automotive fleet I april 201014

An effective fuel management program takes a holistic approach, involving the fleet manager, drivers, vehicle manufacturers, and alternative-fuel producers.

BY CINDY BRAUER

Executing a successful fuel manage-ment strategy requires a toolbox of

tactics that, in combination, can help con-trol or mitigate the escalating — and fluc-tuating — costs of a top fleet expense. This tactical approach involves the fleet man-

ager, drivers, vehicle manufacturers, and alternative-fuel producers.

In addition to best practices, out-of-the-toolbox thinking is often effective in min-imizing the impact of prices expected to rise again this year near, if not beyond, the $3 per gallon milepost.

Fuel Card Capabilities ExpandOften, new ways to deploy familiar and

proven tools help in the ongoing effort to manage fuel costs. Developed 25 years ago, fleet fuel cards initially provided wide acces-sibility, expense controls, and Level III data, which includes line item detail, fuel grade, cost per gallon/unit, odometer reading, and driver/PIN/vehicle number. The cards now are commonly used expense management

tools integrated in fleet management pro-grams. Today, with increasingly advanced technologies, these tools offer critical data mining and control capabilities.

“Fleets that are most efficient in the mar-ketplace are taking advantage of real-time data capture to monitor fleet activities,” said Bernie Kavanagh, VP, corporate payment solutions for Wright Express, a fuel man-agement services company.

“The tools available range from alerts to fuel-price mapping…[with] immedi-ate impact on the bottom line for a fleet,” noted Kavanagh.

Much of the new fuel card technology is integrated with mobile communications systems. GPS programs providing real-time vehicle location can pinpoint the nearest

Building aFUELMANAGEMENT

TOOLBOX

tools available to develop effective fuel management strategies include:● fuel card use, data mining, and card controls.● New technologies to improve traditional cost controls.● out-of-the-box approaches.● eco-driver training.● oem-developed advanced vehicle technologies.● alternative fuels.

At A glANCE

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fuel maNagemeNt

low-cost fuel station. Card controls are growing more

sophisticated, according to Bob Cavalli, VP sales, indirect and co-brand, U.S. Bank Voyager Fleet Sys-tems Inc.

“The ability to control purchas-es at point of sale is far more exten-sive than five years ago,” said Cavalli. “Fleet managers have a huge menu of card con-trols to pick and choose those that best suit their fleet.”

These controls could go beyond time of day, week day, daily purchase limits, non-fuel purchases, and fuel grade to GPS real-time data and authorizations.

“I can see GPS technology tied into a driver using other than a low-cost pro-vider. The fleet manager would get a re-port and the driver is held responsible,” said Cavalli.

Controls can be “hard” or “soft,” he ex-plained. A soft control would authorize two purchase swipes a day, but require a phone call for an exception on a third swipe. A hard control would simply pro-hibit the third swipe altogether.

Cavalli recommended capturing the fuel card Level III data and, “using all card controls available, determine what factors can’t be controlled and create daily exception reports.”

The caveat in structuring fuel card controls and exceptions, not-ed Cavalli, is to “remember the driv-er’s mission. You don’t want to make the driver’s job more difficult.”

As technology progresses, Kavanagh en-visions such new fuel management tools as RFID, single-source data warehousing, and advanced telematics solutions.

Exploring Out-of-the-Box SolutionsSome creative fuel management tools

aren’t found in the traditional toolbox. Kar-en Healey, PHH Arval director of product management, responsible for environmen-tal, risk, and safety services, cited one such creative solution.

According to Healey, one company’s truck fleet supports service technicians who car-ried product parts and equipment in their vehicles. By shipping service parts directly to the customer, the company downsized

to smaller service trucks, saving ve-hicle and fuel costs.

Healey also described expand-ed use of routing software to trim fuel costs. Companies have mined deeper into the software to identi-fy rush-hour bottlenecks and re-route service and delivery drivers

to less-congested streets. Another company schedules its product delivery fleet trucks to store sites during off-peak hours.

“The driver isn’t sitting at the store wait-ing a turn to unload the product,” said Healey. The trucks avoid costly idling time, and improved efficient delivery times can add an extra stop to the truck’s daily schedule, Hea-ley noted.

To uncover wasted fuel expense, BNSF Railway in 2009 piloted a “grass-roots,” one-on-one program with drivers, reported Todd Nicholson, direc-tor of strategic sourcing and supply.

BNSF, through its principal operating subsidiary, BNSF Railway Company, op-erates one of the largest North American rail networks, with about 32,000 route

miles in 28 states and two Canadi-an provinces.

The nearly 7,800-vehicle BNSF fleet of light-, medium-, and heavy-duty trucks supports crews that maintain the company’s rail infra-structure.

