Liquid assets on the move
Issue: Autumn 2008
Fuel is one of the biggest single costs for truck operators,often accounting for more than 30% of operating costs, so its management is vital. It is made the more important by an estimated 30% over capacity in the UK haulage fleet; which in turn brings intense competition and price pressure.
By Robin Dickeson
On average, a typical, five-axle, European specification, 40 tonne truck, doing 80,000 miles a year will use around 55,000 litres of fuel, costing over £50,000. Over a generous 10 year life that 40 tonne truck will deliver goods worth some £100 million and cost nearly £750,000 to run. Costs for a six-axle, 44 tonner will be a little higher and it will carry a little more.
Some 40% of its operating costs will go to the Government as tax revenue. But the issue of the Government’s tax take and the haulage industry’s contribution to the nation’s economy and to the Chancellor is another story for another time. In the meantime, for a fleet of 50 trucks; the annual fuel bill will probably be around £2.5 million, so fuel management is a big bucks deal. Most operators know that and use increasingly sophisticated tools to help them. But surprisingly and sadly, all too many firms still fail to measure and monitor fuel use, let alone properly manage a vital asset. Though of course, these firms are unlikely to be with us in the future.
There are few excuses for this failure to manage fuel, as the number and variety of fuel management tools is huge and growing rapidly. These vary from the fuel cards actively promoted by most major fuel suppliers through to sophisticated asset management systems, increasingly linked to real-time truck tracking and diagnostic and driver monitoring systems. Increasingly, we also see pressures to measure, monitor and cut carbon footprints. Those pressures will grow and affect individuals and organisations. Transport firms are already being asked to define their carbon footprints when pitching for business, particularly where local authorities are involved, or if the customer has a high public profile. That pressure will grow.
Importantly, cutting your carbon footprint will pay, because it is a direct consequence of cutting fuel consumption. For every litre of diesel you burn, you release 2.63kg of carbon dioxide. That relationship is fixed and means that the only way to cut CO2 is to cut fuel use. So save cash and you help save the planet.
Day-to-day fuel use management is often down to the driver. He or she is the front line and his or her foot on the gas pedal almost certainly has the greatest influence on an individual truck’s fuel consumption. Because of this, most truck makers and big operators run driver development schemes to help drivers improve their efficiency.
The issue of the driver’s contribution is so important that even the Government has got in on the act; its Freight Best Practice unit has developed its Safe and Efficient Driving programme with a growing range of Safed leaflets and web-based advice, including case studies.
Theirs, vehicle makers and many big operators’ experience show that an efficient driver can save between 10 and 15% fuel consumption over a less efficient colleague. Go back to that £2.5 million annual fuel bill and even a 10% saving is far too good to miss, particularly when the investment to secure it is very, very modest.
But the benefits of driver development programmes can leak away unless the driver’s performance is properly measured and monitored – another opportunity for fuel management. Fuel card systems will at the very least measure the amount of fuel that a driver draws and also means that a driver doesn’t need to carry and account for cash. On-board systems will measure the amount that an individual truck uses.
Versions of both can and do report via the internet in real-time, with their data included in wider asset management systems that track vehicles, reporting on everything from vehicle position to load temperature or engine health.
These wide ranging systems also offer the opportunity to very precisely measure the costs of each job. Such data can inform decisions about fuel buying; for instance the pros and cons of bunkered fuel versus supplies bought at truck stops. In any business cost management is basic and can make the difference between the success or failure of a contract or even the entire business. Effective fuel management is obviously vital, as it tackles probably the biggest single part of an operator’s costs.
And remember that if you are managing your fuel well, some of your competitors will be doing even better. Remember too that 30% overcapacity and the price pressures that brings. Competition is a powerful spur to development, and so is the knowledge that even if you don’t, your competitors will find a way of saving costs and undercutting what you’re doing. Whatever else you do about fuel management, doing nothing is not an option, and you’ll need to continually review what you are doing, if you want to stay in business. And the increasingly topical and important issue is of course the environment, with more and more firms asking their suppliers about their carbon footprints.
To even begin to answer those questions you need to know about fuel consumption, as there is a direct link between fuel used and CO2 emissions. That is another one that won’t go away.
● Robin Dickeson is manager, commercial vehicle affairs at the Society of Motor Manufacturers and Traders Limited (SMMT) and
editor of the organisation’s weekly newsletter, Transport News Brief.
For further information, contact the SMMT on Tel: 020 7235 7000 or visit: www.smmt.co.uk
Published: 06/12/2009
