Fleet News

Fleet management: Tackling the impact of ever-increasing fuel costs

Without fuel, a fleet of vehicles isn’t going anywhere.

Apart from the vehicles themselves, a source of power is essential to all fleet transport.

But sourcing and using fuel is rarely straightforward, with a plethora of issues surrounding the management of fuel itself and the drivers who use it.

Cost has the most obvious impact on fleets. Oil prices are through the roof, and UK tax and duty on fuel – already the highest in Europe – has just got higher.

Prices at the pump now regularly top £1 a litre for both diesel and petrol, and fleets are struggling to absorb the extra costs.

“The rise in fuel costs since January has added around £2,800 to the monthly fuel bills of fleets of 200 vehicles covering 1,000 business miles a month,” says Richard Schooling, commercial director for Alphabet.

“To put that amount back on to businesses’ bottom line, drivers would need to squeeze nearly five more miles out of every gallon, cut their monthly business mileage by 10%, or find a way to buy fuel for 10p a litre less than the average forecourt price.”

Many firms are now starting to realise the cost difference between forecourts in different locations.

Shelagh Swift, fleet manager at Forticrete, says: “In an attempt to reduce fuel costs, we have recently sent out a directive requesting all company car drivers avoid refuelling at motorway service stations and certain brand outlets as they are far more expensive.”

Rob Corbett, fleet manager of Agility Fleet, agrees. “The cost of fuel, especially diesel, must be a concern for all currently,” he says.

“Also, the recent 2p fuel duty increase seems to have had some interesting effects, with most of my local outlets rising by up to five pence per litre.”

Shirley Colman, fleet co-ordinator of Futures Resourcing, says: “The price is obviously cause for concern, as it is for everyone.

“We monitor it and encourage our drivers to get the best price whenever possible, but don’t feel we can do much more.

“We ask them to avoid motorway service stations, but it is not written into the policy – perhaps it should be.

“On the whole, they are pretty good and they do seem to have their favoured filling-up places which do tend to be supermarkets.

“We certainly would like to see less of the cost made up of tax.”

Robert Kingdom, head of marketing at Masterlease, says it is difficult to look past cost when it comes to fuel issues.

“There is always a problem whenever you are paying a pence-per-mile rate,” he warns.

“People will always over-claim or understate their private mileage use. The best you can do is have accurate mileage systems.

“Make sure your servicing is on time and make sure your tyres are inflated correctly as it can make a big difference.

“There is free advice available from initiatives like Safe and Fuel Efficient Driving (SAFED) which can not only improve safety but also fuel economy.

“Fuel makes up one-third of the total cost of vehicle ownership –20,000 miles of fuel will be around £2,500 a year.

“There’s not much you can do about it unless you significantly alter driver behaviour and mileage patterns. A lot of fleets can’t see the business case in a green fleet policy, but as fuel prices go up the case gets stronger and stronger.”

Chris Deakin, fleet manager at Lloyds TSB Autolease, says: “The fleet managers most successful at controlling the rising cost of fuel will be the ones who can involve their drivers and gain commitment from them to a shared objective of reducing cost for the business as a whole.”

  • USE

    Getting cheap fuel is one thing, but many fleets are trying to reduce their expenditure further by avoiding car use altogether.

    “Fuel consumption is a difficult subject as certain jobs necessitate using the car,” explains Shelagh Swift.

    “But we are looking into video-conferencing in order to cut down on people travelling to meetings.”

  • VEHICLES

    Where travel is unavoidable as there is no alternative, it pays to shop around for vehicles.

    Even small improvements can add up to a sizeable difference over time and a whole fleet.

    “We are conscious of the environment and also the driver’s taxation and try to accommodate both,” says Ms Swift.

    “For example, one vehicle we use is the Mondeo Edge, but we use the 1.8 TDCi which emits 156g/km of CO2 instead of the 2.0 TDCi with 189, which obviously impacts on both issues.”

  • MISFUELLING

    It’s all too easy to get mixed up at the pumps, particularly if drivers are swapping cars regularly.

    And it can be an expensive mistake to make, as the wrong fuel can damage the car’s internals.

    “We have about 1,000 vehicles on our fleet and have at least one misfuel a week,” says Rob Corbett.

    “Drivers normally do this when they are out of town using a service station that has the fuel pumps coloured differently to what they are used to.

    “To date, we have been relatively lucky – a drain, fuel filter change with the cost of recovery and replacement fuel have been the only costs so far.”

  • Alternative fuels – a round-up of other options

    LPG

    Liquified petroleum gas was touted as the next big thing a few years back, but lately has seen incentives vanish and interest wane.

    “We ran a small fleet of LPG-powered vehicles,” says Rob Corbett, of Agility Fleet.

    “We found that dealers couldn’t, or wouldn’t, repair them, so the vehicles were used as normal petrol-powered cars.

    “Now we run hybrid vehicles and, other than being a bit underpowered at times, they seem to work well.

    “LPG, as far as we are concerned, has no future in the UK and because of the lack of supporting infrastructure probably should never have been introduced.”

    Malcolm Jeavons, fleet manager of the CHN Group, runs a fleet of 260 vehicles.

    “Around five years ago we decided to take on a number of dual-fuel vans with the hope of saving money and improving our environmental credentials,” he says.

    “I was hoping that if things worked out we would increase the number of dual-fuel vehicles on our fleet. But unfortunately this failed quite miserably.”

    Mr Jeavons found the monthly rental charges were high because the contract hire company was unsure where to set residual values.

    “There was always a problem in getting the gas,” he says. “At the end of the three-year contract we decided not to continue with LPG-powered vehicles and instead looked at cleaner and more efficient diesel vehicles.”

    IBM’s fleet manager Phil Redman says the Government’s withdrawal of grants for LPG vehicles means he has not ordered any more since.

    “It’s a shame, as considerable investment was made in the LPG infrastructure,” he says.

    There are some that still find LPG useful. Wilson Electrical Distributors has five dual-fuel Ford Transit vans that run on both diesel and LPG.

    “This is vital if one is going into the London congestion charging zone as it allows us to get reduced charges for low carbon emissions,” says fleet manager Fred McDonald.

    David Brannan from LeasePlan says: “LPG is a good example of an inconsistent tax policy where the fuelling industry made a substantial investment, the fiscal incentives were then removed and now the number of LPG outlets is going down. I’m not sure it has a future.”

    BIOFUELS

    “The jury on biofuels is still out,” says Brennan.

    “On one hand, they are the clean, green and practical alternative or additive to fossil fuels as they have renewable, inexhaustible and non-polluting qualities.

    “On the other hand, the use of biofuels may result in the demise of the normal farmer as land becomes more valuable to the industry.

    “Furthermore, the quality of the land may deteriorate due to over-farming.

    “In addition to this, the level of infrastructure needed to support the use of biofuels in the public domain is currently insufficient. Fleets need to bear all of this in mind before they jump on the biofuel bandwagon.”

    There isn’t a single solution that will suit all fleets, according to Robert Kingdom from Masterlease.

    “Biofuel looked like it could be a lovely solution but there has been a lot of bad press about the impact on food crops and deforestation,” he says.

    “You have got to look at what you are using vehicles for. We will see different fuels for different needs – electric cars are particularly suited for city use but for motorway driving, diesel will probably remain the fuel of choice for the near future.”

  • Leave a comment for your chance to win £20 of John Lewis vouchers.

    Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

    Login to comment

    Comments

    No comments have been made yet.

    Compare costs of your company cars

    Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

    What is your BIK car tax liability?

    The Fleet News car tax calculator lets you work out tax costs for both employer and employee