May 18, 2011
BEST PRACTICES: FUEL MANAGEMENT POLICY
With average national fuel prices on the rise, it is imperative that fleets manage this cost, which is second only to depreciation, effectively. In the second of our best practices series, CAF
examines a range of fuel management policies that can help fleet managers mitigate rising fuel costs, assuring a more fuel friendly and efficient fleet.
For fleets in Canada, rising fuel prices make an already high expense, grow by the day. With no control over fuel prices at the pumps, fleet managers must constantly strive to identify and implement fuel management policies that not only increase the efficiency but also reduce the volume of fuel being used.
“At ARI, we’re always saying that you can’t manage what you can’t measure, so the first step in managing fuel costs is establishing a fuel program, which should include clear policies and measurement criteria,” said Tony Dagostino, Department Head of Strategic Account Management, Automotive Resources International (ARI).
One tested method of controlling fuel spending is the use of fuel cards through which all fuel related expenses can be tracked in addition to setting daily and monthly transaction and/or dollar caps.
“Expenses on ARI’s fuel card and fleet MasterCard can be monitored via alerts and reporting through the ARI system,” said Dagostino. “These include velocity controls, such as the number of transactions a days premium fuel usage, and possible fraudulent transactions.”
Many lessors make fuel management programs available. The programs involve fuel cards that track and provide detailed information about the spending habits of a vehicle operator.
“Although there is little anyone can do to impact fuel prices, fleets looking to manage the cost of fuel can concentrate on high-leverage item like vehicle selection, driving behavior and kilometers driven that most significantly impact overall fuel spend” said Stratford Dick, Senior Director of Marketing and E-Commerce Strategy, Wheels, Inc.
Data collected via fuel management programs can also be utilized to understand how fuel is being used and how often it is purchased.
“The best practice for fleets is to engage your drivers in your fuel management, source your fuel program with focus on exceptional changes to purchase patterns or standards, and makes communication to the driver simple,” said Jim Forbom, Vice-President Client Services, Foss National Leasing. “Our Foss Fleet Management and CorpRate fuel cards automatically perform over 25 different pattern analysis tests to highlight exceptions and e-mail them in real time to the fleet manager.”
Data analysis is the key to changing driver habits. When the driver becomes aware that you know if they are following company fuel policy or not, they will comply with company policy automatically. In turn, it is important to make sure that drivers get a copy of monthly fuel statements from the management company so they are aware of their fuel purchase patterns.
“When drivers know that their patterns are known and monitored, compliance increases,” said Forbom.
Another way to change driving behaviour is through the use of driver training, which helps educate drivers about how to drive more efficiently. An added benefit is that training helps to advance safe driving and lessen the frequency of adverse incidents.
According to Angela Feerick, Vice-President of Strategic Consulting, Account Executives and Strategic Consulting, PHH Arval, “Many companies realize a more fuel efficient fleet when implementing driver training programs. Not only are your drivers safer and less likely to have an incident with their vehicle, but they are also learning driving practices that result in reducing fuel consumption.
“Fleets that have introduced telematics, such as PHH Onboard, can use engine and GPS data to monitor and correct driver behaviour and report significant reductions in speeding, idle time, abrupt stopping and starting, and optimal routing, all of which impact fuel efficiency.”
Consequently, idling is among the most wasteful practices. When the vehicle is stationary with the engine running, obviously mileage is zero. This easily avoided practice clearly harms the environment. Over recent years many jurisdictions have put bylaws in place that will allow only a few minutes of engine idling before the vehicle is ticketed.
“Unnecessary idling will waste fuel and increase wear on the vehicle’s engine, ultimately making it less fuel-efficient,” said Dagostino. “Excessive engine idling can burn between two and three liters of fuel per hour depending on engine size and application. For some types of vehicles, it may make sense to track and monitor idling hours.”
Many fleets today are attempting to decrease fuel consumption by selecting more fuel-efficient vehicles that use alternative fuels and/or different technologies. More attention is also being paid to rightsizing fleet vehicles to save money on fuel.
“PHH consults with clients to consider right-sizing their vehicle selector ensuring the right vehicle for the job is the first consideration,” said Feerick. “Fuel efficiency can be gained without sacrificing utility in operating a four-cylinder vehicle instead of a six-cylinder, or a crossover instead of a SUV.”
Finally, while too often seen as a petty matter, proper tire inflation is critical to controlling fuel use. Properly inflated tires are a first and vital step in managing fuel consumption in the fleet.