Operations

Strategies: Coping With a Tough Economy

Posted on August 1, 2008 by - Also by this author

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MIAMI BEACH — Leading executives in the chauffeured transportation industry told LCT’s Leadership Summit recently that economic doldrums require operators to work smarter and learn more about issues plaguing chauffeured vehicles.

 

 

The straight-talk panel at the Ritz Carlton South Beach in Miami Beach offered some blunt advice on managing fuel costs and labor issues while being skeptical of some green alternatives.

 

Led by Scott Solombrino, president/CEO of Boston-based Dav El Chauffeured Transportation Network and a former NLA president, the June panel discussion included: Dawson Rutter, president and founder of Boston-based Commonwealth Worldwide Chauffeured Transportation; Mark Munoz, president of BostonCoach; Ron Sorci, chief financial officer of Miami-based Aventura Worldwide Transportation; and Craig McCutcheon, president of Rosedale Livery Ltd. of Toronto.

 

Fury Over Fuel

The most pressing issue facing operators nationwide is the price of gasoline, which has zoomed past $4 per gallon and likely will peak at $5 or beyond this summer.

 

Munoz gave a quick checklist on handling gas costs:

1) audit fuel purchases

2) find cheaper locations

3) avoid full-service stations

4) use lower octane fuels

 

Rutter reiterated a growing industry practice in response to higher fuel costs: fuel surcharges. Operators should levy fuel surcharges based on a sliding scale tied to the price of a gallon of gas, he said. Rutter also advised operators to maintain steady tire pressure since it saves on average two miles per gallon and keeps tires from being replaced as often.

 

Sorci favors some high-tech approaches:

1) Minimize idling.

2) Don’t overuse air conditioners.

3) Install controls to monitor fuel consumption.

4) Hire someone to handle detailed fuel monitoring per vehicle.

 

McCutcheon mentioned that GPS data can save money through accurate, pinpointed information that identifies waste, determines usage patterns, and tracks maintenance.

 

“Most GPS systems monitor idling times,” Rutter said. “You’ll be stunned at how much idling time your cars have in one week.” He also recommends the use of fuel purchase cards for chauffeurs, so each gas buy can be tracked and recorded.

 

Rutter supports giving pay bonuses to chauffeurs who minimize their idling times, and advocates firing speeders. “Anything over 80 mph is a critical point,” he said.

 

Munoz stressed that substantially less fuel is burned at 55-60 mph than 75-80 mph.

 

To keep vehicle costs down overall, Rutter and Sorci advised operators to look closely at what each vehicle earns in revenues each month, and adjust fleets accordingly.

 

Propane vs. Ethanol vs. Hybrids

Looking toward future relief from fuel costs, the panel addressed some of the most used alternative-fuel vehicles often touted as the route to more efficient chauffeured transportation: propane, ethanol, and hybrid.

 

Rutter cited several advantages of propane:

1) There are tax incentives for installation.

2) It costs about half the amount for gasoline.

3) Propane burns much cleaner than fossil fuels.

4) There is a proven technology for implementing it.

5) A propane tank provides a steady supply and is safe.

 

“Propane is an answer that many will look for in the future,” Rutter said.

 

McCutcheon, however, cautioned that his company sold its propane vehicles because customers feared them. “They were afraid they would blow up in an accident,” McCutcheon said.

 

Ethanol shows less promise than propane, Solombrino said. His company, Dav El, is cycling out and selling off its flex-fuel vehicles as a matter of social conscience. Ethanol has gobbled up more croplands and squeezed food supplies worldwide, contributing to rioting and worldwide food inflation, Solombrino said.

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