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The following article discusses how government fleets around the US are successfully managing and reducing fleet fuel expenses. This Part One of a Series of Articles. Next to to depreciation, fuel is the second greatest public sector fleet expense. Municipal, county, and state fleets reveal their best practices in reducing fleet fuel expenses.
Identify underutilized vehicles and equipment with high maintenance costs
The City of San Antonio’s Fleet Management Department reviews fuel requirements and usage, vehicle mileage, and fleet maintenance costs to identify underutilized vehicles and unnecessary equipment with high maintenance costs with fleet tracking telematics equipment. San Antonio’s fleet is comprised of approximately 5,050 vehicles and equipment, mostly sedans (1,500) and specialized equipment (3,000-plus), including refuse trucks, trailers, and off-road equipment. The city has been successful in reducing the size of its fleet and when necessary purchase more fuel efficient fleet vehicles.
“In an effort to further reduce fuel costs and emissions, the City is currently evaluating the introduction of both E-10 (10-percent ethanol) and B-5 (5-percent biodiesel) fuels,” said Florencio Peña, fleet manager, City of San Antonio. “Compressed natural gas (CNG) is used to power 30 of the City’s side-loader refuse trucks, and propane has been used for several years to power both vehicles and equipment.”
Replaced outdated fuel card reader systems with an automated fuel fleet management system
FiedlLogix CEO, Yukon Palmer, will be speaking at the Green Fleet Management Conference on Wednesday, October 13, 2010, in Palo Alto, CA put on by Agrion. In his discussion, Yukon Palmer, a green fleet telematics expert, will provide attendees with valuable insights, ideas, and examples to help fleet managers create the most cost-effective and environmentally conscious Green Fleet possible for your company. Telematics is the use of technology to manage fleet vehicles and Mr. Palmer will discuss how it can help make your fleet greener and more efficient.
Mr. Palmer’s speech will reiterate that in light of today’s environmental issues and corporate responsibility expectations, the concept of Green Fleet Management should be important to all fleet managers, whether you have a fleet of one or one thousand. Developing and managing a green fleet requires a thorough knowledge of available products, technologies, and an in-depth cost-benefit analysis, plus much more.
A green fleet of taxi cabs is expected to develop in Salt Lake City.A recently proposed Salt Lake City ordinance will make the city’s Taxi Cab fleets lean, clean and “green.” The taxi cabs will be installed with GPS fleet tracking systems and will follow specific airport and evening schedules. The city has been working to improve its taxi cab fleet management issues for more than five years.
The proposed ordinance will be discussed further in September. The ordinance will place all city taxi vehicles under the authority of the Salt Lake City International Airport. “At any one time, we have 50 taxis that we know of, just sitting at the airport, waiting two, three or four hours for a fare,” says Salt Lake City Council Chair J.T. Martin. “We have enough taxis. We just don’t have them in the right place at the right time.”
Installing a fleet GPS management system is expected to enhance the city’s ability to optimize the city’s taxi cab drivers and vehicles. The city plans to develop green, eco-friendly operating and ADA compliant vehicle standards under the new ordinance. The fleet GPS management system will enable dispatchers to send out the nearest vehicle which will improve customer service, reduce fuel costs and vehicle emissions and ultimately put more money in taxi driver’s pockets.
Many changes are coming this year for the fleet trucking industry. CSA Regulations have already caused a great deal of uncertainty and fear for many fleet operators, but do not fret. Based on our research, the actual impact is expected to be less than the potential and most feared impact. New legislation is always daunting, but the doom-and-gloom scenarios you may have been hearing are really not worth losing sleep over.
In the short term, until it becomes clear what the roadside inspectors are going to do differently, how the scoring systems are going to work, and what the auditors will do if and when they visit – there’s definitely going to be some confusion . This uncertainty puts fleet operators on edge and can make it more difficult to make your next business decision. Because of CSA companies may start to freeze their processes, to pull back from expansion plans, or to delay on hiring new truck drivers. If enough fleet operators take this cautious stance, in the short term, it will produce a real constraint on trucking capacity, which will in turn increase the upward pressure on truck driver pay and freight rates.
When Interwest Construction Inc. wanted to catch the thieves that had stolen one of their trucks before they stripped it, they activated the fleet vehicle’s GPS tracking system and the chase was on. FieldLogix, an industry leading GPS vehicle tracking device and green fleet management system, was successfully utilized to recover the missing fleet vehicle in just a few hours.
According to Kristal Wagner of Interwest Construction, Inc., “We had a truck stolen on Monday during the night. Tuesday morning, when the foreman was panicking & calling the sheriff, I used the the real-time GPS tracking device to pull up the vehicle’s exact location and gave the Sheriff the information. We recovered the truck within a couple of hours. Some small items that weren’t valuable were stolen from the truck, but the vehicle was not harmed at all!”
GPS fleet tracking systems are recommended to all drivers by the National Insurance Crime Bureau (NICB) to prevent motor vehicle theft. According to NICB, a car is stolen every 26 seconds in America. Nearly half of these are never recovered, and are commonly scrapped for parts or smuggled to another country. NICB’s vehicle protection approach recommends four layers of security based on the risk factors pertaining to a specific vehicle. Vehicle Tracking Systems are one such layer, and are described by the NICB as “very effective” in helping police recover stolen vehicles. Vehicle GPS tracking systems are an important and integrated part of the “layered approach” to protecting fleet vehicles.
Real-time fleet tracking helps HVAC, plumbing and electrical service companies manage overall mobile worker performance, reduce expenses and increase customer satisfaction. Whether you manage a fleet of 5 vans or hundreds of fleet vehicles, GPS fleet tracking solutions can improve your bottom line. If your residential or commercial HVAC company doesn’t have a GPS tracking device, then you may be missing a valuable opportunity.
