Fleet Fuel Costs: 12 tips on how to reduce fuel costs
Table of contents
- Fuel economy defined
- Ways to reduce your fleet fuel costs
- 1. Stop unnecessarily idling your vehicle
- 2. Curb aggressive driving
- 3. Track and manage fuel trends in MyGeotab
- 4. Optimize your routes and choose smoother roads
- 5. Keep an eye on the tire pressure
- 6. Conduct regular maintenance checks
- 7. Match the right vehicle to the task
- 8. Check that the oxygen sensor is working properly
- 9. Use fuel cards
- 10. Start investigating EVs
- 11. Set speed restrictions
- 12. Lighten the load
- Fuel forecast for 2022
Maximizing your vehicle's miles per gallon (MPG) with fleet management technology can lower your fuel costs. Follow these 12 steps.
Fuel prices are extremely volatile and are at their highest in the last seven years. What does this mean to a fleet owner? How do fuel prices affect fleet fuel economy? How can fleet managers improve gas mileage performance and reduce fuel expenses? This blog post will answer all these questions and provide 12 telematics-based strategies that can help you run a fuel-efficient fleet.
Fuel economy defined
What are fuel costs exactly?
Fuel costs are the costs that a company incurs to refuel a vehicle to a full tank. Automotive Fleetdivides fleet costs into two categories: running costs (operating) and standing costs (fixed). Fuel is considered to be one of the main contributors to a fleet’s operating costs. Considering this fact, it’s all the more important that managers continuously and closely track fuel usage and fuel economy to keep overall operation costs from getting out of hand.
What is fleet fuel economy?
The definition of fuel economy is the distance that a vehicle can travel on a set amount of fuel consumed. Fuel economy is typically measured in MPG or liter per kilometer (km/L) and can differ to a great extent based on the make and model of a vehicle. For example, a compact and small car will possibly have a greater fuel economy (more MPG) than a heavy-duty truck. Fleet managers can use a number of different strategies to improve fuel economy, such as tracking and reducing driving practices that waste fuel (like speeding and idling) or finding shorter routes.
How do you calculate fuel costs?
Calculate the fuel cost of a vehicle by following these steps:
- Whether you are looking to track the vehicle's fuel economy for a long trip or for a week, start by filling the tank with fuel.
- Record the odometer reading at the time when you fill the tank.
- Once you track for a week or for the trip, fill the tank once again.
- Record the mileage driven.
- Divide the number of miles driven by the amount of fuel used in liters (miles per liter).
- To convert the figure to miles per gallon, multiply it by 4.544.
Ways to reduce your fleet fuel costs
Automotive Fleetstates that fuel can take up approximately 60% of a fleet’s total operating cost. This highlights the importance of fuel management for fleet managers as you are responsible for the fleet budget, profitability ratio, and achieving other performance metrics.
Even though the fuel prices are rocky, using fleet management technology is a good way to maximize vehicle MPG performance and reduce fuel costs. To start realizing a return on investment (ROI), here are some fleet management objectives you can look into:
1. Stop unnecessarily idling your vehicle
According to the U.S. Department of Energy, idling can use a quarter to a half gallon of fuel per hour. As well, idling for just 30 seconds wastes more fuel than restarting the engine. The exact amount of fuel used in idling depends on the engine size and air conditioner (AC) use.
Drivers can idle their vehicle on different occasions:
- Warming up the engine
- Warming up or cooling down the temperature of the vehicle cabin
- Loading or unloading a vehicle
- Training new hires
Why is idling such a key area to focus on? The pest control and home services company Orkin saved an estimated $50,000 and cut idling by 8.4% with a telematics-based three-month driver challenge. Not only does idling waste fuel but it also leaves residues that damage engine components and cause higher maintenance costs over time. Idling also contributes to air pollution and impacts health and well-being in the community.
As a quick best practice, encourage drivers to turn off the vehicle when not in use or parked. According to Argonne National Laboratory, it only takes about 10 seconds worth of fuel to restart your vehicle.
Creating or updating your fleet’s anti-idling policy is also important to reducing idling and fuel waste. Here are some examples of provisions you could include in your idling program and policy from The Clean Air Partnershipguidelines for Canadian municipalities:
- Time limit for idling while parked
- Time limit for vehicle start-up (warm-up) idling
- Use of telematics devices in vehicles to track idling and fuel efficiency
- Driver training sessions and materials on idling and eco-driving
- Annual anti-idling challenge
Using a fleet management system is another effective way to tackle, track and monitor idling. Telematics help fleet managers set idle limits and also generate idling cost reports. A Weekly Idling Cost Trend Report, like the name suggests, is a great way to analyze idling costs on a weekly basis, which can also present data in the form of a graph for easier understanding.
