, short-term assistance and/or comprehensive consulting services that can get your cost-saving program into high gear in a hurry.
“People approach us every day now to come in and work with them to help them get the most value from their system,” says Qualcomm's Norm Ellis. “We have customer service managers who call on customers regularly. There are many things they can do for free, right on the spot. If customers want us to come in and help them with process reengineering — with writing code, implementing it for them and testing systems — we can do that, too.
“With such a large installed base and so much experience, we know what industry performance averages are and we know what best practices are so we can definitely help fleets identify areas of opportunity for fuel cost savings and set performance standards,” he adds. “If the industry miles-per-gallon average along a particular 1,200-mile route is 6.5 mpg, for example, and you are getting 5.3 mpg, that can represent a huge cost saving opportunity.”
Consulting is also available from PeopleNet (www.peoplenetonline.com) through a new service called the MPG Guarantee Program, which comes with a money-back guarantee. “Our new consulting service is literally intended to help fleets redesign their fuel processes,” says Louis McAnnally, director of professional services for PeopleNet. “We can generally have a live program implemented in just four weeks. Then we stay in touch, monitor and continue to train.”
According to McAnnally, the MPG Guarantee Program looks at five major areas: fuel purchasing patterns; drivers' operating habits; fleet maintenance processes, including tire management; dispatch operations; and equipment specs. “The goal of the program is to improve the mpg for a fleet by at least 5%,” he notes. In some cases, that can mean millions of dollars. In any case, we guarantee the benefit will exceed the cost of the program within one year, or we will refund all fees.”
“We most certainly have seen a renewed interest in anything that can improve fuel efficiency,” says Dave Stitt of Cadec. “We also have customers coming back and asking us how to get more out of their system. That is what our professional services group does. Usually we are able to help customers save money and improve efficiency. It begins with just asking, ‘Where else can you use the data the system provides to improve processes?’”
THE LONGER TERM
When it comes to process improvements, there is no time like the present either, because it looks like high fuel costs (and maybe even scarcity) are here to stay. Fleets and their IT supply partners are already seeing signs of longer-term shifts in the nature of the trucking business to prove it.
“What long-term effects are we seeing from the fuel crisis?” asks Ellis. “For starters, we expect to see intermodal shipping continue to escalate and the services around that to improve. Investments are being made by the railroads now, although rail can only take freight so far, of course.
“We are also seeing a rise in the dedicated carriage business, because it offers better schedules, a better quality of life for drivers and a generally more predictable operation,” he adds. “It is possible that, over time, we will also see a decline in the number of trucks equipped with big sleepers as routes shorten. And we'll see more hybrids put into service.
“It is also interesting today to watch the interaction between shippers and carriers/consignees. Relationships are being changed by the high price of fuel,” Ellis continues. “Some shippers are really getting down to the details about how their carriers should run their businesses, from tire specs to fuel purchasing practices, to out-of-route miles. It can be pretty frustrating for fleets to try to respond to that with everything else going on now. You can imagine the conflicts.
“As a result, we are seeing practices popping up that we have not seen for years, such as charging for two-way moves,” he notes. “The thinking is if you force me to go ninety miles out of route to get that load in order to meet your service standards, then you have to pay me to do that, even if I am not loaded yet. The high price of fuel is behind this trend, of course.”
The tension between the service expectations of customers and the cost burdens on carriers is even pressing some fleets to do the unthinkable and “fire” shippers who can't or won't collaborate to find fair and mutually agreeable strategies for coping together with the higher cost of fuel. “You have to use all your technology tools to do the best possible analysis of your operating network,” advises industry consultant George L. Edwards, founder and president of George L. Edwards and Associates, “and that includes accessorial costs, such as stop costs, driver loading and unloading costs, fuel surcharges, toll charges, costs for going out-of-route or running empty miles. These are all real costs and must be considered.”
“Anything people can do to reduce fuel usage today is worth it,” notes TMW's Monica Truelsch. “For instance, there are still lots of empty miles out there. Tankers, for example, that have to do tank washes between loads tend to have more empty miles than some other types of fleets.
“You need to have a complex and technical fuel surcharge structure in place to make sure your fuel surcharge recovery is keeping pace with your costs,” she continues. “With fuel prices in such flux and with the regional variations in price, that is very difficult to do without technology to help you, without some sort of enterprise resource planning system.”
Fleets are clearly getting the message about fuel costs and acting to do what they have always done in the face of challenges and adversity: tightening belts, scrutinizing processes and reinventing their businesses yet again. “We are seeing shippers and carriers change and adapt to the new fuel reality,” says Truelsch. “For instance, we are seeing more ‘near-shoring’ and less offshoring and more interest in warehousing capabilities again. Motor carriers are diversifying by doing things like adding LTL to truckload operations, or adding intermodal and logistics services.
“In any future scenario, it is going to be good news for trucking long term,” she continues. “The last mile belongs to trucking. Forward-looking fleets that offer a range of solutions will come out well ahead.”
Higher fuel prices; lower fuel bill
Poland Spring is a brand name well known to consumers, especially in the northeastern U.S. The bottled water supplier, now a division of Nestle Waters, has been providing spring water to customers since it was founded in 1845. While the company may be an old one, there is nothing dated about Poland Spring's approach to managing their 40-truck private fleet. By taking advantage of the capabilities of their Cadec Mobius TTS advanced fleet management software and onboard computers, for instance, Poland Spring is saving enough fuel to more than offset the steep fuel price increases since this time last year.
