Micromanaging Fuel Use

Rising fuel prices and the need to conserve resources and protect the environment make excellent motivators for fleet operators to reconsider how they refuel.
By Ron Kotrba | June 17, 2008
The act of refueling a vehicle is often considered to be an inconvenience, but for fleets what is a mere inconvenience for the individual is compounded exponentially with lost time and labor productivity, equating to lost revenue for private businesses and municipalities-which means taxpayers may be footing the bill for inefficient fuel management.

A number of public and private fleets use the card-lock system where drivers go off-site to a fuel pump accessible only by authorized users. Some companies choose fleet cards that are good at certain chains in a given geographic region. Large fleet operators will sometimes store fuel on-site and manage their own purchases and consumption. There are degrees of benefits to each of these fuel management methods but it is possible many of the pros, when confronted with an alternative and more streamlined option, are outweighed by the cons.

The high fuel prices of today are no joke. Newscasts around the country showcase the public's frustration over new and sometimes exorbitant fuel surcharges from trucking and rail companies; even newfangled flimflam techniques to pilfer free gas from the local station without getting caught are exhibited on the nightly news, warning most how not to become a victim while at the same time teaching others exactly how to do it. At $4 a gallon gasoline, and even higher-priced diesel fuel, is of great concern to those businesses whose largest cost is fuel. Add to this the customers' increasing demand for greener living through reduced consumption and increased alternative fuel use, and fleet operators may want to consider what an on-site fuel management service provider can offer. Ken Fryer, director of clean air solutions with 4Refuel Ltd., explains what his company can offer to clients. "We try to pump up productivity where we save our client money by adding convenience," he says. "So for example, we'll take one of our tanker trucks filled with 10,000 liters (2,640 gallons) of fuel and we'll line up and fill 100 or 200 buses overnight to save them from wasting time." 4Refuel delivers 70 million liters (18.5 million gallons) a month.

Labor is one of a company's most expensive costs. A delivery driver whose job is to deliver as many packages as possible in a work day loses productivity when 20 minutes of an 8-hour workday, which equates to nearly 5 percent of the shift, is spent refueling. "If a company's drivers went to a card-lock, for example, and sat in a line for 20 minutes and then add in the time it takes going back and forth, that equates to money," Fryer says. "With our on-site system we eliminate that whole component, and we allow our client to use that labor for other things within their business. One of our clients told us, 'When you come and fill me at night, it means my guys don't need to spend 20 minutes filling up with fuel, and that means 20 more minutes worth of deliveries I can make.' It's really all about more efficient fuel use and less overall fuel consumption by becoming more efficient. The clients don't have to drive to and from the card locks and as a result they save many gallons of fuel."

The marketing angle through which 4Refuel is selling to potential biodiesel users-and clients-is its "mobile infrastructure." In most Canadian markets and smaller American markets there's a lack of infrastructure for efficient biodiesel distribution. "The advantage of our system is a fleet of more than 100 fuel trucks that can deliver custom-blended biodiesel to clients on demand," says Bill Bishop, 4Refuel vice president of marketing. "That allowed us to expand the market by as much and as fast as we wanted to. We are the mobile network. And that sets the bar for everybody." The company's corporate truck fleet runs on B5. Bishop says they also have one unique truck that's custom-designed to run on and carry B100. The truck is equipped with a heated tank to prevent the fuel from gelling. "And we're working on technologies now that will blend and dye fuel at the point of sale," Fryer says.

The Technology
The functional heart of 4Refuel's on-site fuel management technology is to track the details of fueling and store them on line so the client can access that information and review all of their fuel purchases and consumption. The information is retained for a four-year period and is available to its clients on demand. "Our systems provide a fleet person or contractor the ability to go in and set parameters-to set their own baseline against themselves," Fryer says. "We help them help themselves by reducing fuel use as well as by managing the asset."

The company's novel information-based system is founded on IBM technology. Here's what IBM's Web site has to say about it: "Working with IBM Business Partner Coastal Range Systems, 4Refuel created an integrated business system which allows customers to examine fuel consumption truck-by-truck, and learn how to improve fuel efficiency, reduce environmental impact and control costs."

Compared with municipal fleets and most private companies, 4Refuel management says their technology runs circles around the competition. "They don't have what we have," Fryer says. "Their technology consists mostly of clipboards and notepads and we just blow them out of the water. Bishop adds, "And don't forget the calculators-they also have calculators."

