Combat Rising Fuel Costs with Wireless Fleet Management
Unpredictability= High Fuel Prices Industry experts are all over the place when it comes to predictions about fuel prices. But all agree that unpredictability = higher gas prices. Some examples around the world include: Civil uprisings in Tunisia, Egypt and Libya, unrest in Iran and Saudi Arabia = global fear over wide-scale disruption in oil supply = higher prices Long-term growth trends in China and India = ever increasing demand for fuel = higher prices Immediately after the 2011 earthquake in Japan, oil factories closed and prices dropped; but once operations return to normal = demand will spike = higher prices Combat Rising Fuel Costs with Wireless Fleet Management The first quarter of 2011 did not bode well for retail gasoline prices, and this trend has continued. According to the U.S. Energy Information Administration (EIA), average prices of regular grade fuel rose from $3.052 per gallon to $3.879 per gallon between December 27, 2010, and April 25, 2011. This is the highest average since July 7, 2008 when the cost of regular gasoline reached a record high of $4.114 per gallon. This recent sharp increase supports predictions of even larger price jumps during 2011 and 2012. John Hofmeister, former president of the Shell Oil Company, stated that a retail price of $5 per gallon by 2012 is not that unlikely. 1 Oil billionaire T. Boone Pickens also expects the price of gasoline to reach well beyond the $4 per gallon mark in 2011. Furthermore, he doesn t rule out a rise to $5+ per gallon during the next two years 2. When it comes to prices at the pump, most industry experts agree that, no matter what happens to the U.S. economy, we face a set of uncommon conditions that will likely cause oil prices to continue their upward trend through 2012 and beyond. Organizations Need to Prepare or Face Potential Losses Managers of fleets are rightfully concerned, since fuel is a major line item in their budgets. With this in mind, smart fleet managers are already preparing for unpredictable gas and diesel prices. One strategy is to use a fleet management solution to collect concrete data and, in turn, implement changes that will lower fuel costs. For example, many fleet managers are aware that simple changes, such as more efficient routing, keeping speeds on freeways to 60 miles per hour or reigning in excessive idling, can permanently lower fuel costs by as much as 20%. Wireless Fleet Management -- a Hedge Against Rising Fuel Costs Fleet managers who have implemented wireless fleet management systems report a quick ROI, due primarily to significant savings in fuel and other operating costs. Fuel-saving features to look for include: Alerts and reports for idling and speed violations Fuel card reports that track fuel transactions and identify unauthorized fuel purchases Fuel usage reports for detailed purchase and MPG monitoring Routing capabilities to dispatch drivers more efficiently and reduce overall driving distances Diagnostic tools to help keep engines in optimal condition and increase fuel performance These features not only make up for the rise in fuel costs, but they can reduce overall operating costs by 10% to 20%. 1 Segall, Laurie. Ex-Shell President Sees $5 Gas in 2012. CNNMoney.com, December 27, 2010, at http://money.cnn.com/2010/12/27/markets/oil_commodities/index.htm. 2 Harder, Amy. Pickens Says Oil Could Reach $120 Per Barrel. Washington, National Journal, January 5, 2011, at http://nationaljournal.com/energy/pickens-says-oil-could-reach-120-per-barrel-20110105. 2
Idle No More The EPA estimates that if each car in the US idles just 6 minutes per day, about 3 billion gallons of fuel are wasted annually, costing drivers $10 billion. Idling for two minutes uses about the same amount of fuel as one mile of driving. Idling for 1 hour burns nearly 1 gallon of fuel. Ten seconds of idling can use more fuel than turning off the engine and restarting. Reduce Idle Time and Reduce Fuel Use Idling has a significant impact on miles-per-gallon (MPG), because the engine is burning fuel when the vehicle is not moving. Excessive vehicle idling also affects engine wear. Research indicates that fuel usage may be lowered up to 15% if idling is significantly reduced. Studies show the average person lets his/her car idle five to 10 minutes a day. 3 Idling for one hour burns nearly one gallon of gasoline -- even more if the vehicle has an eight-cylinder engine. 4 Drivers of fleet vehicles such as vans and trucks typically waste more fuel at idle because their engines are larger. Heavy vehicles consume 0.82 gallons of fuel for every hour of idle-time, while light vehicles consume up to 0.5 gallons per hour. 5 In addition to wasted fuel, excessive idling can actually damage engine components, including cylinders, spark plugs, and exhaust systems. Bottom line: Idling gets you nowhere. Instead, it wastes fuel and money and damages the vehicle and the environment. Fleet managers using wireless fleet management can monitor idle time by vehicle to determine which vehicles exceed a pre-set idle threshold. They can then compare idle time and the amount of fuel consumed between similarly operated vehicles. Additionally, tracking MPG averages by vehicle can show how much MPG increases after implementing a formal driver behavior plan to deter speeding and idling. Speedy