Industry insight: fuel management

With fuel representing a major cost for fleets, we ask our fuel card experts what a fuel management strategy should include, as well as whether the fuel card industry will offer alternative energy, such as electricity or hydrogen, in the future.

Whilst the world is still dependent on oil, we will be at the mercy of fluctuating fuel costs. For organisations operating a fleet of vehicles, the cost of fuel is one of their biggest expenditures, but even having a simple fuel management strategy in place can make significant savings.

“Fuel can account for up to 40 per cent of a fleets business spend,” says Andrew Goodwin from Certas Energy. “So a fuel management strategy is crucial. An effective fuel management strategy can have a greater impact than just pence per litre; it can help to reduce costs and improve efficiency.”

Road haulage fleets operating internationally have specific considerations to bear in mind, as Gertjan Breij from DKV Euro Service Benelux explains: “Hauliers operating internationally face a complex purchasing situation: diesel net prices, VAT and fuel excise duty rates as well as the level of refundable international tax payments vary throughout Europe. However, if you ensure that purchasing processes and fuel management strategies take this into consideration, you can definitely save money.”

So what should a fuel strategy look like? Areas such as tyre pressure, vehicle maintenance, driver training, vehicle type, fuel type, route optimisation and fuel card usage, should all be included.

Driver behaviour

No matter how efficient the vehicle is, if it is driven badly – by braking harshly, speeding and idling – it will use unnecessary fuel. Cedric Vigneau from AS24 says the driver must have a “light right foot,” as research suggest that driving in an economical fashion can lead to up to 15 per cent savings on fuel consumption. There is also the added environmental benefit of saving emissions too.

Using telematics or reports from fuel cards to identify which employees are driving in an inefficient style allows fleet managers to put in place eco driver training, and offer incentives and rewards for those that drive the most economically.

Andrew Goodwin from Certas Energy said: “A fleet company can work with their drivers to look at their behaviour when out on the road. Assessing driver speeds, revving and times sat idle gives details of things that can be changed quickly if needed to reduce costs and become more effective. At Certas Energy, we have achieved a two per cent improvement in driver efficiency which, with a fleet of over 1,000 tankers can add up considerably.”

Using telematics data to analyse the types of routes that drivers take can also lead to fuel savings, as shorter and less congested routes can be implemented. Bryan Glazier from Wex said: “The simplest and the most effective way to reduce fuel and fleet spend is to drive less miles, therefore where possible fleets should look to optimise their logistics and fleet utilisation.”

Tyres and vehicle maintenance

A vehicle’s performance can be negatively impacted when not kept in top shape. Getting vehicles serviced regularly, and using diagnostics data to identify faults earlier can result in vehicles performing at their peak condition and not burning unnecessary fuel.

Tyres play an important part in a fuel strategy. Andrew Goodwin from Certas Energy explains: “Research shows that tyre pressure affects miles per gallon, for example, under inflated tyres gives increased rolling resistance with the road which means reduced fuel efficiency and increased CO2 emissions.”

Vehicle choice is a significant part of keeping fuel costs down. These days, vehicle manufacturers have a range of cleaner diesel and petrol vehicles, as well as a selection of electric, hybrid and hydrogen offerings. Fleet buyers need to make sure they choose the most fuel-efficient vehicle that can do the job, as well as get rid of surplus vehicles.

Fuel Cards

Having access to lower fuel prices, as well as having better visibility and control over drivers’ fuel spend is a crucial part of a fuel management strategy. Fuel cards allow managers to do this.

A fuel card allows drivers to charge the cost of fuel to an account settled by their employer. During the transaction, the vehicle registration number and mileage are recorded. The invoice details where, when and what time fuel was purchased, as well as what type of fuel and how much it cost. This information allows fleet managers to cut down on administrative tasks as they no longer have to collect receipts and expense forms from employees, or worry that staff are rounding up mileage and being overpaid.

The captured information on fuel costs, forecourt location and mileage can be extremely valuable to fleet managers, as it gives them insight into a drivers fuelling behaviour and allows them to put in place corrective action. For example, driver training can be implemented for those identified as having an aggressive driving style. And route optimisation can be put in place for those doing unnecessary miles.

Bryan Glazier from Wex says: “The management information available through a fuel card programme can be interrogated to highlight unnecessary transactions, and provide fuel consumption analysis at an individual vehicle level.”

DKV’s Gertjan Breij adds: “By making use of digital reporting from the fuel cards, hauliers get access to unambiguous data based on vehicle, fuel card or cost item. Such a reporting system provides immediate insights in costs and applicable VAT refunds/fuel excise duty refunds. This makes it much easier to calculate the net fuel costs incurred for the entire fleet, resulting in full cost control and reduced fuel spend.”

Limiting usage

Many fuel cards allow organisations to set limits on usage, for example, to get drivers to fill up at supermarkets with lower-cost fuel, rather than motorway service stations.

Cedric Vigneau from AS24 says: “Using fuel cards can help a fleet manager control who fills when, where, how many times, and with what. A fleet manager can detect the non‑expected fillings, at days and hours where it is not required. It also allows them to control prices. For example, there is no sense to fill-up in the UK before crossing to France or Belgium, as the UK is much more expensive.”

