As the season heats up contractors throughout the country are encountering spiraling fuel prices, both for diesel and gasoline. Because contracting businesses rely so heavily on sending crews out to a customer's place of business to do business, increased fuel costs can significantly eat up your profits.
"Fuel is the second-largest cost for a vehicle," says John Dolce, fleet management specialist and a speaker at National Pavement Expo. "The largest cost, of course, is the principal and interest when buying a new vehicle. But once that disappears fuel becomes the largest cost."
And whether fuel is the Number One or Number Two cost in your fleet, it can have a significant impact on your bottom line. Here's an example that might help illustrate the problem. Assume a contractor operates eight vehicles that average 400 gallons of gasoline a week during the season. Assuming a price of $2 per gallon, cost to the company is $800 per week for fuel alone. Assuming a 35-week season that results in $28,000 for annual fuel costs. According to the U.S. Dept. of Energy, as of the end of March gasoline prices averaged $2.15 per gallon, up from about $1.75 per gallon a year ago (diesel prices averaged $2.25 per gallon, up almost 61 cents over March 2004)—that's a whopping 22.5% increase in gasoline costs. Apply that 22.5% increase to the example and fuel is going to cost that eight-truck contractor an additional $6,300 this year.
Track your mileage!
So while you can see the impact gasoline prices can have on your bottom line, there are a number of steps to take to reduce fuel costs by improving fuel economy. But the first step all contractors should take is to track and document fuel usage.
"The most important thing a contractor can do, the first thing he needs to do, is to track fuel purchases and mileage," Dolce says. "If you don't track it you can't demonstrate any waste and you can't demonstrate any improvement in fuel economy."
He says the Corporate Average Fuel Economy (CAFE) rating is posted on the side of each vehicle when you buy it. The sticker might say "22/17," for example, and if it says 17 your vehicles should be getting 17 mpg when used driving locally.
He says contractors should require all drivers to write the vehicle's mileage on the receipt for fuel each time they fill the truck. Dolce says fuel and mileage should be totaled and evaluated weekly. That way any changes in fuel economy will be identified almost immediately and improvements can be made.
Dolce says tracking fuel and mileage weekly has the additional advantage of deterring theft.
"By requiring the driver to write down the mileage you are requiring him to account for the fuel that he's buying. So you are more likely to be assured that the fuel purchased actually goes into the company vehicle," Dolce says. "If you're not calculating what the mpg is, the perception of the driver is that you're not following it. And if you're not following it a driver might be more tempted than normal to put some fuel in his own vehicle."
Dolce recommends that contractors enlist their drivers and crews in keeping track of mileage and reducing fuel costs, but he says contractors who don't want to take the time to track fuel cost and mileage and calculate miles per gallon might consider investing in a hand-held diagnostic meter to read the Electronic Control Unit (ECU). He says the ECU, which is a small computer that actually runs the engine, will calculate the mpg for that vehicle. You can compare the ECU calculations to confirm the driver's manual calculations.
Drive to conserve
Once you've begun tracking miles per gallon, there are a number of steps drivers can take to improve gas mileage.
- Reduce idling time. Idling time is the single most important factor in improving miles per gallon. The reason is obvious: When a vehicle is idling it generates zero miles per gallon. This applies even to equipment, whether a roller, paver, or sealcoating machine (though some equipment does require idling or a warm-up time).