If you want to know why fuel card programs are becoming more popular with fleets, suppliers will tell you to look at the wild roller coaster ride U.S. diesel fuel and oil prices have been on over the past year.
From a U.S. average price of about $3.30/gal. in January 2008, diesel fuel costs skyrocketed to an average of over $4.70/gal. by mid-July, climbing beyond $5/gal. in California, before plummeting down to $2.31 by mid-January this year. U.S. oil followed a similar boom and bust cycle, starting out at just over $88.40 per barrel in mid-January 2008, shooting past $133.60 per barrel by mid-July, then crashing to $32.49 per barrel by mid-January this year.
It's that kind of scary unpredictability that fuel-card programs help mitigate, says Michael Thompson, senior vp of sales and marketing for Nashville, TN-based FleetOne LLC. And it's not just about getting fuel discounts, either — it's about giving fleets information so they can better manage fuel expenditures, he says.
“Enhanced visibility of their fueling patterns is one benefit,” Thompson explains. “Fleet customers are also becoming more informed about what is really the cost of fuel. Taxes play a significant role in the cost of fuel, so fuel card reporting plays a big role in providing the information fleet owners need to manage the true fuel cost.”
He notes that fuel-card programs like those of FleetOne help fleets look at where they are fueling, when they are fueling, etc., and then help them save money by simple tweaks such as consolidating their gallons to specific locations. Most fuel cards also allow users to get the cash price at the pump, with rebates offering additional savings. FleetOne, for example, offers a 2¢ per gal. rebate at over 900 of the 5,400 fueling locations that accept the company's card, Thompson notes. Add to that zero transaction fees for fuel and maintenance, and fleets are poised to save more precious money, he says.
“It's that combination of savings and information that's made fuel cards a ‘change agent’ in the marketplace,” says Randy Morgan, senior vp and gm of Brentwood, TN-based Comdata's Credit Payment Solutions division. “Fuel cards are much more a management tool than a payment tool today because of the tremendous opportunity they present, not just to save money, but in helping fleets become more efficient.”
Fuel-card programs are also an “all-for-one, one-for-all” type of tool as well, he stresses, as fleets of any size, whether they operate five or 5,000 trucks, can use them to forge a myriad of improvements to their bottom lines, especially when used in conjunction with online support systems.
Morgan points to Comdata's Smart Buy fuel locator program as an example. An online system rolled out last year to support the company's fuel card program, Morgan says it quickly locates the best fuel prices within a designated area. This searchable database provides pricing for regular unleaded gasoline and diesel fuel at retail and truck stop locations throughout the U.S. It allows fleets to specify a designated mile radius and to generate a list of nearby retail locations with prices ranked and displayed along with an easy-to-read road map.
Those locations offering Comdata's fuel-card discount — up to 5¢ per gal. at 30,000 retail locations — are also highlighted within the search results. Plus, using a cellphone or an approved communication device gives truck drivers the option of pressing a button to locate the best fuel price and directions to that location in real-time.
“It's all about bringing more intelligence to the customer about the fuel they are buying,” Morgan says. “Prices can change dramatically as we've seen, and sometimes the big chains aren't the cheapest — sometimes Johnny's Gas on the corner is. There's money out there to be saved, and we're trying to give customers a tool to help them find all the savings they can.”
GETTING CONTROL
Cindy Condon, president of Pacific Pride Services LLC in Salem, OR, remembers that when she started in the business 25 years ago, the three main benefits touted for fuel cards were convenience, credit and control of expenses. Back then, however, diesel prices hovered around 79¢ a gal. Today, with prices swinging wildly within the space of a year, the “control” function is now the most critical benefit fuel cards provide.
“Control is definitely the biggest benefit of fuel cards now,” she explains. “Sure, you get cost savings by using fuel cards, but when fuel as a line item on your budget grows by 25% in the space of several months, control trumps everything.”
That's one of the reasons Pacific Pride, now owned by fellow fuel-card provider Wright Express of Portland, ME, switched from an optical to a magnetic strip-style card a few years back. “With the magnetic strip, we can offer 220 different functions, giving fleets pinpoint control of how they buy fuel,” explains Condon. “Maybe they only want to make specific cards active, say between April 1 and Oct. 1 for produce haulers, or only to buy a preset amount of fuel, or only be functional during certain day and nighttime hours. All of that is available today.”
