Managing Your Fuel Expenses Can Boost Your Profits

Jim Luff
Posted on May 1, 2008

While it may seem impossible to “manage” fuel expenses, there are ways that you can reduce your overall fuel bill through the use of fleet fuel programs, chauffeur training, and management tracking programs.


With fuel being one of the top operating expenses of the industry, you must have controls and training in place to reduce fuel consumption and capitalize on resources available to manage the consumption.


Train Your Chauffeurs

The biggest control you have over fuel consumption is how your chauffeurs drive and treat your vehicles. Jack-rabbit starts, speeding, long periods of idling or warming — all waste fuel. Under-inflated tires can reduce your average miles per gallon (MPG) of fuel consumed. Training chauffeurs to perform a pre-trip inspection including a check of tire pressures can help avoid excessive fuel use. Because we are in the luxury transportation business, chauffeurs should be taught to drive slowly and gently and never hurry. Jackrabbit starts may cause beverages to spill on people and toss passengers around. Whether the vehicle is empty or with passengers, speeding limousines reflect poorly on the industry and project an unsafe image. Teach your chauffeurs this before ever allowing them to drive. A chauffeur should be able to place a glass of water either in a holder or on a shelf, and operate the vehicle without spilling the water. Along with this skill, chauffeurs should begin gradually accelerating when approaching a hill to maintain momentum and avoid a hard automatic downshift while climbing. When traveling downhill, allow the momentum to carry the vehicle without using the accelerator until it’s actually needed. Most cities time signal lights for traffic management. If traveling at the speed limit, most lights should turn green as they are reached.


Your enforceable policies should state how long a chauffeur can idle a vehicle when either warming it up or waiting for a passenger. Speeding tickets can increase your insurance premiums, so make sure your chauffeurs know that speeding will not be tolerated and that they risk being fired for speeding tickets and/or unsafe driving. You also might consider adopting a policy of refueling at the conclusion of each trip even if only a few gallons are needed. Combined with starting and ending mileage, it is easy to spot lead-footed drivers when you analyze each trip.


Levy a Fuel Surcharge

Obviously by passing on a fuel surcharge to clients you can cut your fuel costs. Many clients feel you should just increase your price to cover operating expenses. But you can explain that a surcharge allows you to be flexible, and adjust it as fuel prices vary with the seasons. That saves the client money, whereas a rate increase is permanent.


Typical fuel surcharge calculations are based on a percentage of the total order, and on a tiered operating radius with the surcharge rising based on miles traveled away from the operating base, or based on a predetermined flat rate.


Using Technology Guzzles Less Gas

Many tools are available today to help monitor how chauffeurs are operating your vehicle. The Drive Cam system works similar to a carpenter’s level. When the bubble slips out of the center, the camera is activated and allows you to see what the chauffeur saw. Hard starts, hard braking, and sharp turns all activate the camera. With penalties in place for activations, chauffeurs will drive more smoothly.


Most GPS systems provide detailed reports showing: 1) when a vehicle was started, 2) how long it idled at a location, 3) top speed achieved, 4) and current speed. Management notifications of excessive speed occur in real time. Likewise, livery software packages offer mileage tracking by entering starting and ending mileage of each job. Comparing that with a post-trip fuel receipt shows how many gallons were consumed for those miles. That easily tells you who isn’t conserving gas. Of course, a simple spreadsheet also can be used with one sheet per vehicle. Track the date, chauffeur, start and end miles, and the miles per gallon achieved. As each vehicle is slightly different, you will see who gets good mileage and bad mileage in the same vehicle.


Maintenance Is a Must

Of course, you can help by making sure vehicles are properly maintained. The best method is to have a binder for each vehicle or a binder with pages for each vehicle. Track tune-ups, air and oil filter changes, tire changes, oil changes, and other maintenance issues to make sure they get done regularly and on time. Likewise, someone in the company should check tire pressures once a week as a precaution and as a fail-safe system. Under-inflated tires can increase fuel consumption by up to 25%. You also might consider using synthetic-based oil and adding fuel injector cleaner at each oil change to keep injector nozzles clean and efficient.


Join a Fleet Fuel Program

Almost all major oil companies offer a version of a fleet program that provides excellent tracking resources but charge the posted pump price. Exxon, Sunoco, and BP Oil offer rebates based on volume. Others offer a set price above the actual wholesale cost.


Fleet tracking reports are excellent tools that provide data in a variety of formats. The data is captured at each fill-up. Each chauffeur is assigned a unique PIN that identifies who buys the fuel. The mileage of the vehicle is also entered at the pump. The amount of fuel purchased is reported in dollars and gallons. These reports can track by vehicle, showing miles traveled during the monthly billing cycle, average miles per gallon, station used, and time of day. You also may view total gallons bought by individuals. Some programs offer online access to reports. Through use of these reports, you can identify potential theft of fuel and chauffeurs who consistently have low MPG numbers when compared to other chauffeurs operating the same vehicle.


A major consideration in joining a fuel network is the number of locations relative to your service area. Another consideration is the physical location of unattended fuel locations. Many are designed for truckers and are located in industrial areas that may be unsafe for late-night fueling. Be sure to ask for a map of all locations before joining.


Providing Incentives

By using the tracking methods described, you might want to consider implementing an incentive program to reward chauffeurs for achieving the most miles per gallon or even for improving miles per gallon over a period of time.


If you choose this option, post the monthly results on a bulletin board read by chauffeurs. Rank your chauffeurs from best to worst. This becomes a little more difficult if your chauffeurs are assigned to multiple types of vehicles. If your chauffeur always drives a certain vehicle or type of vehicle, you can post multiple lists by the vehicle type to be fair. If you have a mixed fleet, you can still apply averages. Determine the average MPG of a given vehicle. Compare the MPG achieved by each chauffeur who operated that vehicle. Rank them according the vehicle’s average MPG. You can then determine who is consistently at the top or bottom of the list on each vehicle.


For the chauffeur who ranks Number One in fuel efficiency, consider giving him a pre-paid fuel card for his personal vehicle. These rewards can go a long way not only in reducing fuel costs but in building loyalty and showing your appreciation for a job well done.


Methods to Reduce Fuel Costs

• Train chauffeurs

• Inspect vehicles pre-trip

• Implement an idling policy

• Join a fleet fuel program

• Provide an incentive program Using Technology to Reduce Fuel Cost

• Install Drive-Cam System

• Install GPS System

• Use livery software with maintenance alerts

• Use livery software with mileage tracking

• Use fleet fuel program reports

• Use a basic spreadsheet.



Related Topics: cost savings, fleet managers, fleet tracking, fuel costs, fuel efficiency, improving chauffeur driving style, maintenance, reducing fleet idle time, saving money

Jim Luff General Manager
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