The Geotab Last 3 Months Idling Trend Report displays the total fuel used for the entire fleet over the last 3 months. The report is useful as it determines if newly implemented fuel usage policies have successfully decreased the amount of fuel that was used, and how it affected the miles driven and idling statistics. If you want to learn more, read about true idling versus operational idling and how to stop it with MyGeotab.
2. Curb aggressive driving
Did you know that aggressive driving can affect fuel economy by an average of 31%? Excessive speeding, rapid acceleration, harsh braking and cornering, tailgating, excessive lane changes and running stop signs are all considered aggressive driving and can have negative effects on a driver’s fuel efficiency.
Coaching drivers and promoting safer on-road behaviors is simplified with telematics technology. Set up a driver scorecard to effectively evaluate drivers based on how efficiently they drive. Share leaderboard results and set up rewards for top performers to help motivate drivers to aim for those top spots.
Take advantage of telematics rules and alerts to coach drivers in real-time. Feedback using in-vehicle audible warnings will caution drivers if they are engaging in aggressive driving or breaking fleet rules. Expanding your training and safety program and setting up gamification to incentivize drivers through safe-driver recognition award programs are other ways to curb aggressive driving.
3. Track and manage fuel trends in MyGeotab
Geotab aims to help businesses realize their entire potential and receive a solid return on their telematics investment. You can improve MPG and overall reduce fuel spending with MyGeotab.
The Geotab Fuel Tracker is a simple and easy-to-use Add-In that can be integrated with Geotab Drive and helps you track fuel economy, fuel cost, cost per fill-up and monthly fuel spending.
Fuel tracker dashboard
4. Optimize your routes and choose smoother roads
Don’t overlook route optimization when it comes to saving on fuel expenses. How does it help? Choosing the quickest route and smoother roads can significantly increase the efficiency and productivity of the fleet while also reducing costs.
A report released by the National Asphalt Pavement Association states that American drivers burn nearly 170 billion gallons of fuel while driving approximately three trillion miles a year. If the roads were built and maintained for a smoother ride, then drivers could see an approximately 4.5% decrease in fuel consumption. The same report also states that rough and poorly maintained roads increase wear and tear on vehicles — about $377 per year for the average driver.
Unfortunately, road quality is rarely something under a fleet’s control. But with Geotab, you can help your drivers avoid bad roads by planning and dispatching routes that avoid those areas.
Integrating routes into your fleet management systems can help you choose roads that have less traffic, are smoother for vehicles, and shorten the drive time. You can set up customized, pre-scheduled routes and send them directly to the drivers. Now you can observe whether the driver has followed the provided route and then use this to determine individual productivity. Adding a specialized route planner solution to your telematics system can also help lower fuel costs and solve complex or last-minute routing.
Learn more about optimizing routes with MyGeotab in this Geotab Community post.
5. Keep an eye on the tire pressure
According to the U.S. Department of Energy, under-inflated tires can lower gas mileage by about 0.2% for every 1 pound per square inch (PSI) drop in the average pressure of all tires. You can reduce fuel costs by monitoring tire pressure. Tire pressure is also affected by outside temperatures, so be sure to check frequently, especially when the weather fluctuates. This is especially true in cold climates or extremely hot ones.
A Tire Pressure Monitoring System (TPMS) report will indicate if a vehicle’s tires are at the optimum pressure. Drivers can also check tire pressure as part of their pre-start checklist before starting their journey. Geotab telematics can help you remember to frequently check tire pressure as needed by setting automated emailed maintenance reminders, or by including tire pressure in your drivers’ vehicle inspection (DVIR) checklist.
6. Conduct regular maintenance checks
Regularly maintaining your vehicle can improve your fuel economy. According to a report in Fuel Economy, using the manufacturer's recommended grade of motor oil can improve the gas mileage by 1%–2%. Replacing air filters, changing oil, or just fixing any kind of maintenance issues with a vehicle can improve mileage by 40%.
Simple vehicle repairs can prove costly to the bottom line. A fleet management software can prevent vehicle wear and tear, detect engine issues, manage vehicle maintenance and provide critical engine data.
Implementing a telematics solution will save time and reduce costs.
7. Match the right vehicle to the task
It is important that you choose the right vehicle for the task. Using a large truck for a small load and short distance means you are increasing your fuel costs. Choosing the right vehicle for the right task is critical to managing fuel.
A good practice is to downsize to vehicles with smaller engines that consume fewer amounts of fuel. For example, one shipping and logistics company purchased trucks with right-sized engines depending on each route, which are now 70%‒100% more fuel-efficient than the trucks they replaced, according to Automotive Fleet. Another option is to choose electric vehicles (EVs) for lighter loads, which will contribute towards fleet management. Using analytics from a telematics provider can also identify possible downsizing opportunities.
