Managing for MPG Switching to ULSD Optimizing with IT

®
fleetowner.com
JUNE 2006
THE FUEL BITE
Managing for MPG
■ Switching to ULSD
■ Optimizing with IT
■
A Prism Business Media Publication
THE FUEL
BITE
Software tools to help fleets find
the lowest-priced fuel on every trip
B Y
W E N D Y
L E A V I T T,
D I R E C T O R
O F
E D I T O R I A L
D E V E L O P M E N T
FUEL
OPTIMIZATION:
Not a
penny
more
M
ost truck fleets
today are still
not using a fuel
purchase optimization system, even with
diesel pushing
past $3.00 per gallon in some locations. Who would have thought
such a thing was possible from
such a cost-conscious industry? It is
one of the Great Mysteries, right up
there with how the pyramids were
built or the nature of black holes in
space, and the more prices rise and
the wilder the fluctuations, the more
mysterious it becomes. Why would
any fleet willingly pay higher prices
for fuel?
There are, of course, all sorts of
possible explanations, from the
abiding hope that things will “get
back to normal” to concerns that
such systems might alienate drivers
or be difficult to implement.
Many well-managed fleets have
also already taken other important
steps to reduce fuel costs, such as
negotiating preferred rates, joining a
fuel purchase network, implement-
ing a route optimization system,
restricting idling and specifying
equipment for fuel economy. Each
of these measures can potentially
make a significant contribution to
minimizing fuel costs, so why go
chasing the last pennies per gallon
with yet another system?
IT ALL ADDS UP
The fact is, saving a few more
pennies here and there on fuel every day can really add up in a hurry.
Suppose that you were only able to
save an average of four cents per
gallon per year. If a typical truck in
your fleet runs 100,000 miles per
year and averages seven miles per
gallon, that is an annual savings of
$571.43 per truck. Not so bad, and
the savings could be much higher.
“I really don’t understand why fuel purchase optimization is not more
popular because we know that it
works,” says Dr. Richard (Rick) Murphy, founder, chairman and CEO of
Integrated Decision Support Corp.
(IDSC), a provider of fuel purchase
management solutions for the trucking industry.
“With our Expert Fuel system, for
example, customers see an average
savings of four cents per gallon on
a restricted network and eight cents
per gallon on an unrestricted network. These savings occur because
prices vary by location, and they
tend to be the same whether you
buy one million gallons of fuel per
year or per week.
“It does take some effort to do,
since you have to manage the drivers, too,” he notes, “but we have
never seen it increase driver turnover. Almost every carrier we work
with puts only the better national
truck stop chains into the system,
those that include safe parking and
driver amenities, and then we optimize fuel purchasing within that set.
In fact, newer drivers especially tend
to like the system because it takes
out a lot of the uncertainty and anxiety. They know when and where
they are going to buy fuel and how
to get there.”
For most fleets, there is probably
a fuel purchase optimization system
available today that can help wring
more cost out of the fuel bill, no
Fuel optimization
matter what other fuel cost saving
measures have already been implemented. From Web-based ASP solutions to integrated, enterprise-wide
systems, there are plenty of options
from which to choose.
Million barrels per day
12
Transportation
Industrial
Utilities
Commercial
the region or along a route, sorted by
price for any grade of diesel or gasoline. The MobileGates solution is also
available through Sprint/Nextel Internet-enabled cell phones under the
name TrafficMobile Fuel Pricing.
“We felt there was a real need
for an easy-to-use, low-end fuel
purchase tool for regional truckers
and smaller fleets,” notes Anthony
Meador, MobileGates CEO. “This is
a plug and play solution available to
customers on equipment they probably already have. In fact, they can
sign up for the service right from
their telephones.”
U.S. Petroleum Consumption
10
8
6
4
2
0
1973
Transportation
1983
Residential
About two-thirds of the oil consumption in the U.S. is for transportation.
Source: US DOE 2004
14
(averaged 20 million barrels each day)
Source: US DOE 2004
LOTS OF CHOICES
The simplest approach to making
better buying choices is not a software “system” at all, but just asking
drivers or dispatchers to check out
the daily prices at preferred truck
stops along your routes via the Internet. Many fuel providers list current prices, updated throughout the
day, on their Web sites. Go to Flying
J’s Web site, for instance, (www.fly
ingj.com), and you can view prices
at Flying J facilities across all of the
U.S. and Canada.
For even more convenient in-cab
fuel purchase guidance, drivers
can compare regional fuel prices
at most fuel providers via an Internet-enabled cell phone. Earlier
this Spring, for example, Verizon
Wireless and MobileGates Corp.
announced that new map-based
applications from MobileGates, MG
Traffic and MG FuelFinder were
available to Verizon Wireless Mobile Web 2.0 customers.
The new tools are designed to
help customers avoid heavy traffic
and locate the lowest priced fuel in
U.S. 2003 Petroleum Consumption
1993
Industrial
2003
Others (C/R/U)
In April, OPEC crude production was 30.01 million barrels per day. The U.S. uses
about 20 million barrels per day
MobileGates also plans to offer an
enterprise-wide solution, according
to Meador. “We will be going into
beta testing on our new enterprise
solution in about 60 days,” he notes.
