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How a Universal Fleet Card Can Lower Fleet Costs

[fa icon="calendar"] May 2, 2017 10:00:00 AM / by P-Fleet Staff

P-Fleet Staff

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Universal fuel cards offer many benefits to cardholders not unlike some of the benefits available with fleet cards in general. Unlike other cards, universal fleet cards enable drivers to purchase fuel at almost any gas station in the U.S. Some might argue there is a cost to this convenience compared with discount networks, but if you look more closely, there can be potential savings when you use universal fuel cards.

 

Find the Best Fuel Prices

It’s no secret that fuel prices vary by gas station and by brand. Knowing which stations offer the best prices and directing your drivers to fuel at those fuel locations can lower costs. Universal fuel cards don’t have the brand restrictions that a major oil company card (e.g., Shell, 76, Chevron, etc.) would have. With brand-specific cards, drivers are often limited to that merchant’s gas stations, even if a better priced location is just across the street. With a universal fleet card, by contrast, you can realize savings by shopping across brands. Some universal cards, like the Voyager fleet card, even have mobile apps to help you find the best priced gas station while on the road.

 

Reduce Opportunity Costs

The ability to shop across brands can lower fleet fuel costs, but experienced fleet managers understand the importance of balancing the cost of fuel against the opportunity costs associated with operating a commercial vehicle. To determine this balance, you need to know how much it costs your fleet in terms of time and money when drivers go out of their way to find certain fuel locations or brands.

The most obvious advantage universal fuel cards offer is the ability to save time; cardholders can fuel anywhere. At first glance, driving a few minutes out of the way might not seem like a big deal, but driving just 10 minutes out of the way, every day, for the entire year ends up being over 40 hours annually! That’s an entire work week wasted, not just for the driver, but for customer deliveries too.

Let’s get more specific about the cost of that time. Variability between industries and individual companies would seem to make computing the total opportunity cost for time spent driving to a gas station difficult. But we know part of the opportunity cost is quantifiable when we look at the costs for operating a vehicle.

The American Transportation Research Institute (ATRI) publishes an annual analysis of the operational costs of trucking in which they calculate the average cost per hour of operating a commercial vehicle. They consider costs for maintenance, insurance, tolls and tires, in addition to wages and benefits paid to the driver. In their most recent analysis, they estimated the average cost per hour was $63.70. The table below shows a breakdown of that cost compared with previous years.

Average Cost per Hour of Operating a Commercial Vehicle

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Source: American Transportation Research Institute (ATRI)

Let’s use this per hour cost information in an example. For those companies that don’t issue universal fuel cards to their drivers, what is the added cost of driving just 5 minutes out of the way to find a fuel location? Using the ATRI analysis, we can calculate this:

  • Fuel Costs: $1.34
  • Truck/Trailer Lease or Purchase Payments: $0.77
  • Repair & Maintenance: $0.52
  • Truck Insurance Premiums: $0.31
  • Permits and Licenses: $0.07
  • Tires: $0.14
  • Tolls: $0.07
  • Driver Wages: $1.66
  • Driver Benefits: $0.44
  • Total Added Cost = $5.31

Driving an additional 5 minutes adds more than $5 per fill up. If your average transaction is 100 gallons, you would need a rebate of more than 5 cents per gallon to offset the increased operational cost.

The ATRI analysis is best suited for tractor-trailers travelling on highways. For companies that primarily use box trucks in metro areas, expected operational costs differ. With that in mind, we can modify the ATRI analysis to better represent the cost per hour of operating a box truck:

  • Fuel Costs: $12.10
  • Truck/Trailer Lease or Purchase Payments: $5.52
  • Repair & Maintenance: $4.67
  • Truck Insurance Premiums: $2.48
  • Permits and Licenses: $0.59
  • Tires: $0.65
  • Tolls: $0.59
  • Driver Wages: $19.95
  • Driver Benefits: $5.22
  • Total Cost per Hour: $51.77

With the above revised cost estimates, we can determine the added cost when a box truck drives 5 minutes out of the way to purchase fuel:

  • Fuel Costs: $1.01
  • Truck/Trailer Lease or Purchase Payments: $0.46
  • Repair & Maintenance: $0.39
  • Truck Insurance Premiums: $0.21
  • Permits and Licenses: $0.05
  • Tires: $0.05
  • Tolls: $0.05
  • Driver Wages: $1.66
  • Driver Benefits: $0.44
  • Total Added Cost = $4.31

Initially, it seems that greater fuel efficiency (MPG) and lower operational costs for a box truck result in a lower added cost of driving out of the way to purchase fuel. However, because box trucks have smaller fuel tanks, the opposite is true when you divide that additional cost over fewer gallons. If your average transaction is only 40 gallons, you would need a rebate of almost 11 cents per gallon to offset the increased operational cost of driving just 5 minutes out of the way.

Therefore, it is important to carefully evaluate discount networks and make sure fuel locations are along driver routes. If not, opt for a universal fuel card. The convenience of fueling at the nearest location can reduce driver time and operational costs, which ultimately add up.

 

To learn about our Universal Voyager Fleet Card, click here!

 

Topic: Voyager Fleet Cards

P-Fleet Staff

Written by P-Fleet Staff

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