Client vehicles and/or equipment are each equipped with identification cards only good for the specific vehicle to which it is designated. "When we go to our client's location, we scan the vehicle and all the information is sent to our truck's computer," Fryer says. "And then all the new filling information is added to the truck computer. Then all that information is uploaded to fuel management online, where the client can view all of its fleet information, whether it's the whole fleet, part of its fleet, or individual vehicles." If a fleet owner needs or desires to use an on-site storage tank, 4Refuel will install a sensor in the tank to alert its deliverers when a fill-up is needed depending upon where the threshold level is set. Also based on the vehicle cycle use, the company will set up a delivery schedule so the vehicles remain full.

The savings could add up to more than meets the eye. "We've had clients who've notice that one of their trucks was burning twice as much fuel as another truck in the fleet, but we noticed the route wasn't any longer," Fryer says. "It turned out that the engine in the truck consuming more fuel was long overdue for maintenance." Through tight on-site fuel management other clients noticed some of their trucks never needed a refill and months went by before those particular vehicles needed more fuel. "The client said, 'I realized I had two more trucks than I really needed-so I sold them,'" Bishop says. "It gives them valuable business information to use however they wish. We're helping clients save millions of dollars on their fuel bill-simply because we know what we're doing."

There is another component an on-site fuel management service provider can offer-one which is not pleasant to discuss but real nonetheless-and it is one that is all too familiar right now in the transportation fuel industry: theft. "It's really hard to track and put numbers on it but it's significant, much more so than anyone realizes," Bishop says. "The one thing about an on-site solution is you can take out the human component-the theft-which reduces fuel consumption."

But surely these services and technologies don't come for free otherwise companies such as 4Refuel couldn't stay in business. However, if 4Refuel can save clients money and profit from its services, it should be an indicator of how much inefficiency there really is in some fleet operations.

Environmental Benefits, Expansion
Having a trained staff to contain spills when they occur-or better yet prevent them altogether-is a service that may be difficult to place a dollar value on. "If we do have a spill, we have spill kits available-containment socks-we look at the drainage, the layout of the land, and contain storm drains if that's an issue," Fryer says. "We have one of the best spill rates-a 0.28 instance for every 10,000 deliveries. And we take responsibility for what we do. If we spill as little as a gallon, it will cost us at a minimum $10,000 to $20,000 to clean it up. That's huge-it's enormous."

While it's difficult to verify, Bishop and Fryer say through their on-site fuel management model, more than 160 million pounds in greenhouse gas reductions have occurred over the past 13 years. "That's mostly fuel that wasn't burned up to go get fuel," Fryer says. "That also includes the fuel we burn to do it. And we'll be adding more to those numbers thanks in part to the biodiesel business we're doing. When biodiesel was put on the table, 4Refuel started delivering blended biodiesel to at least 22 different cities at a time, all with different blend levels. Since then we've expanded into Alberta and into northern British Columbia." And they've gone south as well. The company's presence is not only pervasive across Canada, but it's broken into the U.S. market, with offices in Washington State. "We've opened up a shop in the state of Washington," Fryer tells Biodiesel Magazine. "We have three trucks down there now-the fourth one is on the way."

The company says it maintains several biodiesel suppliers to avoid pricing pitfalls that arise from reliance on only one dealer. Its executive team readily admits much of the biodiesel it purchases for blending and distribution into Canada comes by way of the United States in the form of B99.9, for obvious tax credit reasons. With offices now in Washington, it would be easy for the company to purchase B100, drop a dash of diesel fuel in the tanker and ship the tax-free fuel north to Canada. As long as this practice continues to be allowed, and as long as the blender's credit remains on the books, 4Refuel will possess great motivation to expand biodiesel use across Canada and the Pacific Northwest.

Nevertheless, on top of the greenhouse gas emissions averted through the company's on-site fuel management approach, proliferation of biodiesel use will only add to those greenhouse gas reductions. "If you start using say a B20 blend, you'll get about a 15 percent reduction in greenhouse gas emissions," Bishop says.

When companies such as Wal-Mart start marketing themselves as green and eco-sensitive, it's obvious that the need to go green has hit the mainstream. There are unquantifiable benefits to appealing to customers' increasing awareness of climate change. 4Refuel believes its model can and should be replicated en masse. "Particularly we want to grow the business under the franchise model, where individuals have the opportunity to have their own business and make a good living doing the right thing," Fryer says. "We're looking at strategic locations across the United States and Canada, and to actually step up to the plate and be a quality player. Through our franchise expansion we have the capability of bringing on more business and growing the biodiesel market a lot quicker than anyone who's got a fixed infrastructure can. And for the first time franchisees can profit from high fuel prices and take advantage of a clean solution."

Ron Kotrba is a Biodiesel Magazine senior writer. Reach him at rkotrba@bbibiofuels.com or (701) 738-4962.
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