Buy Right

Max Kvidera | January 03, 2011

Slash your costs by knowing when and where to purchase fuel. And make sure you’re getting the most value from a fuel card and a fuel surcharge.

 

There’s no shortage of awareness in trucking about ways to cut fuel consumption – idle less, cruise slower, improve aerodynamics, maintain tire pressure. The other major way to cut the cost of fuel is simply to pay less for it. When you’re spending $60,000 a year on fuel, consistently shaving cents per gallon can save thousands of dollars a year.

Buying fuel where it’s cheapest, after deducting the state tax portion of the pump price, is a key strategy.

The International Fuel Tax Agreement between the United States and Canada facilitates the reporting, collection and distribution of taxes to states and provinces. You pay taxes every time you fuel, but your ultimate fuel tax bill is calculated according to where you drive. If you purchase fuel in high-tax states and drive most of your miles in lower-tax states, you will get a refund when you file your IFTA report.

You cannot lower your tax outlay unless you choose hauls that avoid high-tax states. What you have more control over is how much you pay strictly for fuel when the fuel tax is not considered.

“Take the tax out to see what the fuel’s worth,” says Canadian owner-operator Greg Decker, who’s leased to Caneda Transport. “Where the fuel costs the least – that’s where you buy the most.”

He monitors the IFTA website (www.iftach.org) to track tax rates in each state. “Illinois is a good place to buy fuel,” says Decker, who runs about 65 percent of his miles in the United States. “The pump price has a really high tax rate. So when I take out the tax it’s cheaper to buy there than in Indiana by 6-8 cents a gallon.”

Mike Skurdahl of Sun Chaser Transport figures he saves money by buying most of his fuel at Love’s Travel Stops, where his fuel buying qualifies him for free coffee and showers.

On a trip of his last fall through Georgia and Florida, the pump price was 1 cent a gallon higher in Florida. But the tax rate was approximately 17 cents higher in Florida, so Florida’s fuel was actually cheaper.

Fuel purchasing strategy also varies by whether you’re leased to a carrier or running independent. If you’re leased and your carrier handles fuel taxes, simply look for the cheapest pump prices.

At Dart Transit, like many carriers, independent contractors can choose to have the carrier handle fuel tax payments for them. Under Dart’s program, different state rates are averaged, says Matt Doth, retention manager. Long-haul operators pay 1.2 cents a mile, while the short-haul rate is 0.6 cents a mile. Fuel optimization programs provide a more complete assessment of fuel-related variables in route planning.

Prime Inc.’s optimization program, run through its Qualcomm system, is optional for leased operators. It provides information on fuel cost, fuel taxes, tolls, miles and time for the trip. It looks at the operator’s location, where he’s going and when he needs to arrive, and downloads information about the rig. It has data on average mpg for the truck, fuel capacity, whether it needs ultra-low sulfur diesel and load assignment.

Henry Albert of Albert Transport earns cash discounts when buying fuel and comes out ahead on fuel surcharges because of his superior fuel mileage.

“It comes back with recommendations on where to fuel,” says Verna Bailey, fuel manager. “It tells them how much to buy to optimize their tax rate, where to go for cheaper fuel, how much to buy and where to buy. It recommends stops in our charged network, which includes a combination of chains and independent stops.”

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