In the world of fleet management, fuel costs can be a thorn in the side of profitability.
At the same time, fuel expenses cannot be eliminated entirely, as they’re essential in running a fleet business. However, with the right strategies, you can reduce fleet fuel costs and maintain a healthy bottom line.
In the following sections, we’ll offer pro tips on how to reduce fleet fuel costs. We’ll dive deep into this topic, offering definitions, formulas, and result-proven best practices.
Let’s jump straight into it.
What are fuel costs?
Fuel accumulates roughly 22% of the total cost of owning and operating a vehicle. This is a significant percentage, especially when considering other inevitable expenses like acquisition and depreciation costs.
But let’s go back to basics to explain what fuel costs are in the first place. This will help you gain more insights into the topic of how to reduce fleet fuel costs.
As noted above, fuel costs are a major operational expenditure for any business that depends on transportation as a part of its services or operations.
In essence, fuel cost represents the money spent on diesel, gasoline, or alternative fuels required to power a fleet of vehicles.
These costs are dynamic and can vary widely over time due to various influencing factors. This makes them a core focus for businesses seeking to manage expenses effectively.
It’s crucial to accentuate that costs are not just the price one pays at the pump.
They consist of several components:
- Base fuel price – The raw fuel price, which is established by the market according to crude oil prices. This price changes due to different global factors, such as supply and demand, geopolitical stability, production levels, and market speculation.
- Taxes and levies – Governments impose taxes and environmental levies on fuel, which can vary by country, state, and even city. These taxes can dramatically impact the final price of fuel.
- Distribution and marketing costs – The costs related to moving the fuel from refineries to service stations also influence the final price consumers pay. This includes the cost of transporting the fuel, as well as the marketing and retail station costs.
- Volume discounts and contracts – For fleet operations, fuel costs can also include negotiated rates with fuel suppliers. Larger fleets might have the advantage of bulk purchasing and discounts that can lower the cost per unit of fuel.
- Fuel card fees – If a fleet uses fuel cards for their fuel purchases, there may be additional fees or service charges associated with these cards.
What is fleet fuel economy?
Now that we’ve covered the basics of fuel costs, it’s worth mentioning fuel economy.
We have a separate article covering fuel economy in detail, so we’ll be brief.
In a nutshell, fleet fuel economy measures how efficiently a fleet of vehicles uses fuel. This calculation is typically gauged in terms of the average distance traveled per unit of fuel consumed (miles per gallon – MPG, or kilometers per liter – km/L).
For a fleet manager, optimizing fuel economy means allowing fleet vehicles to cover greater distances while using less fuel. As a result, operational costs are reduced. Moreover, improved fuel economy also has a significant positive impact on the environment.
If you’re interested in discovering more about the nuts and bolts of fuel economy, we invite you to read our article on the topic.
What affects fuel costs?
Going back to our main topic, it’s essential to understand what influences this expense to answer the question of how to reduce fleet fuel costs.
The factors that will affect the bottom line are:
- Market prices – Fluctuations in the global oil market can change fuel prices, causing rises or falls
- Vehicle efficiency – The age, condition, and type of vehicle play a significant role in your fleet’s fuel consumption
- Driving behavior – How drivers operate their vehicles can also impact fuel prices. For example, more aggressive driving often increases the vehicle’s fuel consumption, while consistent driving can result in lower fuel use.
- Route management – The distance and type of roads covered by specific vehicles can further influence fuel usage.
- Maintenance – Lastly, vehicle maintenance is a critical factor in fuel consumption. For example, poorly maintained vehicles often consume more fuel.
Considering all of these factors, you’re one step closer to understanding how to reduce fleet fuel costs.
The next phase to mastering fleet management fuel cost is having the know-how to get all the right numbers.
How to calculate fuel costs?
You’ll need a quick and easy formula to find out how to reduce fleet fuel costs.
To calculate fuel costs, multiply the number of miles driven by the fleet by the average fuel consumption rate (gallons per mile), and then multiply the result by the current cost of fuel per gallon.
You can work out this calculation for the entire fleet or focus on a single vehicle at a time.
There is no right or wrong way to approach your calculations. It all comes down to the available data and the results you’re looking for.
How to reduce fleet fuel costs
It’s time to move on to the meat and potatoes of this article – how to reduce fleet fuel costs.
The good news is that there are plenty of techniques to explore. Ideally, we would recommend creating a combination of all of the mentioned options.
This will guarantee a significant reduction and will enable you to keep your fleet fully optimized and operational.
Idling (when a vehicle’s engine is running, but the vehicle is not moving) can waste a significant amount of fuel, resulting in hefty fuel costs.
Although newer vehicles are equipped with features that automatically turn off the engine when the vehicle comes to a stop, not all trucks and assets can achieve this.
One of the most reliable ways to reduce idling is to rely on GPS tracking technology. By monitoring and understanding engine idling, you can detect where drivers are idling, for how long, and more.
These insights can help you make more informed decisions and train your drivers to prevent idling.
Improve driver techniques
Earlier, we mentioned that driving behavior can substantially impact fuel consumption.
Aggressive driving, including rapid acceleration and hard braking, leads to excessive fuel usage, increasing costs.