“Fuel cards have a key role to play in helping fleet managers keep a tighter control of fuel costs,” explains Matthew Rumble, gm at Tusker Fleet Management in Watford, England. “As fuel prices look set to remain high for the foreseeable future, the onus is on fleet managers to keep a closer control of fuel costs.”
Rumble says better control generates savings in several ways. For starters, card programs reduce the amount of time drivers spend trying to find a particular branded fuel outlet, thus saving both the drivers' time and fuel in finding the needed site. Consolidated invoicing eases the administrative burden associated with fuel-tax accounting, removing the need for drivers to keep fuel receipts and the accounting department to process them.
“Fuel cards also allow key information to be fed back to the fleet manager via management reports, which measure fuel spent by several parameters, including driver, price, location and current mileage,” Rumble stresses. “This allows managers to identify areas where savings can be made, such as by using cheaper filling stations.”
The use of fuel cards also limits purchases that are expressly not allowed, he adds, so drivers cannot buy other goods with the card other than products specified on the card, typically fuel and oil. Drivers, therefore, will not be able to purchase sundry goods with the card, which can happen when using a pay and reclaim system or with credit cards.
“This helps fleet managers keep a tighter rein on fuel expenditures as well as reducing the administrative burden, which has to be good news,” Rumble says.
PUTTING IT ALL TOGETHER
Bernie Kavanagh, vp-strategic services for Wright Express, says the key advantage with fuel cards today is packaging everything together. Not only are you saving a few cents per gallon, you're also closely monitoring the scope of a fleet's fuel-buying patterns and getting detailed information so you can better control that pattern.
“Our dedicated card program is convenient and easy to deploy and helps fleets enforce fueling policies, sets limits at the pump, monitors employee purchases, tracks the best fuel prices in an area, and puts fleets in control of fuel buying by drivers,” he explains. “Significant savings can be realized by enforcing vehicle use policies, using a fuel-buying program that sets and tracks limits, tracking unauthorized use, and using telematics technology.”
It's also about customizing a fuel-card program to better fit the specific needs of the fleet, Kavanagh notes. For example, managers can set different parameters for cards assigned to a mixed fleet of Class 7 and 8 over-the-road units used alongside medium-duty box trucks. “You're talking about pushing control and data gathering down to the individual card level,” he says.
FleetOne's Thompson adds that drivers and trucks are the most valuable and expensive assets in any fleet, so integrating card purchase data with GPS (global positioning satellite) data enables owners or managers to further control expenses and track purchases in long routes.
“We also save them time by giving them access [free of charge] to our online account management,” he continues. “They have the ability to completely customize reports so they work for them. It also helps with bookkeeping; there's no need for keeping up with receipts, etc. The reporting and online account management also helps them keep track of their drivers, giving them the ability to monitor their drivers' [fuel] spend by setting daily or weekly limits, which really helps the owner manage day-to-day business costs.”
On top of that, last year the company formed a partnership with NationLink Wireless to offer FleetOne Vehicle Tracking. This secure GPS tracking system provides customers with specific fuel stop locations and amenities that are directly communicated with their drivers and designed to improve routing and reduce fuel costs and idle times.
And all of those fuel-card capabilities are attracting fleets, says Thompson, noting that FleetOne saw new business increase 32% in 2008, no doubt driven by the major spike in oil and diesel fuel prices.
“It's all about delivering real bottom-line value to customers in the form of rebates, cost avoidance, transactional efficiency and financial control,” says Comdata's Morgan. “That's what fleets need from fuel-card programs today.”
Fuel cards … by phone
One of the latest trends in fuel cards is to merge them into existing technology platforms, negating the need for a driver to carry around the ubiquitous piece of plastic.
