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How a Universal Fuel Card Can Lower Fleet Costs

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

P-Fleet Staff

Universal Fuel Card Costs

Unlike other fleet fuel cards, universal cards enable drivers to fill up at almost any gas station in the United States. 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 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 products 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 stations, even if better prices are just across the street. In contrast, a universal card provides consistent savings by shopping across brands. Some options, like the Voyager 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 managers understand the importance of balancing the price per gallon against the opportunity costs associated with operating a commercial vehicle. To determine this balance, you need to know how much it costs your fleet when drivers go out of their way to find certain fuel locations or brands.

The most obvious advantage universal cards offer is the ability to save time. Cardholders can fuel anywhere, without having to expend time and energy trying to find a specific retailer. At first glance, driving a few minutes out of the way might not seem like a big deal, but driving just 10 minutes further, every day, for the entire year ends up being over 40 hours annually! That’s an entire work week wasted.

Let’s get more specific about the opportunity costs at play here. Though variability between industries and individual companies makes computing the total cost difficult, we are able to make rough estimates based on the known costs of 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

ATRI Chart per hour.png

Source: American Transportation Research Institute (ATRI)

Let’s use this per hour cost information as a generic example. For those companies that have drivers that must go out of their way to find a specific fuel brand or station, what is the added cost of driving just 5 minutes out of the way? 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. 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 Fuel Card, click here!

 

Topic: Voyager Fuel Cards


P-Fleet Staff

Written by P-Fleet Staff

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