Spiralling fuel costs are bad for businesses, hauliers and road users but there are simple effective measures that can save fuel and money, says the Freight Transport Association
The number one concern for members of the Freight Transport Association (FTA) is the rising cost of fuel; unsurprising, perhaps, given that we pay 24 pence per litre more in fuel duty then our continental neighbours pay on average. And with fuel comprising over a third of total transport costs and with the running cost of an HGV rising by 15 per cent in 2010 commercial vehicle operators should be forgiven for keeping an almost daily vigil over movements in bulk diesel prices.
As a result of concerted industry lobbying, we saw the unprecedented move of a reduction in fuel duty from the Chancellor in March’s Budget. A move made all the more symbolic given the fact that since October 2007 this all-too-easy way for the government to bolster its coffers was employed no less than seven times. The feared one penny above inflation price hike could have left industry facing an additional annual bill of up to £500m, heightening the misery being felt by transport businesses as they desperately try to stay solvent amid rapidly rising fuel costs and weak levels of business activity.
While the reduction in fuel duty levels and the delay in future increases until next year was a welcome reprieve for industry, FTA and other industry stakeholders will continue to campaign hard for a more permanent solution to the logistics sector’s principal worry. In the meantime, there are some very effective measures that commercial vehicle operators themselves can undertake to save fuel and money.
Divide and conquer
Fuel purchasers may elect to split their fuel supply between contract and spot purchases. While there is little to choose between the two in terms of price over a period of time, when prices are falling as a result of over supply the ability to purchase on a spot basis can yield a better price than sticking to a contract for all purchases. Likewise, in a period of sustained rising prices, contract purchases will be more competitive.
Of course, not every fleet can justify its own bulk-site facility, in which case a cooperative which incorporates more than one business located in close proximity is eminently viable. The savings can be worthwhile, with bunker card premiums typically 1.0-1.5ppl above bulk prices compared with fuel purchased using forecourt agency cards which is typically 4-5ppl higher – a saving of £750 per year for a 17t rigid. Furthermore, fuel dispensing systems can accurately record drawing details of all fuel used from the site allowing even tighter control on fuel usage.
To ensure that on-site and on-the-road fuel drawing arrangements are properly
controlled and policed there are various other actions that can be taken. For off-site purchases, operators should talk to their fuel supplier to get vehicle-by-vehicle information, something that can be supplied as an electronic form. Such drawings should be recorded along with the vehicle odometer reading, and management systems can ensure that records of fuel used are consistent with vehicle activity. This will provide a check against unauthorised drawings and provide the basis for driver fuel efficiency monitoring.
Drivers hold the key
Minimising fuel usage starts with training the drivers themselves. For example, any new vehicles introduced to the fleet should be accompanied by training on appropriate driving style (gear changing/braking). Regular refresher training and regular feedback on their fuel efficiency performance will help this process.
In-cab technology aids are available that can pinpoint poor driving performance. Vehicle to driver telematics providing realtime information on the link between driving style and fuel consumption can be expensive to fit to all vehicles, but provide valuable instant results to drivers in a training environment. That is not to say they only apply to larger fleets. Indeed a recent three-month trial conducted by the Freight Transport Association (FTA) and transport management solutions provider Microlise has questioned the widely-held view that telemetry is the sole preserve of large fleet operators. Clearly, there are excellent returns on investment in telematics technology to be had for more modest-sized outfits too.
In a controlled trial, specialist waste management operator Vetspeed had seven of its 40 vehicles fitted with a new telematics system unbeknown to its drivers for an initial five week period. After this first set of data was analysed and then conveyed to those drivers to address issues of performance further trials were undertaken. The upshot was that Vetspeed’s drivers cut their fuel consumption by 0.43 miles per gallon (despite the severe weather conditions that hit the UK during the trial), potentially saving the company around £13,000 a year.
The introduction of fuel efficiency targets for drivers is essential for rewarding and promoting good practice. However, fuel efficiency targets need to be credible. To this end, operators should consider establishing targets comparing performance to the previous year rather than averages, to reflect cyclical business activity which can affect fuel performance. The age and condition of the vehicle must also be considered as these factors will have a direct bearing on fuel consumption. Needless to say, the diagnostics of under-performing vehicles can be very useful here.
To ensure that all depot or site managers are made aware of the importance of fuel saving, nominating a fuel champion comes highly recommended. These individuals must be trustworthy and responsible as it will be up to them to monitor usage and develop a competitive culture between drivers through incentivising them to drive smarter. For example, league tables showing the best performing driver can create a competitive edge and sharpen drivers’ focus on fuel saving. A fuel champion can also help to reduce carbon emission outputs, which reflects well in a company’s operational reporting figures.
Perhaps the most crucial element to consider when making wholesale operational and structural changes is to get buy-in from the management team. Having a fuel champion will make this process easier and foster closer working relationships between departments. It is therefore essential that the fuel champion understands how important their role is in mitigating rising transport costs. Following input from FTA’s Consultancy team, one such FTA client was able to shave £420,000 off its total fuel budget in this way.
There are numerous ways that a company can work to mitigate the cost of fuel without necessitating an expensive overhaul of the way in which they operate. While FTA continues to lobby for a change in the direction of fuel tax policy at a political level, whether that is in terms of ensuring the fuel duty escalator never rears its head again, creating a more level playing field across Europe with fuel duty parity or the introduction of a genuine and workable fuel duty stabiliser, companies should be empowered to make their own very real efficiency savings.
For more information
The advice above is by no means an exhaustive list of ways that a transport operator can reduce fuel consumption. Further information on reducing fuel use via influencing driver behaviour, vehicle maintenance and vehicle choice can be found at www.fta.co.uk