HVAC Challenges & Controlling Operating Expenses with GPS Tracking:
Lack of accountability for drivers – Having a widespread fleet makes tracking worker location and activity. GPS fleet tracking can make your mobile employees and contractors more accountable. Improving employee performance will not only make your customers more happy but it will make your drivers safe and at less risk of an accident.
High Cost of Fleet Vehicle Maintenance and Insurance – Managing a large group of fleet vehicles has high operational costs for most HVAC and building service contractors. Many HVAC managers have trouble keeping up with vehicle maintenance logs because they have to wait for drivers to manually submit their mileage records. But with a vehicle tracking system, electronic driving records are available 24/7 with just a click of the mouse. A modern GPS fleet management system can also help you to get better resale values when it’s time to sell or trade-in vehicles. Also, installing a fleet tracking device can instantly reduce your company’s insurance premiums and will help to immediately improve your ROI.
Have you heard about the 9th annual Fleet & Asset Management USA 2010 Conference & Expo on November 17-18 in Atlanta, GA? It is an important forum for the commercial Fleet and Telematics industry.
The program will have speakers from the Department of Transportation (DOT), NHTSA, John Deere and more.
Here is a list of topics that will be covered at the Fleet Management Show.
- Innovative Joint Ventures Elevate Industry Benchmarks: Assess which future partnerships will enable your business to surpass competition and achieve supremacy through deliverance of next-generation products and services.
- Commercial Logic of Green Solutions Unearthed: Capture the fiscal benefits fundamental to adoption of green-fleet initiatives by positioning solutions to deliver competitive idle-time and route optimization capabilities to help fleets slash costs! Learn how green GPS fleet tracking systems like FieldLogix can help you go green and save green.
- Create the Winning Formula for Insurance Telematics : Discuss how best to create successful alliances with the insurance community and see how resulting products and services will be integrated within the fleet space.
Fleet Cost-Reduction Strategies: Direct Expenses
Reduce fuel costs. Fleet operators should focus on miles per gallon. Fuel costs are a large direct operating expense, especially for fleets with high mileage each month. Many fleet managers approach fuel cost savings by looking for purchase discounts, which aren’t really feasible unless the fleet can fuel in volume at a single site. Fleet fuel cards can be used to direct driver purchases away from premium fuel, which offers some benefits, but the most significant fuel savings come from selecting more fuel-efficient vehicles. Moving away from heavy vehicles and larger engines can provide 30% to 50% fuel economy increases. Using a fleet tracking system to identify poor driving behavior that burns excessive fuel, such as speeding and unnecessary idling can reduce fleet fuel costs by approximately up to 12% per year. Also, a fleet fuel card will help move 8% of fuel purchases away from premium fuel.
Secure the best fleet financing. Proper vehicle financing should absolutely be considered. Leasing vs. ownership of fleet vehicles is a common funding decision for fleet managers, and the economic analysis often ends in a tie. The decision to lease or own frequently hinges simply on balance-sheet considerations.
Fleet Cost-Reduction Strategies: Direct Expenses
Sell used vehicles in competitive resale markets. Most fleets value their used vehicles based on market values published from various industry sources like KBB. Fleet managers are usually satisfied with the sale of an individual fleet vehicle if they realize close to the market average or, worse, an amount more than book value. This approach ignores that those published market values are the mean of a distribution of high and low prices. Far too often in a negotiated sale, the purchasing vehicle dealer or driver knows the condition of the vehicle better than the seller, and pricing it at market average gives the upside to the buyer. Only by pricing negotiated sales above the market average or by selling in a competitive bidding market with a larger population of buyers can sellers actually capture above-the-mean value for themselves. This approach can provide an additional 5% in average resale prices, up to $75,000 per year.
Reduce accidents and insurance costs. Typically most insurers will reduce your insurance premiums by over 30% if you install a GPS fleet tracking system. Moving beyond depreciation to other operating costs, fleet vehicle accidents require an average of $1,500 to $2,800 in repairs, but total accident costs are perhaps closer to $11,000 per incident when indirect costs such as injuries, liability, property damage, and workers’ compensation are included. Typical fleet annual accident rates range from 15% to 40% of all vehicles, so the savings opportunities by reducing accidents can be substantial. By mandating pre-employment and annual motor vehicle records checks, requiring safe-driver training, and enforcing a safety scoring system, your fleet can reduce its accident rate by over 15% and save up to $375,000 per year.
Fleet Cost-Reduction Strategies: Direct Expenses
Use the right vehicle with the right equipment for the job. Feature and model creep are common causes of excess fleet vehicle depreciation. Drivers love four-wheel drive, extended cabs, plush leather seats, V-8 engines, and all kinds of other features. While providing fleet vehicles with those options may be good for morale and can be a good business decision, it will add to the depreciation cost. Trading in older vehicles for more fuel efficient fleet vehicles is also a good decision and this will be discussed further. Also, choosing fleet vehicles without regard to expected resale value can result in higher depreciation. For example, if you convert fleet vehicles from SUVs to sedans and remove some unnecessary amenities you can save up to hundreds of thousands of dollars in fleet expenses.
Negotiate well with vehicle manufacturers. After selecting the right vehicle, acquire it for the best possible price. Vehicle manufacturers compete aggressively for market share and have significantly increased purchase incentives for fleet customers who buy new vehicles. By sourcing with only one manufacturer, your fleet can improve net discounts by approximately 5%, reducing depreciation by up to $225,000 per year.