Facts About Speeding Vehicles gain a 10% increase in MPG just by slowing from 70 MPH to 60 MPH (Fleet Owner Magazine). Edmunds.com reports a 12% increase in MPG by reducing speed from 75 to 65 MPH. A reduction of 10 MPH across a fleet yields approximately a 10% reduction in your total fuel cost. This is the equivalent of purchasing all of your fuel at a reduction of $.40 per gallon. Reducing speeding saves lives. An Insurance Institute study estimated a 15% increase in fatalities on interstates and freeways when speed limits were increased from 55 to 65 MPH. Drive the Speed Limit and Save Fuel According to the U.S. Department of Energy, aggressive driving, including speeding, can lower highway fuel mileage 33% and city mileage by five percent. Moreover, while each vehicle reaches optimal fuel economy at a different speed, fuel mileage usually decreases rapidly at speeds above 60 MPH. Some experts estimate that every five miles per hour over 60 MPH is like paying an extra $0.25 to $0.81 per gallon for gas (depending on current fuel prices). 6 These statistics underline the huge effect that monitoring speed can have on the operational budget of a fleet. Fleet managers who can view online speed violation reports or receive text or email alerts when speed limits are exceeded will save on the cost of speeding tickets and money at the pump. 3 http://www.hcdoes.org/airquality/anti-idling/idlefaq.htm 4 http://www.fueleconomy.gov/feg/drivehabits.shtml 5 Estimates for fuel savings from sensible driving are based on Energy and Environmental Analysis, Inc., Owner Related Fuel Economy Improvements Arlington, Virginia, 2001. 6 http://www.fueleconomy.gov/feg/drivehabits.shtml Estimates for the effect of speed on MPG are based on a study by West, B.H., R.N. McGill, J.W. Hodgson, S.S. Sluder, and D.E. Smith, Development and Verification of Light-Duty Modal Emissions and Fuel Consumption Values for Traffic Models, Oak Ridge National Laboratory, Oak Ridge, Tennessee, March 1999. 3
The Networkfleet Fuel Guard Report compares the location and time the fuel was purchased with the vehicle location and time to expose fraud. Auto-Calculate Fuel Expenditures Paper methods of documenting odometer readings, credit card transactions and fuel usage are rarely successful. Fleet managers who have an automated reporting system for fuel use and MPG eliminate this problem. Additionally, many fleets are turning to fleet fuel cards to capture fuel and services transactions electronically. When these cards are used in conjunction with a fleet management system to track fuel transactions and identify unauthorized fuel purchases, fleet managers have even more control over fleet operations and expenditures. For example, Networkfleet s Fuel Guard Report compares the location and time fuel was purchased with vehicle location and time to determine if the proper vehicle was fueled or if there was a potential fraud event. Networkfleet s Fuel Card Transactions Report allows the user to see all fuel transactions undertaken for a definable time period as well as details regarding those transactions, including location, gallons, and total cost. Reduce Unauthorized Driving Using company vehicles for personal reasons or in a non-business fashion during business hours will increase fuel use and costs. Fleet managers using wireless fleet management can verify daily route and stop locations as well as check on odd hours of usage, such as weekends. More Efficient Routing Improves Customer Service Many organizations begin each day with a pre-determined schedule of jobs, and drivers are dispatched in advance with sufficient lead time to factor in delays. Others schedule work on the fly when customers call with emergencies. Knowing where your fleet is at any given moment is critical to customer service and overall business success. Improving routing, even if only by a small percentage, can have a significant positive impact on fuel usage. With a fleet management solution you can: Analyze driving patterns and historical location history to choose routes that optimize schedules. View vehicles on a map so that the closest vehicle to a particular customer site can be selected for optimized dispatching. Perform more jobs each day, helping the workforce increase productivity and revenue. 4
Leverage Engine Diagnostics to Cut Costs Since vehicles without engine issues get higher MPG, diagnostic tools that help keep engines in optimal condition can greatly increase performance and cut fuel and repair costs. Fleet management systems that monitor engine diagnostics through the OBD-II port can notify managers automatically by e-mail when a vehicle registers a check engine light in the form of a specific diagnostic trouble code (DTC). This information can be provided to technicians to reduce time spent diagnosing the problem. A Networkfleet DTC alert gives advance warning of maintenance issues. Wireless diagnostic monitoring also provides access to accurate mileage information generated by the engine computer, rather than through GPS. This allows for the scheduling of regular maintenance using odometer email alerts when vehicles reach predetermined maintenance intervals. These schedules ensure that maintenance and repairs are performed regularly and avoid potential problems that are more costly to fix. Fleets Report 15+% Savings on Fuel with Networkfleet