“It is called The Collaborator, and
was developed for use by dispatchers and fleet managers with their
drivers. We plan to begin marketing
it by the end of this year.”
Other fuel management system
developers also offer both ASP
and enterprise-wide, client-server
choices. Maptuit Corp., for instance,
began with its integrated product,
FleetNav Fuel, which is an add-on
to its in-cab routing and directions
solution called FleetNav, and then
introduced an ASP version last summer targeted to owner-operators and
smaller fleets.
“FleetNav Fuel is a fuel purchase
optimization system that is overlaid
on our in-cab routing and directions
system,” explains Erin Cave, director
of product management for Maptuit.
“It provides suggestions for the best
fueling stops along a route based upon the customer’s own existing fuel
purchase arrangements, the amount
of fuel onboard, the size of the fuel
tanks and the out-of-route miles required to fuel at a particular location.
Fleet managers can also see if drivers accepted the recommended fueling stops or not and what the results
were. For instance, they can see how
far the driver may have had to go out
of route to fuel at another location.
We have also teamed up with Siri-
Fuel optimization
COMM to provide an ASP version of
FleetNav called FleetNav Express.
Both an integrated, client-server
fuel optimization system and an
ASP solution are also available from
Integrated Decision Support Corp.
(IDSC), a long-time provider of fuel
optimization services. Developed
specifically for truckload carriers,
IDSC’s Expert Fuel is designed to
work with a fleet’s mobile communications and dispatch and routing
system to provide drivers with optimized fuel purchase and route plans
at the time of dispatch.
The fuel plans are generated using
IDSC’s proprietary algorithms to calculate essential factors in real time,
including current fuel prices, fuel onboard, vehicle fuel consumption, state
tax implications, fuel network implications, out-of-route miles, company
route and terminal fueling policies,
tank fill policies and driver amenities.
“The system will also generate
several real-time and historical reports, including a report on driver
compliance,” notes Murphy. “Some
fleets use the reports to encourage
compliance by creating competitions between fleet managers. No
one likes to be last.”
IDSC’s Web-delivered system is
called FuelAdvice.com. It is designed
to provide in-cab fuel location pricing
information, optimal fuel trip planning
and fuel query services for over-theroad truck operators on a subscription
basis. “FuelAdvice.com is targeted to
fleets with fewer than 75 trucks,” Dr.
Murphy. “Some fleets offer it to their
owner-operators as a retention tool.
The nice thing about an in-cab solution is that there is virtually no integration cost. Instead, it is tied to the
mobile communications system.”
A system called FuelLogic is the
fuel optimization and fuel management offering from Prophesy
Transportation Solutions, Inc. It integrates with the company’s Mileage
and Routing and Mobile Communications systems, which are part of
Prophesy’s suite of dispatch tools.
According to the company, it is designed to work with a fleet’s existing
fuel networks, fuel cards and other
negotiated discounts.
ProMiles Software Development
Corp. offers its own fuel purchase
Found money
Tools to help you reduce fuel prices everyday on every trip
T
oday many fleets large and small and even owner-operators can benefit from using a fuel purchase management system. There are a number of solutions from which to choose, depending
upon the size and nature of your business. Here is a partial list of suppliers. Some now offer
web-delivered options available for a monthly fee as well as integrated, enterprise-wide systems, making
it easier to find a supplier and a solution that are a good fit for your fleet.
■ FuelQuest, Inc.: The company’s fuel management outsourcing system
was developed to provide larger companies that buy fuel in bulk (or are
interested in aggregating their fuel buying) with terminal-level sourcing
and pricing, fuel delivery management and/or fuel inventory management.
The software system is available on a license basis, via the Internet for a
subscription fee or as company-provided, service. (www.fuelquest.com)
■ Integrated Decision Support Corp: Expert Fuel is designed to provide
drivers with an optimized fuel plan at the time of dispatch, including where
to fuel and how much to buy (www.idscnet.com). FuelAdvice.com is IDSC’s
web-based fuel pricing and trip planning option, delivered through a web
browser on a subscription basis. (www.fueladvice.com)
■ Maptuit: FleetNav Fuel extends the company’s FleetNav Directions
to provide drivers and fleet managers with route analysis and fuel price
evaluation data. It also takes into account a number of factors, such as the
vehicle’s current fuel level. (www.maptuit.com) An ASP version called Fleet
Van Express is also available.
