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It now costs over $200 to fill up a straight truck, and pouring 120 gallons into your twin-75 equipped tractor can cost $500.  In an earlier post we discussed fueling strategies.  If $10 is saved on labor, it is as good as $10 saved on fuel cost.  What else is there?

We are not going to list all the well known strategies for reducing fuel efficiency, such as more efficient trucks, driving slower, less idling, correct tire pressure, etc.  Many of these techniques have little benefit in the local trucking universe.  Often overlooked is what kind of diesel is being used. This is a potential money-saver for you.  Think about it.

During the winter months diesel is often blended with expensive additives to prevent ice buildup.  Sometimes standard practice starts the “additive season” too soon and ends too late.  The difference in cost can be ten cents per gallon or more.

In the warmer months, or warmer climates, biodiesel is an excellent choice.  Because of government subsidies, biodiesel is often $0.15/gallon less than plain diesel.  Biodiesel gets the same or better mileage and comes with no additional maintenance or other expense.  Look for a source, figure out the extra labor cost (if any) to get the truck to the appropriate facility, and make an informed decision.  Most wet fueling operations can provide biodiesel.  It is your tax dollars that are providing the subsidy, so you might as well get some benefit from it.

So, what is biodiesel?  Biodiesel is a blend of diesel fuel with organic materials other than ethanol, such as used cooking grease, canola oil, etc.  It is refined and cleaned before use.  Here is a link to an interesting slide show about biodiesel:

http://www.biodiesel.org/resources/sustainability/pdfs/Advance_Biofuel_Webinar_20100827.pdf

As usual:  keep doing the homework, and you can probably keep finding new places to save money.

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With fuel costs skyrocketing, and customers resisting additional fuel surcharges, it is all the more important to find areas to save money. Your decisions about how trucks are fueled can have a significant effect on your profitability. There are three choices for local operations:

1. Fueling off-site
2. Fueling at on-site facility
3. Contract for wet fueling

Each method presents positives and negatives, costs and benefits. By analyzing the variables, you can arrive at the best solution for your business. Let’s examine each one in turn.

1. Fueling off-site: This includes fuel card programs, off-site fueling facilities, etc. The direct costs are minimal, just the administrative cost of handling the cards and receipts. You will be paying retail price for the fuel, with some ability to shop around for a lower price, although sometimes the extra travel time eats up the savings. Many fuel card programs offer excellent reports for fuel tax purposes.

Indirect costs can be high. Consider the amount of time it takes a driver to fuel. There is (a) the added travel time to and from the fueling location, (b) the time spent dispensing fuel, (c) the time spent purchasing items from the convenience store, and perhaps (d) the time spent talking with other drivers who are fueling at the same time.

Example: you find it takes 10 minutes, on average, to detour for fuel. It takes 8 minutes to dispense the fuel, the driver averages 2 minutes in the store, and 2 minutes taking to others. This totals 22 minutes total. For a driver earning $15 per hour this costs the company about $20 after benefits and insurance (not including overtime). The 22 minutes cost $7.33, adding 18 cents per gallon to a 40 gallon fill.

2.  Fuel at on-site facility: The direct costs are large. The capital cost must be calculated and amortized. If you build a fuel station costing $35,000 and expect to spend $15,000 in maintenance and interest over five years, your per-year cost is $10,000 or $27.40 per day. In addition, there is either the time it takes a driver to fuel and chat, or the expense of having another employee do the fueling. Administrative expenses include administering the fuel station, sales and fuel tax reporting, etc. The up side is you can obtain fuel at wholesale, saving perhaps 20 cents per gallon off retail. You must calculate your expense and translate into a cost per gallon, then compare the expense to expected savings. If the cost/benefit analysis looks good, check into local laws concerning on-site fueling facilities before proceeding.

3.  Wet fueling: This refers to hiring a fuel supplier to fuel trucks parked at a single facility, usually at night. The direct and indirect costs are minimal. The supplier will provide details of how much fuel went into each truck. You will have no expenses for labor. The downside is that wet fueling usually, but not always, means a higher price per gallon. The price is usually expressed as a markup over a published, “wholesale” price. The markup could range from 10 to 30 cents per gallon. It is possible that this price, for larger fleets, could be less than average retail price. Even if price is higher, you must calculate your labor savings and compare to the added cost per gallon.

You may be surprised at how much savings can be realized with the wet fuel option. There are many other factors to consider. Some fleets have drivers pre or post trip their vehicles while fueling. Your municipality might not allow on-site or wet fueling. You may forge a great relationship, and discount, with a nearby retailer.

What’s the best fueling option for you?  Performing a cost analysis on the three methods will help guide you to the most cost effective choice.  Take a serious look at all three options, and you can not only make a good business decision but also know that you really looked at it from a number of angles.  Tell us in a comment what your experience has been with any of the options listed above.  We’d like to hear from you.

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