Fleet News

Fuel cards: 'Free' gifts can mean extra costs for fleets

IN life, if something is labelled as 'free' there is usually a catch. Buy one, get one free often means an over-priced product and 'free' holiday vouchers could mean you get to the Caribbean – but during the monsoon season and staying on a building site.

The same reasoning could be applied to loyalty cards. Shop at a particular store and you will be offered a host of goodies including free flights, bottles of bubbly, discounted products and trips to theme parks. But where is the catch?

Many fuel providers offer customers the chance to accumulate points by filling up at a particular station.

But as far as fleets are concerned, loyalty cards could be persuading drivers to travel miles out of their way – spending company money – to go to expensive petrol stations in an attempt to scratch together enough points to eventually win their goodies.

It's a case of misguided loyalty, according to Clive Forsythe, Arval PHH's sales director.

He said: 'In order to accumulate bonus points, drivers often have to deviate from their usual route to fill up at their nominated petrol stations. This can result in not only paying potentially higher pump prices but also incurring the extra fuel consumption costs in driving there.'

It is the actual detour taken by the driver which can bump up fleet fuel bills rather than the 1p or 2p added to the cost of fuel, according to Teresa Maynard, head of fuel at Castle Fuel Cards.

She said: 'Loyalty schemes add millions of pounds to the total UK fleet fuel bill every year but the problem is easy to ignore at the level of the individual driver.

'There are two potential extra costs when drivers collect loyalty points – higher-priced fuel and the cost of making detours to participating sites. Of these, the latter is the most significant. If you add salary to fuel and running costs, a detour made during company time could see an employer paying out at well over £1 per mile.'

If fleets are already operating a fuel card for payments, then a reporting system will highlight which stations are being used.

Forsythe believes having such a system could show whether filling stations are being chosen for their loyalty card benefits, for their convenience or for the price of the fuel.

He said: 'The key to reducing the impact that loyalty cards may have on fuel costs is to have an effective fuel management reporting system and a clear fuel policy in place. Efficient fuel management and, in particular, the use of fuel cards can help in assessing the effect, if any, of employees using loyalty cards.'

By completing accurate fuel reporting, fleet managers can keep fuel expenditure under control, which is the main issue over whether loyalty cards are being used, according to one fleet consultancy.

A spokeswoman at McKinnon & Clarke, a utilities consultancy which completes fuel audits, said: 'The price of the fuel is the key issue and this should always be the focus for fleet managers.'

It is well-known that supermarket chains offer cheaper fuel than the other leading brands, often to woo customers into the supermarket, with many offering loyalty cards with the promise of discount vouchers.

But even this is not set in stone. Research completed by Castle Fuel Cards showed price discrepancies just a few months ago when fuel prices began to rocket.

When the group checked fuel prices across the country for its monthly regional price report for customers in July, it showed that as prices began to drop after the surge, with one supermarket's prices staying 1-2p a litre higher than two of its rival chains.

If a fleet uses fuel cards, it is effectively buying fuel directly from the provider rather than an individual employee using a credit card, according to Maynard. She believes it is up to the individual fleet to decide whether policies are needed to control drivers' spending.

She said: 'If a fleet uses fuel cards, the fuel belongs to the company from the moment it goes in the tank, giving the company a legitimate right to lay down policy guidelines about how and where its drivers should refuel.'

However, the idea of introducing additional policies stipulating where drivers can fill up could create more work for fleet managers. Keeping a check on which stations drivers are using would also require regular maintaining.

Forsythe added: 'It is difficult to see how any employer could ban their drivers from using loyalty cards. As long as they have an effective fuel policy in place and the management reporting to check that employees are adhering to this policy, then employees should be free to make use of them.

'Any attempt to ban or clamp down on the use of loyalty cards would cause disruption and would be difficult to police. Removing this perceived benefit could well damage staff morale.'

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