If you’re not managing fuel, hot dogs and coffee can cost you $3,000+ per truck annually.
Fuel is usually the highest cost item in any fleet (sadly, more expensive than the driver). Most companies don’t manage it daily. That complacency is probably costing you $3,000 per truck annually for local/regional fleets and double that for long-haul or slip-seat operations.
What does this have to do with Hot Dogs…? Everything.
If you’re not managing fuel, your drivers are filling up wherever they want. A few will always pick the lowest cost station, but most will pick the most convenient station (they’ve got enough to worry about in their day). In order to entice drivers to stop at their pumps, savvy retailers offer rewards systems for things like free coffee and hot dogs.
I’ve set up multiple nationwide fuel networks, and the #1 driver complaint is the loss of some free perk from the old fuel stop of choice.
Anyone who has read Dan Ariely
’s books can tell you “free” causes people to act irrationally. In the end, the coffee that’s costing retailers a few pennies per cup is costing your company a few thousand dollars per truck annually.
Your driver isn’t doing it intentionally… it’s something you haven’t made a priority and they are focused on making their delivery.
Manage Driver Choices through Choice Architecture and Contests
The two biggest ways to reduce your fuel costs are:
- Take the choice of “where” to fuel out of your drivers’ hands.
- Incentivize drivers to improve their MPG’s.
Chances are you can obtain a volume discount at a local or regional supplier. Find locations that your drivers can get in and out of easily and works logistically for your operation. Then work on a discount program (most retailers will offer a cost-plus or retail-minus system and some will offer a blend). If your fuel is currently un-managed, you can probably save at least 5% just by asking politely for a better rate.
Now start managing your drivers. Create monthly or quarterly contests for MPG performance, idle time, and other fuel related KPI’s. Start posting weekly updates on whatever categories you see fit. You’ll probably bump your Fleet MPG up by over half a gallon just by showing the drivers fuel matters.
Show Me the Money
Based on current USEIA
fuel averages, diesel is running about $2.83/gallon nationally. If we assume a baseline MPG of 6.0 and the 5% price per gallon savings mentioned earlier, you’ll probably drop your fuel cost per mile by around 14%:
If your trucks run 1,000 miles per week, you’ll save over $3,000/truck yearly. More if you run over 50,000 miles per truck annually.
The strategy above will take you about 5-10 hours to initially setup and an hour a week to maintain and save you a lot of money. I suggest you use some of the savings to provide free coffee and/or hot dogs for your drivers.