With the help of its fleet man-agement company Automotive Re-

sources International (ARI), the BNSF pilot program targeted 1,000 vehicles. Drivers with high mpg or cost-per-mile records were identified through fuel card reports and exceptions.

An ARI staffer personally contacted each identified driver to review fuel expense-re-lated issues, such as tire pressure monitor-ing, fuel type, non-fuel purchases, idling, maintenance, and cargo weight.

“It was a normal discussion with each driver to learn what’s going on and sug-gest best practices,” explained Chris Bar-tley, assistant manager, account manage-ment at ARI.

“Fuel card programs are data-rich, but you can’t just send exception reports,” said Nicholson. “The key was reaching out and

talking to the person individually. You re-ally have to have a real human being sit-ting down in conversation to change driv-er behavior. Drivers forget e-mails and other non-personal communications. A personal discussion has greater and last-ing impact.”

In the first six months of the pilot pro-gram, vehicle mpg increased and premium fuel and non-fuel purchases decreased.

“One of the areas that we targeted had a history of fraud incidents involving the

fuel card. After the pilot program, we have had no incidents of fraud,” said Brenda Thowe, BNSF vehicle fleet manager.

“Word spread like wild fire” among drivers that someone was watching and their personal actions mattered, Thowe explained.

The pilot program produced $50,000 net savings in the first six months, ac-cording to Bartley. “And those savings oc-curred when fuel prices were lower. With this year’s increased gas prices, the savings should be more.”

The program population will expand to 2,500 vehicles, said Nicholson.

Reducing fuel-consuming unnecessary vehicle idling simply through driver “coun-seling” proved more difficult for the BNSF fleet operation.

“We’ve been working on idling for some time, initially through communication,” said Bartley. “Now, we’re going to more of a technology fix.”

BNSF vehicles are upfitted with power-on-demand engine features and idle tech-nologies that slow the engine to regular idle rather than the faster rate PTO requires, Bartley explained.

Green initiatives often provide fuel cost savings. The general contracting and con-struction company DPR instituted a cor-porate green policy targeting a 25-percent reduction in the company’s carbon foot-print by 2015.

To help meet the goal, fleet administra-tor Terri Smith partnered with fleet man-agement company Wheels Inc. to devel-op a vehicle selection program, expected to also produce significant fuel savings. The Redwood City, Calif.-based DPR will replace the company’s Ford F-150 trucks

thOwE

hEalEy

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(about two-thirds of its total 456-unit fleet) with Ford F-150s equipped with EcoBoost engine technology. The first replacements are expected to begin by early 2011.

All company vehicles must meet a 20-mpg mandate, said Smith. Drivers in large and mid-size SUVs will transition to more fuel-efficient vehicles, and all sedan driv-ers will be moved into hybrid vehicles, in-cluding Ford Fusion, and Toyota Camry and Prius models.

Switching to EcoBoost technology is expected to pay for the advanced engine in fuel savings in one year. Future savings will help fund the transition to hybrid ve-hicles, according to Smith.

Eco-driver training KeyEven when comprehensive vehicle se-

lection, right-sizing, fuel card data min-ing, and exception report programs are deployed, effective fuel management ultimately depends on one key play-er: the driver.

Common driver behaviors — “jackrab-bit” starts and stops, unnecessary idling, ex-cess weight, inaccurate tire pressure, vehicle maintenance neglect, etc. — can drag down mpg rates for each driver. Collectively, a fleet of fuel-wasting drivers can total thousands of dollars in fleet fuel expense.

Development of eco-driving techniques and training programs over the past few years has heightened awareness of “fuel-ish” driving habits.

Driver training is an underutilized fuel management tool, said PHH’s Healey. In-struction in fuel-efficiency behaviors that improves mpg by just 5 percent in a 1,000-ve-hicle fleet can save $180,000 in annual fuel costs, she pointed out.

Online resources provide ready and eas-ily accessible help in promoting fuel-smart fleet driving. For example, the Alliance of Automobile Manufacturers sponsors www.ecodrivingusa.com. Designed for driver use, the site offers an eco-calculator for in-dividual eco-scores, interactive eco-quiz, a virtual eco-road test, video presentations, and a 20-item list of driving tips.

The Environmental Defense Fund (EDF) Innovation Exchange site — http://edf.org/greenfleet — presents several fleet-related green driving resources. An online module

introduces drivers to fuel-smart practices. To help fleet managers implement an eco-driving campaign, a collection of online communications templates includes:

● E-mail announcement to drivers from the CEO.● Online announcement article for the company Intranet.● Quarterly driver performance report.● Fuel-smart driving pledge.● List of fuel-smart driving behaviors.Training that truly changes driver be-

havior must be repetitively reinforced and consistent. A one-time eco-driving session will be soon be forgotten by busy driv-ers focused on their jobs. An EDF online handbook for fleet managers seeking to operate effective driver engagement pro-grams advises:

● Use a driver-respected, credible com-pany source to issue eco-driving communi-cations. Draw upon respected third-party sources (Department of Energy, J.D. Pow-er, etc.) when presenting facts.