8. Check that the oxygen sensor is working properly
Oxygen sensors primarily monitor the efficiency of combustion by keeping track of the amount of oxygen remaining in the exhaust. However, there is a high possibility of them degrading over time and that can add to gas mileage. The U.S. Department of Energy cites that repairing a faulty oxygen sensor can improve mileage up to 40%.
Every vehicle manufactured, starting around the 1980s, is now equipped with at least one oxygen sensor. These sensors constantly analyze the oxygen concentration in the vehicle’s exhaust gasses. Input from the sensor is sent to the engine computer to determine how much fuel to add to every combustion cycle. Unfortunately, these sensors do need to be replaced over time and can become faulty.
Geotab can help to identify faulty oxygen sensors by setting up emailed or pop-up exception notifications when a fault is triggered regarding the oxygen sensor. This means the prompt repair of the sensor, lessening the impact it will have on the vehicle’s fuel economy, and easy fuel management system tracking.
9. Use fuel cards
One of the ways to improve fleet efficiency is through a driver fuel card. In addition to making fuel payment more convenient for drivers, a benefit of fuel cards is that they help fleet managers keep track of fuel purchases and other employee transactions.
A controlled fuel card with specialized metrics and rules can help fleet managers keep a tab on fuel spending. A fuel management system will also identify the actual MPG, fuel consumption (when idling as well as when in use) and fuel levels.
10. Start investigating EVs
Electrification doesn’t happen overnight, so fleets should start evaluating EVs and consider where they might fit. In the right applications, they have a lower total cost of ownership. Electricity costs are generally less expensive than fossil fuels and more stable, allowing better budgeting, while also realizing cost savings from lower maintenance costs. EVs are also more environmentally friendly and will play a key role in creating a more sustainable fleet.
Telematics can be used to track your EVs right alongside your gas-powered cars and trucks. With Geotab, you can view trend reports, fuel and EV energy usage reports and EV charging reports. Access EV data from your fleet management platform to keep operations running smoothly and plan for the future.
11. Set speed restrictions
Reducing and restricting your speed is another method for reducing fuel waste. The implementation of speed restrictions in fleet management can be helpful when it comes to saving fuel. This is due to the fact that slower speeds require less fuel, ultimately resulting in lower fuel expenditures. As per a report by the U.S. Department of Energy, it is safe to say that each 5 mph you drive over 50 mph is like paying an additional $0.25 per gallon for gas.
Telematics technology can also help drivers reduce fuel consumption by reminding them to slow down and stay within the speed limit. You can also make use of the Top 5 Speeding Violations Report in the Geotab Marketplace®. The report is designed to run as either a dashboard or an emailed report and displays the top 5 drivers or vehicles with the highest number of speeding events in a specified time period.
12. Lighten the load
Having a lighter vehicle load can help contribute to saving fuel. The lighter the vehicle, the more fuel-efficient it will be. Car manufacturers now build vehicles with composite body parts, which significantly decrease the weight of the vehicle.
This also means making sure that drivers are carrying only what they need as part of their cargo. The EPA reports that every extra 100 pounds of weight on a vehicle can lower fuel economy by 1%. Carrying cargo on the roof can be even worse.
Fuel forecast for 2022
In their Short-Term Energy Outlook, the U.S. Energy Information Administration (EIA)predicts that the U.S. average gasoline price will continue to rise due to crude oil price increases. Several countries in Europe are also seeing rising petrol prices. Many have spent the last few days scrambling to find alternative sources, states The Guardian. In the same article, it is also suggested that heavy industries across Europe have adopted short-time working or, in several cases, weekly shutdowns to cope with rising prices.
The EIA also expects the price of diesel to increase. In Fortune, Patrick De Haan — the head of petroleum analysis at the gas price tracking service, GasBuddy — stated that the current volatility makes it difficult to confirm where prices could go, how high and when.
Fleet managers can respond to uncertainty by using telematics data and tools to promote more fuel-efficient practices and save fuel costs. Here at Geotab, we are dedicated to helping businesses realize a solid return on their telematics investment. Getting better MPG lies at the heart of what we do, as there are many contributing factors for reducing overall fuel expenditures.
Originally published on January 25, 2018.
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Mrinalini Sundar is a content coordinator at Geotab
Geotab's blog posts are intended to provide information and encourage discussion on topics of interest to the telematics community at large. Geotab is not providing technical, professional or legal advice through these blog posts. While every effort has been made to ensure the information in this blog post is timely and accurate, errors and omissions may occur, and the information presented here may become out-of-date with the passage of time.
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