Tips For Frugal Buying
There are only two places to fuel trucks - on the road or at home. Home can be your yard, terminal or warehouse - anyplace you can keep a fuel storage tank. Fueling at home is the surest way to save on the basic cost of fuel itself.
If your fleet is large enough and you have the physical and financial resources, you can buy fuel in bulk at negotiated, wholesale-level prices. If you have the time and skill, you can save money by buying on dips in the market. Or you can buy contracts for delivery of bulk fuel over specific periods of time, during which your contract price remains stable.
For example, Exxon Mobil has what it calls a Risk Management Program that offers bulk fuel from specific distribution points at locked-in prices for terms as long as 18 months. Most major oil companies offer bulk fuel information through links on their corporate web sites.
You can buy in bulk through local or regional independent distributors who can be found in the Yellow Pages under "diesel fuel," or you can contract fuel through a third-party broker like Petroleum Traders Corp. of Fort Wayne, Ind., which offers a number of contract options that hedge against the oil market.
One such program allows fleets to cap fuel costs at a predetermined ceiling price - typically 5 to 6 cents per gallon above a firm price. Collar programs identify a guaranteed range in which fuel costs are price protected. This range is commonly a reference cost plus or minus 4 cent per gallon. You can also contract with PTC for fuel you get from a current supplier.
Some fleets use more than one option. For example, a fuel user can contract for a guaranteed price over a given period - but only for a portion of the fleet's needs - and buy the rest on the spot market, taking advantage of price dips.
The price you pay for bulk fuel will include the cost of delivery, though most fuel distributors allow you to reduce that expense if you have a tanker and pick up the fuel yourself.
You must consider the cost of maintaining tanks and the equipment to pump fuel. You will also have to meet regulatory requirements that kick in when fuel is stored on site. Those regulations begin with the U.S. Environmental Protection Agency, but also involve state and possibly even local governments.
You must be able to track inventories to know where the fuel goes. The higher the price of fuel, the more attractive it is to thieves.
Buying On The Road
Bulk fuel buying only works for fleets that return to established locations where fuel can be dispensed. Other fleets have no alternative but to buy fuel on the road. That includes virtually all of the truckload sector and those private fleets that do long hauls.
Depending on the size of the fleet and the amount of fuel it consumes, you can negotiate discounts directly with truckstop chains. Virtually all offer fleet discounts. Some offer hedging contracts that guarantee a fuel price over time - much like bulk sellers. Most of the chains have fleet sales reps who serve a multi-state area. Contact information is available on the web sites of Flying J, Petro, Pilot and other major chains.
Many truckstop chains have driver-incentive programs that earn points on fuel purchases. Points typically earn discounts on merchandise or services. The Ambest network of independently owned truckstops, for instance, has its Ambucks program. Travel Centers of America has the TA RoadKing Club. Petro has Petro Passport. Many individual truckstops have their own special deals, such as free showers, based on fuel purchases. While fuel-buying decisions should not be based solely on these incentives, they should be considered in overall comparisons.
If your fleet doesn't qualify for volume discounts, there are still ways to save, often through fuel card programs offered by many vendors, including Fleet One, FTS, GE Capital Fleet Services, Multi Service Corp., T-Chek Systems Inc., TLC Cos., Transportation Clearing House and Wright Express, to name a few.
Here's an example: Fuel card and financial services company Comdata offers the Comchek Discount Fuel Network for fleets of 75 trucks or fewer. The Comdata Discount Fuel Network provides discounts up to seven cents per gallon on posted cash fuel prices or a cost plus-savings. There are no minimum purchase or usage limits and the service includes monthly reports. Drivers will pay the posted pump price, but Comdata will return the difference between that and the discount price in a monthly rebate check. Comdata claims a network of 1,000 participating truckstops.
A similar rebate program is available from TruckersB2B, the buying cooperative launched by Celadon Group in 2000. The TruckersB2B fuel network includes 500 stops and claims to offer savings of up to $.04 per gallon. Like the Comchek Discount Fuel Network, TruckersB2B fleets pay the pump price and receive the discounted difference in a monthly rebate check. In the case of TruckersB2B, that check can include rebates on other trucking related purchases - anything from tires to payroll services.
About Fuel Taxes
The price you pay for fuel is partly determined by taxes collected at the pump. The federal tax remains constant but state taxes vary. This is why some managers and drivers plan trips so they tank up in low-tax states. Fuel-buying services can help fleets and even individuals with this. Of course, you have to pay fuel taxes in every state you run, but based only on the miles you actually turn your wheels. So buying low-tax fuel and remitting taxes to the appropriate states may work for you.
At least that's what some experts say.
Others say that fuel taxes shouldn't have much to do with your fuel-buying decisions, and should be subtracted from pump prices to make real comparisons between fuel prices. Federal tax is uniform across the country and the taxes you'll pay to any state are based on the miles traveled in that state, calculated with quarterly fuel tax reports. Even if you don't buy fuel in a state where you run, you'll eventually pay the tax. And high fuel taxes can sometimes hide a low fuel price.
The answer for your fleet may lie somewhere in the middle. You can gauge what's best for your fleet interests by closely comparing your fuel costs with your state fuel tax expenses.
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