It’s highly advisable for fleet managers to implement driver training programs to encourage smoother driving habits. This will not only cut fuel usage but also contribute to road safety improvements.
Another vital factor to cover when it comes to reducing fleet fuel consumption is route efficiency.
If your drivers travel through busy local areas, circle around the same locations, or go through heavy traffic, it’s time to implement some changes.
Using data from GPS tracking technology, you can take measures to optimize routes. By reducing the distance driven and avoiding congested areas, you can contribute to the overall decrease in fuel usage.
Stay on top of preventive maintenance
Preventive maintenance is a powerful way to achieve many fleet goals. It can help you reduce downtime, expand the lifespan of your vehicles, and more.
But most importantly, it can help you achieve a lower fuel cost.
One of the best ways to implement preventive maintenance for your fleet is to adopt fleet maintenance software that supports PM Intervals.
Regular maintenance ensures that vehicles are running efficiently. This includes oil changes, air filter replacements, and ensuring engines are tuned properly.
Keep an eye on the tire pressure
Vehicles with low tire pressure require much more fuel to achieve the desired speed.
When one or several of your truck’s tires are below the normal pressure, this requires more engine power to get the vehicle up to the expected speed.
Overall, properly inflated tires reduce rolling resistance and improve fuel consumption. Monitoring tire pressure should be a part of regular vehicle maintenance.
Check that the oxygen sensor is working properly
If your fleet vehicles are produced after the 1980s, they’re most likely geared with oxygen sensors.
These devices measure the oxygen level in the vehicle’s exhaust gases and relay this information to the engine’s computer system. This data is then used to precisely determine the necessary amount of fuel for each combustion cycle.
As useful as oxygen sensors are, they must be regularly replaced. Why?
Because a faulty oxygen sensor can lead to an inefficient fuel-air mixture, causing the vehicle to consume more fuel.
Once replaced, the fuel efficiency of the vehicle can be drastically improved.
Use telematics technology
Modern technology like GPS and telematics systems can provide real-time data on vehicle performance and driver behavior, identifying areas to improve fuel efficiency.
In addition, partnering with high-quality fleet maintenance software with powerful telematics integrations can further contribute to achieving impeccable results when it comes to reducing fleet fuel usage.
For instance, your technology can track driver routes, monitor fuel consumption, and provide additional metrics for informed decision-making.
Match the right vehicle to the task
When providing tips on how to reduce fleet fuel consumption, it’s essential to mention vehicle usage for specific tasks.
To achieve a lower consumption, it’s advisable to always match the vehicle to the task. For example, a heavy-duty truck may not be the best vehicle type to deliver a limited load in your local area. Instead, using an electric vehicle or a smaller asset may be more efficient.
Oftentimes, relying on a vehicle with a smaller engine is more efficient. However, your choice must be based on detailed analysis and data.
Lighten the load
Excess weight requires much more fuel to power the vehicle. In that sense, apart from choosing the right vehicle, ensuring your loads are as light as possible is also important.
By removing unnecessary items from vehicles, fuel efficiency can be improved. Make sure that your trucks only transport vital elements to their final destination.
Research suggests that removing 100 pounds from a vehicle can lead to a 1% reduction in fuel consumption.
Use fuel cards
Fuel cards can offer discounts on fuel purchases and help manage and track fuel expenditures effectively.
Where possible, consider signing up for local gas station chains by taking advantage of available discounts and loyal customer programs. This can result in short- and long-term cost savings.
Set speed restrictions
Implementing speed restrictions can prevent drivers from driving too fast, which can significantly lower fuel efficiency.
The higher the speed, the more fuel the vehicle requires. To be able to monitor speeding, you can use GPS tracking solutions that can provide insights into vehicle speeding.
This data will enable you to improve your tracking habits, reduce fuel costs, and prevent unnecessary risks of accidents.
Similar to how low tire pressure or excess cargo can increase fuel consumption, wind resistance can also cause your vehicle to burn more fuel by forcing it to exert more effort to reach and maintain speed.
Simple actions such as keeping the windows closed and using a cover on a pick-up truck’s bed, can mitigate this effect.
For a more comprehensive approach, installing aerodynamic side mirrors can further streamline your vehicle’s shape, reducing drag and enhancing fuel efficiency.
Start investigating EVs or alternative fuels
Electric vehicles (EVs) stand out for their superior fuel efficiency compared to traditional gasoline and diesel counterparts.
Opting for EVs or vehicles powered by alternative fuels can lead to lower operational costs. Alternative fuels like biodiesel, which is derived from sources such as vegetable oils, animal fats, or recycled cooking grease, can power diesel vehicles more economically.
Although EVs may have a higher initial purchase price than gasoline or diesel vehicles, they are more cost-effective in the long run due to lower maintenance needs. With fewer mechanical components, EVs are less prone to wear and tear and require fewer replacements or repairs.
Reducing fuel costs with Fleetpal
We hope that the information provided above will help you get some clarity on how to reduce fuel costs.
Take the next step and see your fuel consumption decrease by implementing fleet maintenance software like Fleetpal. With powerful data and core functionalities, you can make all the right decisions.
Ready to find out more? Schedule a free online demo and let our team members show you how the tool can work wonders for your fleet company.