We’ve heard the phrase, do more with less, right? But surely, where fuel is concerned, more production requires more fuel. Simple logic, isn’t it?
Well, like everything today, nothing is simple and when you look at new opportunities and new technology, it’s now a realistic idea to get more productivity out of less fuel. Here’s what I mean.
Know Your True Cost of Fuel
First off, have you ever considered your true cost of fuel? And what I mean by this is the cost of the fuel (the price at the pump) plus the cost of getting it. That is, the time it takes drivers to go and get fuel and during that time, the cost of administration, insurance, repairs and maintenance. On top of this is also fuel waste and theft which, depending on security and monitoring systems, each account for an addition 5 percent to 20 percent of fuel purchases.
While most school districts have fueling stations on site, others must send buses to other locations to fuel up. As to the time taken to get fuel, truck industry averages peg it at 30 minutes, which includes the time it takes to stop work, change routes, find the filling station, wait in line, refuel and pay. And the time it takes to get back to the route or worksite. That’s 30 minutes every day for every vehicle or piece of equipment in your fleet. You may never have thought of this as a real cost because it’s how you’ve always done it. But when you think about what your business could be doing with those wasted thirty minutes, you quickly recognize the enormous costs associated with refuelling yourself.
Refueling takes time – and time is money. Take, for example, a fleet of 10 buses. Ten trips to get fuel each day takes five hours a day at a cost of about $5,000 per month for labour (more if you pay over-time). This means 100 hours of vehicle wear and tear plus more hours of office overhead to manage operators and equipment. These costs are easy to measure, but there is more.
Know Your Hidden Fueling Costs
Today, fuel theft ranges 5 percent to 20 percent of annual fuel purchases. This number has grown with the increasing price at the pump. Fuel is taken by employees who top up their own vehicles without authority or by organized gangs who steal fuel from your fuel tanks. Either way it amounts to thousands of litres in real losses each year!
Fuel waste is another huge area of cost that is hard to measure. Waste comes from idling, speeding, poor driver habits and routing issues. Measuring waste requires accurate data on fuel consumption by vehicle and mileage to produce indicative fuel efficiency trends. Again, for most companies, this is either too hard or too time-consuming to measure.
Now here is the number one hidden fuel cost: lost productivity. The 30 minutes spent each day by 10 buses getting fuel adds up to 1,250 hours of lost revenue per year. If you expect a return of $150 per hour, you are losing $187,500! That’s almost $200,000 in lost revenues each year! If you have a larger fleet, the numbers are even more staggering. So what’s the answer?
Crush Waste, Rev Up Revenue
First, understand there is more to your true cost of fuel than just the price at the pump as mentioned above. There’s the labor and overhead you pay for and the producitivity and revenue you give up. As a business manager, you know this is a very big deal.
Second, make fuel come to you. Use an on-site fuelling service with trucks that refuel your fleet and equipment while it is idle. Your operators start every day with full tanks and you get 30 extra minutes each day to deliver more product, ship more goods, push more dirt or complete your construction projects.
Direct to equipment fueling is not new. Services exist across the country that have service standards, safety training, environmental protection and, possibly, even local or national certification program for all their operators.
Manage Cost and Consumption Online
Entirely Web-based, fuel reporting systems help fleets control fuel costs, manage budgets and measure fuel efficiency by unit. Because of automation and built-in suite of reporting tools, fuel reporting systems can greatly reduce administration time and increases accuracy.
Combined, direct to equipment fuelling with online fuel management software will help you reduce costs, eliminate theft and waste and turn wasted time into profitable, productive time. Together, that spells more productivity!
Once you see the hidden costs that drive up your true cost of fuel and recognize that these costs can be controlled, you can start converting lost time into extra revenue to make this spring and summer more profitable. And if we believe the fuel gurus, our cost per litre is going nowhere but up, so you’ll be glad you’ve armed yourself with solutions that protect that bottom line!
Remember, you can’t manage what you don’t measure!
Jack Lee is the founder and chairman of 4Refuel Canada LP, a wholly Canadian-owned national distributor and manager of fuel supply for over 6,000 businesses in transport, construction, marine and rail across Canada.