Portland, ME-based fuel-card provider Wright Express is pilot-testing just such a system in cooperation with Altoona, PA-based Sheetz convenience stores — a multi-city trial of specially enabled NFC or “Near Field Communication” mobile phones to which drivers can download an over-the-air fuel card. They will then be able to purchase fuel by merely tapping their phones at contactless payment readers installed in more than 350 participating Sheetz locations throughout Pennsylvania, Virginia, Maryland, West Virginia, Ohio and North Carolina, according to Russ Lamer, Wright Express' manager of emerging technologies.
“There are indications that the wireless phone will be the electronic ‘wallet’ of the future,” he says, adding that the pilot, which began in January, is a first for both Sheetz and Wright Express, and they are collaborating with Santa Clara, CA-based Vivotech in testing NFC mobile technology to gauge its benefits and the impact on the fleet fueling industry.
“Sheetz has had the contactless readers at their stores for several years now and have been accepting contactless chip cards, using RFID [radio frequency identification] technology for payments at the pump and in-store,” notes Lamer. “They are providing a complete end-to-end NFC mobile solution for this trial, including a ‘mobile wallet,’ over-the-air fleet card provisioning infrastructure software, promotion management software, and contactless/NFC terminals installed at Sheetz locations.”
The potential scope of this market is fairly large, Lamer says. There are close to half a million contactless terminals already deployed in the U.S., and, according to Juniper Research, by 2011 about 470 million mobile phones will include NFC technology.
Card consulting
One size doesn't necessarily fit all in trucking. And that same philosophy fuels Fleet Cards USA's approach to the fuel-card market, explains Paul Citarella, senior vp-sales and marketing.
“No two fleets are alike, so we've set ourselves up more like a consulting company than a fuel-card provider,” he says. “Based on the fleet's size, needs and scope of operation, we try to find the card program that's the best fit for them, rather than take one card and try to make it work for all of them.”
Based in Norcross, GA, Fleet Cards USA also has partnerships with fuel-card providers, including BP, ARCO, Chevron, Texaco, CITGO and its sister company Fuelman, as both are owned by Atlanta, GA-based global fleet card company FleetCor. Citarella says the key to the consulting approach is to find the cards that offer the specific benefits fleet customers are seeking.
“All fleets want convenience, cost savings and control from their cards, but to varying degrees,” he explains. “Some fleets want higher rebates per gallon with their cards, yet to get that, they lose some of the convenience since not all refueling locations offer the rebate level they are looking for. Our job is to balance those trade-offs so they don't lose too much of one feature when trying to maximize another.”
Citarella adds that the company's proprietary FleetMatch card selection system is the key to that process, addressing both the immediate and long-term concerns of small to large fleets. “Every fleet business has subtle differences and that translates into how they want their cards to function,” he says. “Our job is to match them with the card program that best addresses their specific needs.”
Counting carbon
When the National Biodiesel Foundation (NBF) sought a way to encourage greater use of biodiesel by the trucking industry, it turned to fuel cards, creating the BioTrucker Fuel Card in early 2008 in partnership with Nashville, TN-based FleetOne.
Truckers using the card get the cash price on all fuels (biodiesel included) at all participating locations, a 2¢ per gal. discount at over 800 truck stops offering biodiesel and tracking services. Carriers can even use the card to provide pre-approved cash advances for drivers at truck stops, explains Sharon Bell, spokesperson for Jefferson City, MO-based NBF.
The organization is also planning to add another capability — tracking the amount of carbon dioxide emissions saved when a truck fills up with biodiesel versus regular diesel. “We're contemplating this for two reasons,” Bell explains. “The first is that many shippers insist that their carriers be as ‘green’ as possible and have evidence to back it up.”
The other, while more tenuous, is along the same lines: using that data to allow truckers to participate in any “cap-and-trade” system designed to reduce carbon dioxide emissions. Under such a system, businesses would be required to obtain allowances, sometimes called tradeable permits, for all of their “global warming” emissions, including carbon dioxide. The total amount of allowances permitted into the market each year are ratcheted down, thus allowing the federal or state governments to guarantee a certain amount of overall pollution reduction.
“We'd tie the total amount of carbon dioxide reductions to the percentage of feedstock used in a gallon of biodiesel and that would be recorded by the card,” Bell notes. “Eventually, we'd tie that data into a cap-and-trade system if one is developed to control emissions.”