● Communicate with drivers through channels they already utilize, e.g., at annu-al sales or safety meetings, and the compa-ny’s Intranet site.

● Leverage existing online or phone-based fleet management tools; for exam-ple, post a “driving tip of the day” on fleet odometer-reporting Web sites.

● Piggyback on regular electronic news-letters, e-mails, or mailings, such as pay-roll & benefit notices or new-vehicle pa-perwork.

● Provide drivers visual prompts, dis-played in vehicles — on the sun visor or in cargo areas, for instance.

In addition, well-publicized and imple-mented eco-driving competitions among drivers, business units, etc., can foster per-manent fuel-efficient driving habits. Tracked by fuel card or telematics data, winners can be rewarded with recognition, gift cards, or special perks.

Vehicle technologies advance Responding to increased consumer demand in the face of rising fuel pric-es, as well as impending new federal standards, automobile manufacturers

automotive fleet I april 2010 19

The Wright Express®

Universal Fleet Card is good just about anywhere

your drivers go. It’s accepted at over 90% of retail fuel locations – including 50,000 diesel and 45,000 U.S. service locations – plus 2,100 fueling sites in Canada.

Use our powerful Purchase Control tools to help

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www.wrightexpressnafa2010.com

AF0410wex_01.indd 1 3/16/10 2:25:14 PM

fuel maNagemeNt

are tackling fuel efficiency on sever-al fronts. Car and truck OEMs contin-ue to develop advanced transmission and engine technologies, improved ve-hicle aerodynamics, and lighter-weight parts and materials.

A brief review of major vehicle man-ufacturers:

Ford. EcoBoost technology, deliver-ing up to 20-percent improvement in fuel economy, will launch in 2.0L I-4 engines in North America on SUVs and CUVs, and in a 3.5L V-6 on the Ford F-150. Twin inde-pendent variable camshaft timing (TiVCT) will also promote fuel efficiency in select-ed Ford models.

A new 6.2L V-8 gasoline engine and an all-new Ford-built 6.7L V-8 turbo-charged die-sel engine deliver best-in-class fuel economy in the 2011 F-Series Super Duty trucks. The work trucks also feature an all-new 6-speed transmission and Live-Drive PTO.

The Ford Fusion gas-electric hybrid, with an expected 700 miles per tank of fuel, de-buted this year. The Ford Transit Electric small commercial van was launched at the Chicago Auto Show in February.

Ford anticipates delivering a electric Fo-cus passenger car in 2011 and a next-gener-ation hybrid and plug-in hybrid in 2012.

General Motors. The Ecotec 2.4L I-4 en-gine helps deliver best-in-segment highway fuel economy in the all-new 2010 Chevro-let Equinox of 32 mpg and a highway range

of up to 600 miles. GM’s small four-cylin-der engines (1.0L to 1.4L) will be available in the Chevrolet Cruze and two addition-al models in 2011.

While general production is scheduled to begin later this year, 100 all-electric Chev-rolet Volt sedans are being tested in utility fleets throughout the U.S.

The Vortec 6.0L V-8 engine, standard in 2011 Chevrolet Silverado heavy-duty trucks, provides class-comparable fuel economy. The 2011 Silverado diesel models offer fuel efficiency with a new 6.6L Duramax turbo-diesel and Allison 1000 6-speed automatic transmission powertrain. The diesel engine is also B-20 capable. In addition, the Dura-max diesel will power Chevrolet Express and GMC Savana full-size vans.

GM offers hybrid models in the GMC Sierra and Yukon, Cadillac Escalade, and Chevrolet Silverado and Tahoe.

Chrysler. A revamped powertrain line-up will contribute to overall improved vehi-cle fuel efficiency of more than 25 percent in 2010-2014. The vehicles will incorpo-rate Fiat powertrain technologies such as Multiair, direct injection, turbocharging, and transmission systems.