Commercial and government fleets consistently report a 15% savings on fuel costs after implementing Networkfleet s GPS fleet management. Even when fuel prices are relatively low, the savings in fuel and other operational expenses make up for the cost of the system. When fuel prices soar, the cost benefits and return on investment become of even greater value. Here are actual ROI data and statistics from various industries and types of fleets: Service Fleets Virginia-based Cavalier Telephone, LLC is a full-service provider of reliable, efficient telecommunications solutions. With greater customer accountability and lower costs as primary goals, Cavalier installed Networkfleet s fleet management technology on 112 Ford F150 trucks and Rangers in its fleet. By reviewing Networkfleet reports, the fleet management team was able to analyze fleet statistics such as maximum recorded speeds, idle times, number of stops, and distance traveled. Based on the data, they implemented new procedures for cutting unnecessary mileage and set alerts to reduce speeding, idling, and off-hour usage. Mileage declined almost immediately despite an above-average workload. In just 60 days, the distance the 112 vehicles traveled cumulatively per day declined from 9,100 to 8,000 miles, for a projected decrease of 275,000 miles per year. At 48 cents per mile (the industry estimate on what it costs per mile to operate a vehicle), Cavalier estimates annual savings of $132,000 on operating costs. 5
The fleet also used less fuel since implementing Networkfleet. Vehicle idling time dropped from 32% to 22%. Within the first 60 days, the company documented an increase of two miles per gallon, from 15.3 to 17.3 MPG. Using a conservative figure of $2.50 per gallon of fuel, the company estimates its first-year fuel savings at $37,780. By using historical location reports and other data, fleets using Networkfleet can route vehicles more efficiently and reduce total miles driven. Transportation/Delivery Fleets Fleet reductions, decreased budgets, and layoffs are just a few factors that affected managers of transportation and delivery fleets during the recent economic downturn. At BLS Trucking Inc., the solution was Networkfleet. Based in Dayton, Ohio, BLS Trucking operates a fleet of 210 trucks within 40 locations throughout six states. By lowering fuel and repair costs, Networkfleet paid for itself in less than a year. By eliminating unauthorized usage and unnecessary idle time, BLS Trucking saved $188,539 in fuel consumption alone during the first year. This equates to $900 savings per vehicle, nearly 10% savings over the previous year. By the end of the second year, the company projected a savings of $220,000 -- equivalent at that time to 55,000 gallons of free fuel. Government Fleets Faced with reduced revenues from lower water consumption by customers, the Eastern Municipal Water District (EMWD) implemented Networkfleet s fleet tracking system to help shrink operating costs while still carrying out projects required by state and federal laws. By focusing on drivers habits such as speed and idle time, Networkfleet helped EMWD improve MPG and reduce speed-related accidents. EMWD supervisors also use Networkfleet to view a GPS-based map of vehicle locations, enabling them to dispatch the vehicle closest to an emergency or other job not scheduled in advance. With more efficient vehicle usage and better MPG, EMWD lowered the average number of miles driven by about 165,000 fewer miles within the first six months of operation. Additionally, fuel costs declined by about $79,000 as compared to the previous year s data for the same period. 6
Networkfleet Wireless Fleet Management Networkfleet is a telematics and fleet management system that connects directly to the vehicle s engine computer and wirelessly transmits fleet data to a secure website. Fleet managers log in to the website to view fleet usage, GPS locations and diagnostic data, including exact fuel consumption, fuel usage reports, mileage data, and speed and idle-time trends. Fleet managers can also receive email alerts regarding vehicle status such as exceeding speed limits, excessive idling and diagnostic codes that indicate possible engine malfunctions. This information enables fleet managers to pinpoint problem areas such as inefficient, fuel-wasting habits and odd-hour usage and then counsel drivers accordingly. By using historical location reports and other data, fleets using Networkfleet can route vehicles more efficiently and reduce total miles driven. The Networkfleet Dashboard provides an at-a-glance view of vehicle information, including location tracking, diagnostic data and vehicle performance information such as speed history, MPG trend, and fuel efficiency. Bundled Pricing: No Upfront Cost Networkfleet customers have the option to pay a low monthly rate that combines the cost of the GPS tracking device, installation, and monthly service into one affordable monthly fee. With no required capital expenditures, fleets can easily and immediately start reaping the benefits of GPS fleet tracking, including lower fuel and maintenance costs and improved fleet utilization. Schedule an ROI Analysis Today For more information, or to schedule a ROI analysis for your fleet, please contact Networkfleet at 866.227.7323 or sales@networkfleet.com or visit www.networkfleet.com