“The amazing thing to me is that even with diesel costing $2 more per gallon now than it did last year, we are still saving money, still ahead,” says Chris McKenna, northeast inside fleet manager for Poland Spring. “Last June, we were paying $2.70 per gallon for diesel. This year, it is $4.70 per gallon, but thanks to the reductions we are making in idle time, we are still spending less overall for fuel than we did last year.”
Poland Spring operates 40 International andtanker trucks with day cabs along regular routes between six spring locations in northern Maine and three bottling facilities, for a total of some 44,000 trips per year, covering more than six million total miles. In 2008, the company decided to use their Cadec system to help reduce engine idle time. The results were eye-popping.
“We acquired Cadec in 2007, primarily to automate driver logs,” he says, “but the rest of the system's capabilities were completely underutilized. In early 2008, we decided to use the system to try to reduce our idle time. I am very proud of what we've accomplished together. From March to June of 2007, our trucks idled 940 total hours. During the same period this year, we had just 350 hours of idling. We are on track to save about $21,000 in fuel in 2008 due to reduced idle time.”
According to McKenna, the idle reduction program itself was about as simple as it gets. “We just printed out the data on idling by driver from the Cadec system and posted it on the wall,” he says. “We have 80 drivers and nobody wanted to be number 80, on the bottom of the list. That is just human nature. Really, we just asked our drivers to think about reducing idling, to pay attention to something they didn't think about much before. We also offered the ten best drivers each month a $25 voucher for fuel or food from our fuel supplier, The Big Apple.
“We didn't have to come up with elaborate rules,” McKenna adds. “We just made suggestions and asked them to use their own best judgment. For instance, it can get pretty cold here in the winter, but at most stops, drivers can go inside to stay warm rather than sit in the truck and idle the engine while they wait to load or unload. Of course, if it is minus 30 degrees, you may have to idle the trucks. That happens. We also counsel drivers if they are at the bottom of the list for three months running.”
Buoyed by the success of their idle reduction initiative, Poland Spring is turning its attention to improving routing efficiency by creating optimized route plans and then using data from their Cadec system to compare actual routes to those plans. “We are having an engineering firm do the routes and mileage for us,” McKenna says. “Then we can create time and mileage standards against which we can measure actual performance. I think there is some money to be saved there too, mostly around labor. Some drivers will probably be able to do a route in 10 hours, while it takes someone else 12 to do the same thing. With Cadec, we will be able to see what is happening and look for opportunities to improve, such as reducing out-of-route miles.
“We are also adding air pressure inspection programs, recapping our tires more and considering using a couple of trucks as test trucks to try out things that might improve fuel efficiency,” McKenna adds.
IMPROVING MPG WITH B5
The Cadec system also gives Poland Spring the ability to compare its mpg running on non-irrigated soybean meal-based B5 biodiesel against the mpg for regular ultra-low sulfur diesel and the numbers look good, according to McKenna. “We try to launch one major green initiative a year,” he says. In 2007, we switched from regular diesel to B5 biofuel, which we get from Sprague Energy. We are seeing a quarter of a mile per gallon better fuel economy with the B5, especially in the summer months,” he says, “and people in the community like the fact that we are taking steps to reduce emissions.”
“The high price of fuel is forcing a lot of companies to do the right thing,” McKenna observes. “I am not sure all the things we are doing now would have been at the top of the list if fuel was still cheap, but I am sure they are the right things to do.”
Driving fuel cost reductions with technology
Thanks to technology, Rodman Companies, a major site development contractor based in Frisco, TX, is on the way to implementing a new fuel policy that will manage fuel from purchase to storage, use to disposal (consumption). “Ideally, you have to invest in technology when times are good,” says Shawn Schneider, business process improvement specialist for Rodman. “Otherwise, you can find yourself caught in a bad situation where the economy requires that you do things you can no longer afford to do to survive. The price of fuel is not coming back down, ever. This is our wake-up call.”
In response to that call, Rodman Companies is implementing a program to give it what Schneider calls a “360-degree view of fuel.” “We consider fuel as a part of our inventory, whether it is in a storage tank or in a truck,” he says. “We buy it at a certain number of cents over rack prices and we subscribe to OPIS to send us the rack prices every day or whenever the price changes to verify that rate.
“Storage is in on- and off-site fuel tanks situated at job sites,” Schneider adds. “We burn about six million gallons of fuel annually. We are building a computer system now that will help us track fuel down to the gallon, down to the penny. The system will show us exactly where all our fuel is, how much there is and at what cost. That information will be meshed internally with invoicing and all other applicable internal systems. Scanning a bar code on each driver's badge will automatically trigger the fuel tank storage valve to open and allow him or her to dispense the authorized amount of fuel.”
According to Schneider, this fuel inventory visibility will enable the company to reduce fuel costs in a variety of ways. “We are using technology to tell us exactly where we are when it comes to fuel,” he says. “For instance, once we know exactly to the ounce how much fuel a particular machine used to do a job on a particular day, we can make better decisions about equipment deployment. We can also use that information to guide equipment buying and spec'ing for fuel efficiency. Access to accurate data will also allow us to go back to customers and price things appropriately. We'll be able to say, ‘This is the equipment we need for this job. Here are the emissions restrictions for the counties we'll be working in, and here are the fuel costs by type of equipment.’
“Rodman understands the role of technology in creating efficient businesses,” he notes. “Many companies just won't invest in the backroom people it takes to deploy the technology and run the reports decision-makers require to help structure their companies for success going forward. You simply have to do that today.”