Near-future Chrysler models will feature new 1.4L four-cylinder and flex-fuel 3.6L V-6 Pentastar engines. Fiat’s 6-speed dual dry clutch transmission, delivering 10-per-cent improved fuel economy, will migrate to Chrysler Group vehicles in 2010.

automotive fleet I april 2010 21

CHOOSINg FUEl-EFFICIENt vEHIClESvehicle selection best practices include right-sizing fleet vehicles to their applications, mov-

ing to four-cylinder engine models whenever possible, and choosing the most fuel-efficient vehicles. for the latter task, the federal government provides online resources.

the Department of energy, environmental protection agency, and the office of energy efficiency and renew-able energy partnered to publish the 2010-MY Fuel Econ-omy Guide, www.fueleconomy.gov.

the 30-page guide lists mpg, engine size, transmis-sion type, fuel type and actual costs, and mileage range for cars, light-duty pickups, and vans. alternatives to gas-oline-powered vehicles are also covered in the guide, in-cluding hybrid-electric, ethanol flex-fuel, diesel, CNg, and fuel cell vehicles.

the annual fuel cost estimates in the 2008-2010 elec-tronic fuel economy guide are updated weekly to match the energy information administration’s current national average prices for gasoline and diesel fuel.

fuel maNagemeNt

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2010-MY Chrysler, Jeep, Dodge, and Ram vehicles offer active transfer case and front-axle disconnect, providing a fuel economy improvement of 1 mpg (com-bined city/highway).

The automaker is developing a Ram 1500 with traditional hybrid capability for 2010. Chrysler LLC is also develop-ing concept cars with electric motors: an electric performance sedan, the Chrysler 200C; Chrysler Town & Country mini-van; Jeep Patriot, and Wrangler Unlimit-ed. A fifth concept car, the Dodge Circuit, is a true electric vehicle.

Toyota. The third-generation 2010 Prius and the 2010 Lexus HS 250h hybrid mod-els were launched last year. The 2010 Prius Plug-in Hybrid debuted in North Amer-ica last fall.

Honda. The all-new 2010 Honda In-sight hybrid is powered by a 1.3L i-VTEC gasoline engine and a 10-kW electric mo-tor that delivers an EPA-estimated 40/43 city/highway mpg.

In addition to continued development of the FXC Clarity fuel cell vehicle, Honda is working on expanding the refueling in-frastructure to support the Civic GX nat-ural gas-powered sedan.

alt-Fuel Potential unrealizedEven as gasoline and petroleum diesel

prices fluctuate in the short term, the era of $2 per gallon is over. Fuel and econom-ic experts expect prices to continue their long-term rise in the next few years, im-pacted most heavily by dramatically in-creasing demand in China and India.

Issues of fuel independence, environment,

and government mandates are prompting development of alternative fuels and the vehicles they power.

According to the latest available Depart-ment of Energy figures (see Overall Aver-age Fuel Prices chart), U.S. pump prices for ethanol and natural gas have been less than gasoline or petroleum diesel, while B-20 biodiesel and propane are less than 10 cents more in price.

Adequate fueling infrastructure, eco-nomic production feasibility, and higher alt-fuel vehicle prices remain significant obstacles in widespread use of alternative fuels in the U.S. Federal initiatives, includ-ing the American Recovery and Reinvest-ment Act of 2009 and clean energy poli-cies, offer tax incentives and grants that aim to ease the roadblocks.

In addition, states and companies such as GM, Honda, and alt-fuel producers are partnering to develop wider alterna-tive-fuel accessibility. Prompted by reg-ulatory mandates, the public sector leads in adopting and promoting alternatively powered vehicle use.

Fuel management vendors can assist fleets in surmounting alt-fuel availabil-ity difficulties. For example, said Ka-vanagh of Wright Express, his company “is helping one of our largest fleets meet a corporate mandate around alt-fuel us-age by looking at the marketplace and helping the customer deploy the right vehicles to the areas where alt fuels are available. This allows for the most effi-cient routing and less driver diversion, while still meeting the mandate around alt-fuel usage.” AF

automotive fleet I april 2010 23

OvERAll AvERAgE FUEl PRICES – 10/09

FUEl

NAtIONwIDE AvERAgE PRICE

10/09

NAtIONwIDE AvERAgE PRICE

7/09

CHANgE IN PRICE 10/9 vS.

7/09UNItS OF

MEASUREMENt

gasoline(regular) $2.64 $2.44 $0.20 per gallon

Diesel $2.79 $2.54 $0.26 per gallon

CNg $1.86 $1.73 $0.13 per gas/gallonequivalent

ethanol (e-85) $2.27 $2.13 $0.14 per gallonpropane $2.69 $2.48 $0.21 per gallonBiodiesel (B-20) $2.88 $2.69 $0.19 per gallonBiodiesel (B-99-B-100) $3.19 $3.08 $0.11 per gallon

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With Wright Express you have a partner with you every step of the way.

Our fleet fueling tools are current and robust and our dedicated account

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Wright Express Drive-in, Detroit, MI NAFA 2010

www.wrightexpressnafa2010.com

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