Gertjan Breij from DKV agrees, highlighting that some other countries vary their fuel prices according to the time of day. He says: “In Germany, fuel prices vary hourly, usually dropping in the evening. When comparing Belgian fuel prices with prices in Luxembourg, fuelling in Luxembourg appears cheaper. However, when subtracting discounts, VAT and diesel duty refunds refuelling in Belgium is actually the better option. It is therefore important to account for all factors when it comes down to choosing the cheapest fuelling location.”

What’s more, Gertjan Breij says that attention should be paid to whether the tank is topped up every day or only when empty. He says: “If a 600-litre tank is topped up daily with only half this volume used each day, the unnecessary fuel costs due to increased weight amount to €2,500 per vehicle per year. This implies that there is a considerable saving to be achieved if a policy is put in place that sets up for fuelling only when necessary.”

Alternative fuels

On the 20 July 2016, the European Commission published its strategy for low emission mobility. It detailed plans to speed up the deployment of low emission alternative energy for transport, such as electricity, hydrogen, advanced biofuels and renewable synthetic fuels, as well as removing obstacles to the electrification of transport. It also outlined plans for Europe to accelerate the transition towards low and zero-emission vehicles.

While the world still depends greatly on oil, recent news has shown that even the oil giants are beginning to think about alternative fuels. Shell has revealed its UK service stations could offer electric vehicle charging next year. And in America, Mark Oil, which distributes fuel for BP, is going to work with Nissan to offer free DC fast-charging in 10 fuel stations in North Carolina.

So will fuel card providers include the option of buying alternative fuels in the future?

Gertjan Breij says DKV already is: “We have developed the DKV Card +Charge for hybrid trucks. This card was first introduced in Germany, with now over 4,000 charging stations being connected. Other European countries are expected to be included in the network in the near future. These examples show that the infrastructure for respective alternative fuels is developing more and more.”

Bryan Glazier from Wex believes that fuel card providers and EV charging network providers could work together in the future. He also believes that hydrogen could be easily incorporated into a fuel card system should the fuel take off. He said: “There are a very small number of hydrogen refuelling sites in the UK and whilst a fuel card could be configured to purchase this product relatively easily, it is ultimately demand led. The number of Hydrogen refuelling sites is unlikely to rise unless the numbers of Hydrogen vehicles increases and vice versa. The same was noticeable 20+ years ago in regards LPG.”

For AS24, gas is the greener fuel they are embracing. He said: “We think gas could be an alternative to diesel in the middle term. That’s why we are investing in this technology and we are about to open our first CNG station.”

Meanwhile, Andrew Goodwin from Certas Energy said: “We have been investigating alternative fuels for our fleet and those of our customers. The most promising of which is a paraffinic fuel which will be implemented in the coming months. The cleaner transport fuel can lower local emissions by up to 38 per cent including particulate matter, NOx, hydrocarbons and carbon monoxide. We are constantly reviewing products available and are looking at opportunities to introduce hydrogen products in the future.”

Many fuel card operators have a carbon offset scheme, so members will be contributing to certified carbon protection projects. Gertjan Breij from DKV says: “It needs to be noted that complete elimination of CO2 emissions cannot be achieved yet through the use of alternative fuels or hybrid trucks. DKV believes that hauliers should therefore be given the opportunity to compensate CO2 emissions in an efficient way. To allow for this, DKV has introduced the climate neutral DKV Card Climate.”

Expert final thoughts

Andrew Goodwin: "Certas Energy has been investigating alternative fuels for our fleet and those of our customers. The most promising of which is a paraffinic fuel which will be implemented in the coming months. The cleaner transport fuel can lower local emissions by up to 38 per cent including particulate matter, NOx, hydrocarbons and carbon monoxide. As a forward thinking and innovative business, and with ongoing legislation in the industry, we are constantly reviewing products available and are looking at opportunities to introduce hydrogen products in the future."

Gertjan Breij: "DKV supports the use of alternative fuels with its DKV Card and has in addition developed the DKV Card +Charge for hybrid trucks. This card was first introduced in Germany, and now has over 4,000 charging stations connected. It needs to be noted that complete elimination of CO2 emissions cannot be achieved yet through the use of alternative fuels or hybrid trucks. DKV believes that hauliers should be given the opportunity to compensate CO2 emissions in an efficient way. To do this, DKV has introduced the climate neutral DKV Card Climate."

Bryan Glazier: "The number of electric car charging points in the UK is increasing and whilst many operate on a philanthropic basis, an increasing number of private providers levy a charge to their users. I can see fuel card providers partnering with electric charging networks in the future. There are a very small number of Hydrogen refuelling sites in the UK and whilst a fuel card could be configured to purchase this product relatively easily, it is ultimately demand led. The number of Hydrogen refuelling sites is unlikely to rise unless the numbers of hydrogen vehicles increases, and vice versa. The same was noticeable over 20 years ago with LPG."

Cédric Vigneau: "Fleets can reduce fuel use by implementing driver training. The driver is the one who uses the truck and he has to have a light right foot. Truck maintenance is another way to improve the miles per gallon. With regards to alternative fuels, at AS24, we think gas could be an alternative to diesel, in the middle term. That’s the reason we are investing in this technology and we are about to open our first CNG station."