Why you need a Strategic Fleet Fuel Management Plan
Rising diesel prices, epileptic product availability, increasing incidences of fuel contamination, an unsteady economic outlook and shrinking supply of qualified drivers have all combined to change how you need to manage your fuel program. In an era where fuel expense occupies the biggest slice of every haulage company’s total operating cost profile, managing fueling and keeping your trucks steadily on the road for revenue maximization is nothing less than a race to keeping the business in business.
Many haulage firms especially in our environment have a faulty and extremely skewed perspective regarding fueling needs for their assets. Some see it as the least of their headaches while some simply walk the assumption that fueling is ‘given’. This explains why many never see the need to have an impregnable fuel management and guaranteed supply strategy in place as part of their commencement or routine operational plan. Most simply ‘role with the tide’ as far as fuel planning is concerned. Walking these dangerous assumptions has produced some cataclysmic consequences for some operators.
Some procure trucks worth several millions of dollars only to discover that for most parts, the assets are grounded simply because a sure fuel plan was not in place therefore defeating the purpose for the acquisition. Some got into the business believing that prospective clients have a fueling arrangement in place (most likely an in-plant fuel dump designed to cater for haulage contractors) for which they will be back-charged. They concluded in their mind that this arrangement will at least guarantee that their trucks will always be on the road for as long as the contract remains alive. But the first question to ask is: what is the core business of these prospective contract clients? Surely, it can’t be the ‘regular provision of cost-friendly uncontaminated fuel’! For these businesses, it is an adjunct aspect of their day-to-day operations and it will always be treated as such. No wonder then why some haulage clients have a number of product distribution centers geographically spaced over several kilometers from one another while the fuel dump intended to serve haulage partners is sited in a single location at one of the distribution centers. The reality of this arrangement on the haulage firm means they load in one place and journey to another location (which may be completely off-route) for fueling before embarking on the assigned trip. This definitely can’t be an optimal solution as far as smart trucking is concerned. Apart from the relevant oversight that is lost in the process, the cost implication of lost mileage may far outstrip the commercial revenue associated with the trip.
For the haulage firm, fueling is the epicenter of the business. It not only determines the commercial viability of the business but also its overall operational relevance. As a commercial trucking fleet, you’re not just hauling product; you’re providing your clients outstanding services and these can’t be achieved unless your trucks move in a timely and unhindered manner. Trucks will not move or arrive destination unless they are adequately fueled. Their movement will not be unhindered unless fuel supply is guaranteed, pocket-friendly and uncontaminated.
Essence of a fuel supply plan and management
The need to have a cost-effective in-house team focused on a the continuous actualization of a strategic fleet fuel management plan in the present dispensation cannot be overemphasized. Some of the core responsibilities of this team shall be to:
– Analyse and determine the optimal fuel need for the company
– Audit and negotiate fueling deals for maximum value
– Pre-qualify, manage and administer fuel supply vendors
– Analyze diesel prices put in place by suppliers vis-à-vis the market trend of diesel prices
– Evaluate and prepare for the changing diesel price shifts in your area and other locations with particular emphasis on the routes regularly travelled
– Make sure that back-charges are all being properly audited and verified
– Design diesel discharge procedure for both inward diesel delivery and outbound loaded trucks
– Set up the infrastructure, define the parameters and manage the procedure for diesel testing and analysis as a means to checkmating delivery of contaminated or adulterated product
– Keep track of diesel utilisation to prevent out-stocking and random product theft
– Design and set the appropriate standard for fuel management analysis and reporting for P&L tracking
– Design a risk management program for your fleet fueling and help insulate your company from sudden and dramatic price and/or supply fluctuations