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Diesel fuel: Covering increased costs through efficiencies, rates

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To Get a handle on rising fuel costs, a carrier must first understand its costs, said Corey England, executive vice-president of Salt Lake City-based trucking company CR England, in his presentation, Surviving The Fuel Crisis. Next, it needs to finds ways to reduce fuel expenditures by becoming more efficient, which can be done by doing such things as reducing idle time, improving miles per gallon, and reducing deadhead miles.

Supposing a sample 1,000-mile load, figuring the rig got six milers per gallon and consumed 167 gallons, he said the cost per mile has increased 0.31 cents compared to last year.

Fuel Costs
Today Last Year Difference
Avg mpg 6 6
Gallons 167 167
PPG (price per gallon) $4.60 $2.75 $1.85
Fuel cost $770 $460 $310
Per mile cost $0.77 $0.46 $0.31

“The question is,” he said, “are you covering the increased cost with a fuel surcharge? This same question needs to be asked about reefer fuel. Are you getting a surcharge for reefer fuel?”

Assuming a 1,000-mile load that took 24 hours to deliver, keeping the load at -20° F, the per mile cost of reefer fuel, from last year to this year, has gone up $0.044 per mile. “What are you doing to cover this increase?”

Reefer Fuel
Today Last Year Difference
Fuel consumption/hr 1 1
PPG $4.60 $2.75 $1.85
Total fuel cost $110 $66 $44
Per mile cost $0.11 $0.066 $0.044

Another key consideration in becoming more efficient is how a carrier manages deadhead and out-of-route miles, England said, noting that some deadhead and out-of-route miles are necessary.

Often, a truck has a pick-up and a different location from where a delivery was made.

Some out-of-route miles are required in order to get drivers home or into maintenance facilities, he said. Some aren't, for example, when allowing drivers to choose their own routes.

Assuming 100 miles out-of-route or deadhead, the increased cost is $0.31 per mile.

Today Last Year Difference
Miles 100 100
Avg mpg 6 6
Gallons 17 17
PPG $4.60 $2.75 $1.85
Fuel cost $78 $47 $31
Per mile cost $0.78 $0.47 $0.31

The cost of deadhead and out-of-route miles must be understood, said England, so that a carrier can calculate this into rates to offset the added cost.

Other efficiencies

He noted that there are a number of opportunities for increasing efficiency. Chief among them are idle reduction, speed reduction, tractor specs for improved mpg, and fuel theft elimination.

“At CR England, before we did anything to manage idle, we were at about 44% idle time. We have now reduced that to around 7%, and that has resulted in dramatic savings of about $621 per month, or around 6 cents per mile, assuming the truck runs 10,000 miles per month.”

Idle Time
Current Goal Savings
Idle percentage 44% 7%
Driving mph 53 53
Driving hours 189 189
Total engine hours 338 203
Idle hours 149 14 135
Fuel consumption/hr 1 1
Gallons/month 149 14
PPG $4.60 $4.60
Total fuel cost/month $685 $64 $621
Per mile cost $0.069 $0.004 $0.062

Like many fleets, CR England has reduced the top speed on company trucks. It has been lowered from 65 mph to 62 mph.

“At this point we're seeing about a two tenths miles per hour difference.”

Truck Speed
Current Goal Savings
MPH limit 65 62
MPG 5.8 6
Mile/month 10,000 10,000
Gallons/month 1,724 1,667 57
PPG $4.60 $4.60
Total fuel cost/month $7,930 $7,668 $262
Per mile cost $0.793 $0.767 $0.026

“Surprisingly, we haven't had much flak from our drivers about lowering the speed,” remarked England. “They understand the need for it.”

Other fuel efficiencies can also be obtained through truck specifications, he said. He cited such things as going with aerodynamic models rather than classic styles, using automatic transmissions and wide-base tires, and changing engine horsepower and torque ratings to get better fuel economy.

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