Fuel Cost Driving Large & Small Business Efficiencies
Large fleet carriers are not the only purchasers of fuel purchasing management software. With the rising price of fuel, mid-sized fleets and owner-operators themselves are driving the market for this software.
“Now we’re getting into the phase where the smaller and mid-sized companies are really going to be forced by the need to grab these competitive efficiencies for themselves. It’s going to require a new level of sophistication on their part. They’re being squeezed on one side by the competition and on the other side by rising fuel prices,” according to TMC information technology editor Christopher Driscoll, speaking with FleetOwner.
Route planning allows the largest fuel cost efficiencies. This software identifies the least expensive fueling stations along routes for vehicles’ fuel economy. This software is becoming a necessity for more and more owner-operators. Chris Lee, project manager for Promiles Software Development Corporation told FleetOwner, “It’s fair now for the owner-operator to look at the software specifically for the purpose of fuel optimization. Quite simply it’s because of the rising cost of fuel.”
Lee continued, “We get calls fairly regularly from clients who have a family member who decided not to purchase software. Six months to a couple of years later, they’re still in the business and their family member is not. That’s always a great feeling for us to know that we’ve been able to help somebody stay in business.”
Bill Ashburn, vice president of Prophesy Transportation Solutions told FleetOwner, “Often times we’re explaining what are the different implications of where you purchase fuel. It is critical to shop for the best rate so that you can maximize your discount (with a particular vendor). But even within a negotiated price network, people don’t realize that getting a penny off at the pump might be costing them if they don’t know the state tax.” Clients averaging 50-truck fleets are the main users for their FueLogic software.
Wood TV8 reports that other small businesses dependent on low fuel prices, such as cab companies, are also responding to rising fuel prices. “I’m going to have to raise my price if it goes up anymore...I’m not going to have a choice,” said Mary Mitchell, owner of Aces Taxi Company. Fuel prices are already 18 percent higher than this time last year, according to AAA. The highest prices last year peaked over Labor Day weekend at $3.21 per gallon. The government predicts fuel prices will peak in the area of $3.50 over the summer.
The waste industry also feels the pain of high fuel prices. Matt Terrell, Allied Waste Services’ general manager, told the Toledo Blade, “We’re definitely concerned, and we’ve been looking for efficiencies to cut costs. For example, we don’t let trucks idle more than five minutes in any single spot.” Furniture showrooms are also increasing their home delivery charges, while ambulance companies and florists wish they could add fuel charges but “...eat the cost” instead.
The purchase of motorcycles receiving 50 or 60 miles to the gallon, or mopeds that can get up to 100 miles to the gallon, have been recommended. Sean Devrou of M&M Motors told Wood TV8, “Everyone’s complaining about the high prices and trying to find a way out. And the neat thing is, now with these bikes, you can get 60, 70, 80, even 100 miles a gallon on a lot of these motorcycles.” Devrou recommended that first time purchasers should take a safety class.
Airfares have also risen with the price of fuel costs. Large airlines added $50 onto their unrestricted coach fares in most markets last week. USA Today reports that fares are expected to increase due to strong travel demand and adding passenger capacity, also.
Andrew Winterton, executive at consultant American Express Business Travel, told USA Today, that airlines have entered a prolonged time of more frequent fare increases, fewer ticket sales, and lower limits on the number of fares sold at the lowest published price. “If airlines are going to stay in business, they have to begin pricing for profitability,” Winterton added.
The fare efficiency of the airlines has come about as a result of the sudden jump in jet fuel prices after the Gulf Coast hurricanes. With one third of available jet fuel cut, jet fuel prices peaked above $125 a barrel. With this pressure, airlines began testing travelers and competitors with small fare increases, according to USA Today. “From a purely capitalist standpoint, high fuel prices have been good for the (traditional) carriers,” said Mark McLain, chairman of the Airline Pilots Association unit at Northwest Airlines.
The El Paso Times recommended several gas-saving tips to help reduce your gasoline consumption.
- Avoid accelerating fast or sudden stops in order to drive more efficiently. Avoid driving over the speed limit, also.
- Keep you car tuned up, change your oil at recommended intervals, ensure your tires are inflated to the proper pressure.
- Combine trips when possible to reduce wear and tear on your vehicle and fuel usage.
- You should purchase the most efficient vehicle for your driving needs also.
Refineries are currently shifting their production from winter blends to summer blends, according to the El Paso Times. “Some refineries have been off line in recent weeks, and this has shrunk the available supply of gasoline. The second factor is demand remains strong in most major markets around the world,” said Tom Fullerton, an economics professor at the University of Texas at El Paso.