■ MobileGates: Systems from MobileGates are designed to help users
avoid heavy traffic and locate the lowest-priced fuel via an Internet-enabled
cell phone from Sprint/Nextel or Verizon. (www.MobileGates.com or www.
mobilepublish.com)
■ ProMiles Software Development Corporation: Fuel Opt is for use
within the company’s trucking mileage guides, ProMilesXF (on CD) and
ProMilesOnline (available over the Internet). The system is designed to first
optimize the route and then associates the truck stops along the route with
the lowest fuel prices. (www.promiles.com)
■ Prophesy Transportation Solutions, Inc: Windows-based FuelLogic
is a fuel optimization and fuel management program designed to identify
the lowest priced fueling options and to help reduce out-of-route miles
.(www.mile.com)
■ Oil Price Information Service (OPIS): Offers information about fuel
prices plus petroleum industry news and analysis through a variety of sources. (www.opisnet.com)
■ T-Check Systems: Offers an Internet-based fuel management service
called e-Stop Fuel Management Tool Kit, which includes truck stop retail
pump prices, net price per gallon, wholesale cost-plus averages, state and
federal taxes and other information. Any company can subscribe to the
service, but it is free to T-Chek customers. (www.tchek.com)
optimization tool
called Fuel Opt within
its trucking mileage
guides, ProMilesXF
(on CD) and ProMiles
Online (available over
the Internet). According to the company,
the system first optimizes the route and
then associates the
MobileGates Fuel Pricing
truck stops along the
route with the lowest fuel prices.
BULK FUELING OPTIMIZATION
Companies that buy a lot of fuel,
especially in bulk, also have opportunities to reduce fuel costs by looking further up the fuel supply chain
to the fuel terminals. Houston-based
FuelQuest, Inc. provides full or partial fuel procurement outsourcing
services for some of the nations largest fuel purchasers, including convenience stores like Circle K and fleets
like UPS and Swift.
“Large companies that buy fuel in
bulk or that are interested in aggregating fuel purchases to lower costs
are our target customers,” explains
Ryan Mossman, director of marketing solutions management for FuelQuest. “Our system can help companies save money on fuel in three
different ways: by helping them find
the best prices at the rack [the terminal] from among all suppliers, by
helping them lower the cost of transporting fuel to their locations and/or
by helping them to maintain optimal fuel inventory levels. Keeping
too much fuel in storage tanks can
needlessly tie up money that might
be better deployed elsewhere.
“All of the 800 or so fuel terminals
in the U.S. are in our software system,” says Mossman, “and we handle the purchase of over 9-billion
gallons of fuel every year, including
diesel, biodiesel, ethanol blends and
all grades of gasoline. We will also
be handling ultra-low-sulfur diesel
fuel. Some companies use our software themselves; others outsource
all their fuel purchasing, pricing and
financial reconciliation to us.”
WHY PRICES VARY
When fuel prices begin to cause real financial pain, the impulse
to find fault is almost irresistible. There are lots
of good reasons, local
and global, for today’s
volatile fuel prices,
however, and most of
MobileGates Traffic
MobileGates Directions
them are not going to
change any time soon.
“There are real, physical reasons
why domestic fuel prices vary at
the pumps, regardless of who buys
where,” explains Murphy. “State
taxes contribute to price variability, for instance, as does the cost of
transporting fuel. Retail fuel price
variability is not simply a factor of
consumer buying patterns and it increases as prices fluctuate.”
Globally, the fact that more than
60% of our nation’s fuel comes from
foreign sources is, of course, at the
heart of the pricing problem. So is
Today it is easier than ever to find a right- the fact that oil supplies worldwide
are not increasing to keep pace
sized fuel purchase optimization tool.
with worldwide demand, which is
exploding in developing countries
TRACKING PRICES
such as India and China.
Most of the fuel purchase optimiNo wonder President Bush has
zation systems get their price infor- called America’s dependence on
mation from data specialists such as foreign oil a “national security
OPIS (Oil Price Information Service), problem and an energy security
automatically downloading the data problem.” It clearly is. Events like
every few hours or as changes oc- Hurricanes Rita and Katrina and
cur. OPIS, for example, has been the terrorist attacks on oil rigs in
providing oil news and pricing to Saudi Arabia were also shocking
the downstream oil chain for over reminders of the vulnerability of
25 years. Today it distributes infor- the oil supply chain to sudden dismation on petroleum prices via fax, ruptions
newsletter, e-mail, the Internet and
If there is a silver lining for fleets
third-party vendors. According to the trying to deal with today’s fuel marcompany, nearly 100 billion gallons ket it is this: There are still opporof fuel are pegged to the OPIS rack tunities out there, and good ones,
and spot prices every year.
to offset at least some of the fuel
Fleets interested in accessing OPIS prices increases, and fuel purchase
data directly can subscribe to the optimization systems are one of
OPIS and Oil Express Newsletters or those opportunities. “For the good
attend OPIS-sponsored conferences. of the industry, fleets should be
Their next Fleet Fueling Conference taking advantage of fuel purchase
is scheduled for September 17-19 in optimization technology,” observes
St. Louis. More information is avail- Murphy. “I hope they do.”
able at www.opis net.com.
Reprinted with permission from the June 2006 issue of Fleet Owner® (www.fleetowner.com)
Copyright 2006, Prism Business Media. All rights reserved.
Visit IDSC at idscnet.com or contact Dave Harris at
email: [email protected]/phone: 877-671-0045 ext. 211.
FO-78-RB