Energy conservation strategies remain a key priority for truckers
April 29, 2012
April 29, 2012
As the cost of diesel fuel hovers around $4.00 a gallon in the United States and $1.30 a liter in Canada, trucking companies (and politicians) are again focusing on strategies to control energy costs that have risen forty percent since 2010.
President Barack Obama firmly defended his record on oil drilling recently and ordered the government to fast-track an Oklahoma pipeline while accusing Congress of playing politics with a larger Canada-to-Gulf Coast project. Alberta, home to the world’s third largest pool of oil reserves, is working to increase capacity to transport crude amid opposition from environmental groups as companies such as Exxon Mobil Corp. and Suncor invest about C$20 billion annually in the oil sands.
In addition to increasing supply, trucking companies are instituting measures to ensure these energy supplies are utilized as efficiently as possible. Three such strategies were highlighted in a recent paper prepared by Derek Singleton, ERP Analyst at Software Advice. Here are some excerpts from Derek’s paper and from other industry sources.
Careful planning and the use of predictive technologies–such as distribution business software–can minimize the impact fuel costs have on the bottom line. Companies that manage a fleet can cope with rising fuel costs using three general strategies:
1. Streamline fuel procurement;
2. Improve operations and fleet management; and,
3. Better plan delivery routes and shipment loads.
Streamline Fuel Procurement
Managing fuel costs isn’t just about taking steps to control the costs. According to David Zahn, VP of Marketing at FuelQuest, significant savings can be realized simply by building predictability into fuel procurement budgets. Gas prices typically swing five cents per gallon, up or down, on any given day. When purchasing thousands of gallons of gas, buying at the wrong time can be devastating to a company’s bottom line.
Technology solutions like FuelQuest give companies that store gas a way to forecast demand, monitor on-hand fuel, and procure at the best market price. Automating the fuel procurement process, says Zahn, typically saves companies four to six cents per gallon.
Long-haul carriers don’t have the luxury of being able to fill up on-site. Companies that transport long-haul freight should consider fuel optimization programs that indicate where to refuel and how many gallons to fill at each location to minimize total fuel costs. Maps with turn-by-turn directions – even those designed for truckers – are available free from a number of web sites, including Truckinginfo.com (powered by ProMiles Software Development Corporation). These services do a good job of routing and costing. On the other hand, full-featured, trucking-specific routing and mapping software used by many large carriers can do much more than tell you which highway to take, when to turn left and right and calculate a trip cost.
Many packages are integrated with a carrier’s management and dispatching software to not only give drivers detailed driving instructions, but also provide fleets with useful management data and automate many record-keeping tasks. When tied into a fleet’s business management software, some routing packages can become powerful sales and management tools. These packages can calculate miles for billings and settlements, optimize fuel purchases, locate truck stops and fueling sites along the route, record state mileage data for fuel tax reporting, identify truck restrictions or construction along a route and compute lane rate information.
The most recent demand is for fuel optimization programs. ProMiles now includes a fuel optimization module built into its flagship software and offers a stand-alone fuel program. Over the last year, fuel purchase optimization has become the most requested feature since it saves money for fleets and owner-operators.
With the ProMiles fuel-optimization module, users enter their fuel network information, mpg, tank capacity, a beginning fuel level and an ending fuel level. The program then looks at the truck’s fuel level at any point along the route and suggests where to fuel and how much to buy. This allows the user to optimize retail price or price minus IFTA taxes collected at the pump.
Improve Operations and Fleet Management
Any cost savings from purchasing fuel at low prices can be nullified by transporting with an inefficient fleet. Most efficiency improvements–such as streamlined trailer aerodynamics or retrofitting the engine for renewable fuel use–require significant capital investments. However, there are several controllable factors that can boost fuel efficiency for a fraction of the cost.
One of the biggest boons to fuel efficiency is employing highly-skilled drivers, which can improve fuel efficiency by five to 20 percent. Roy Craigen, President of Transcom Fleet Services, suggests testing drivers beyond licensing standards to ensure they’re versed in industry-standard driving techniques, such as accelerating smoothly and minimizing idling. Beyond that, routinely monitoring things like tire air pressure and speed go a long way toward conserving fuel. Here are a few quick stats Craigen shared with Derek in a recent conversation that show the impact driver actions can have:
• A three percent variance in air pressure impacts fuel efficiency by one percent.
• For every 10 MPH over 55 MPH, you consume 10 percent more fuel.
• A 100 truck fleet operator can add over $700,000 to its bottom line by improving fuel efficiency just a half a mile per gallon.
Better Plan Delivery Routes and Shipment Loads
A final strategy for reducing fuel costs is to plan more intelligent routes and truckload shipments. Both of these goals can be accomplished with transportation management system (TMS) software. TMS software helps fleets suppress fuel costs by planning routes in a way that minimizes miles travelled and the number of stops. The resulting efficiency gains can help fleets make more deliveries within comparable operating hours. When used in conjunction with a well-trained dispatcher, this can be a great way to minimize things like time spent in fuel-wasting commuter lanes.
Creating intelligent routes is complemented by load planning features that ensure trucks leave with a fully-stocked load to reduce return trips. This limits fuel surcharges incurred by making less frequent shipments. It also helps make difficult decisions, such as whether to drop off the heaviest load first–even if it’s farther away–to make the rest of the drops with a lighter, more efficient vehicle.
As Derek stated, companies that put these strategies to use will be prepared to deal with the high fuel prices of today and tomorrow. By reducing the impact of rising fuel prices, companies with fleet operations can maintain competitiveness without sacrificing their bottom line.
Dan Goodwill, President, Dan Goodwill & Associates Inc. has over 30 years of experience in the logistics and transportation industries in both Canada and the United States. Dan has held executive level positions in the industry including President of Yellow Transportation’s Canada division, President of Clarke Logistics (Canada’s largest Intermodal Marketing Company), General Manager of the Railfast division of TNT and Vice President, Sales & Marketing, TNT Overland Express.
Goodwill is currently a consultant to manufacturers and distributors, helping them improve their transportation processes and save millions of dollars in freight spend. Mr. Goodwill also provides consulting services to transportation and logistics organizations to help them improve their profitability. All posts by Dan Goodwill