No matter the price of fuel, fleets must ensure they find ways to identify waste and reduce fuel consumption. Whether your trucks are parked or rolling down our nation’s highways, it is incumbent on fleet managers and owners to identify opportunities to improve fuel usage, decrease costs, and raise revenue. And yet, too many remain distracted with other matters.
Guess what? Fuel expenses typically amount to over half of a fleet’s operating budget. This is second only to the natural depreciation of equipment. Whether a single vehicle or over one hundred, how fuel costs are managed has a direct impact on the bottom line. Understanding where fuel is consumed and who is most impacted by fuel price fluctuations will influence how we reduce consumption and will keep costs in check.
Who is Most Impacted by Wild Swings in Fuel Costs?
Fuel prices are always fluctuating. And yet, we are not in unprecedented times. Over the last two years, fuel prices have dipped as low as $2.58 for gasoline and $2.55 for diesel in 2020 to a 40-year high in February 2022. The war in Ukraine has caused a crisis of unprecedented proportions across the globe, not just for the price of fuel, but for food and other commodities.
As the war in Ukraine escalated, the U.S. imposed sanctions restricting Russian oil purchases. By reducing these oil purchases, the global oil supply was quickly diminished, causing oil prices to soar and fuel costs to rise. As of just a couple of months ago, diesel prices had risen to $4.85, and gasoline rose to $4.10. Those are huge increases. Many small trucking companies simply cannot cope with these kinds of massive swings. And that’s a big problem because most trucking companies fall into the “small trucking company” category.
Consider that according to statistics pulled just over one year ago, the number of for-hire fleets registered with the FMCSA was just under one million. Private carriers accounted for 82% of that total while around 18% were listed as interstate fleets. Of that 18%, nearly all operate six or fewer trucks. What does this mean? That the vast majority of trucking operators out there are small, for-hire outfits that simply cannot handle the kind of wild swings we have been seeing as a result of the war in Ukraine and other major industry disruptions. Most fleets are low-margin, family-owned operations that don’t have the kind of liquidity required to survive global catastrophes.
How Must Fleets Adjust to Accommodate This New Paradigm?
It is important that one operates not just as a fleet manager, but as a truly good fleet manager who thinks long-term and with forethought. Fleet managers and owners must know how much fuel their fleet consumes and why. This is where technology comes in.
An advanced GPS monitoring system delivers insight into truck driver behavior, routing, vehicle condition, and even customer behavior as it pertains to detention times, weather, traffic patterns, and so much more. Fleet operations issues that drive up fuel consumption costs and diminish productivity should be both measured and corrected. After all, you cannot fix what you do not know is a problem in the first place.
GPS fuel monitoring and truck driver behavior solutions help fleet managers monitor assets, vehicle and truck driver locations, and activities. And all this is done in real-time using cellular and satellite technology. Take detention times as just one example. Tracking system solutions show how long truck drivers remain at loading docks before moving to their next stop. This data is useful when negotiating with shippers, training new truck drivers, or deciding on vehicle procurement options.
The fact is, GPS fleet monitoring produces accurate and actionable data on vehicle operations including current location, location history, fuel consumption (MPG), emissions, dwell times, and truck driver behaviors. It also delivers needed data for strategic decision-making to increase asset and vehicle return on investment (ROI).
Fleet Managers Must Improve Their Monitoring Capabilities
GPS technologies are not the answer to all problems. Fleet managers and other important operators within the organization must do a better job at monitoring fleet actions and operations. This must happen at both the truck driver and beyond. It should be a process that involves back-office operations, technicians, truck drivers, yard workers, and more.
Because managing a successful trucking company involves a lot more than dispatching vehicles and moving freight. The success of a business hinges on the ability to optimize the equipment and truck driver’s hours of service. And while vehicle monitoring helps to optimize fleet operations, trucking companies need fleet-wide solutions. They require real-time insights that can optimize routes, track maintenance, and deliver greater fuel insights.
Whether using technological solutions or otherwise, fleets must collect and transmit critical information. This information must include everything from vehicle location to engine speed, idling, trip distance, and so much more. Also, consider fleet health. The health of your company goes beyond the truck driver (though that too is important). You need to monitor all aspects of your organization to gain a competitive advantage.
Speeding alone can increase fuel use by a significant amount. Knowing the precise number arms you with the data you need to address problems that impact your bottom line. With this knowledge, you can implement measures that coach drivers to correct cost-causing behaviors. You also can use insights to reward drivers with good fuel efficiency to help retain drivers.
Rely on Data to See the Big Picture
The problem is many fleet managers can’t see the forest for the trees. They simply do not collect or monitor data collected by various technologies – whether GPS or otherwise – to gain the insight they need to more effectively run their organization. What can they do to gain greater insight? Fortunately, the answer is not difficult.
Even something as simple as idling can create major cost problems. Even small fleets with 10 trucks or less can lose thousands of dollars a year to idling. When you compound that with speeding and other problems associated with the inability to properly monitor fleet actions, costs rise. The key is to have access to the data required to see the big picture.
Do you know who in your fleet spends the most time idling? Furthermore, are you aware of who has the biggest lead foot in the fleet? Because if you do not know this information, you are likely throwing money out the window. Running a proper data-gathering and analysis operation pinpoints the most direct and fuel-efficient routes or identifies the closest trucks to help eliminate unproductive deadhead miles. Monitoring routes also can help keep drivers on truck routes and reduce the risk posed on unforgiving or inappropriate routes.
How to Choose the Right Technologies
We’ve discussed GPS technologies and data in this article, but there are many more technologies fleets have at their disposal. From advanced ELD systems to telematics, fleet management systems, web-based portals, digital training systems, augmented reality, and more – the list goes on and on. Trucking is no longer a “legacy” industry bound by yesterday’s shortcomings. The options available to fleet managers are plentiful. Today, there really is no excuse to not utilize technologies to help you evolve your operation into a 21st-century company.
But here’s the rub. Not all technological solutions operate the same way or provide the same data or capabilities. Fleet managers must ask the right questions to ensure they obtain the right technology for the right purpose. Here are some questions you should ask yourself before you adopt any new technology:
- How long will it take to install?
- Who will be required to install it?
- Will special tools be needed?
- Will your vehicles require any special alterations?
- Can the device or system be easily monitored and modified?
- Is it interoperable with the systems you currently use?
- What is its anticipated lifecycle?
- How durable and reliable is the technology that underpins it?
- Will it require updates and if so, when, and how many?
- Does it have a warranty?
- How will it be powered?
Fleet Optimization in the Palm of Your Hands
These are just a few questions that you must ask when adopting a new technology or fleet solution. There are many options out there, so it is up to you to be prepared when it comes time to use them. If you want to compete in today’s marketplace, it is vitally important that you evolve your trucking company to fit with the times.
No matter what technology or set of technologies you use to do this, the key is to do it. We began this article by talking about small trucking companies. And fortunately, many of these technologies are far less expensive than even just a year or two ago. Take advantage of a changing marketplace to change your trucking company, whether big or small. You’ll wind up with more money in the bank and happier employees as a result of your efforts.