Fuel’s gold

| December 12, 2008

As pump prices climb, savvy owner-operators must do everything they can to cut costs.

As pump prices climb, savvy owner-operators must do everything they can to cut costs. Here are 12 ways to boost your smiles per gallon. Everyone discusses the weather, says the adage, but no one does anything about it. For too many of today’s owner-operators, the preferred topic of pointless conversation is not the weather, but the high price of diesel fuel.

According to Overdrive research, only 38 percent of owner-operators have changed their driving habits to improve their fuel economy. Only 15 percent have invested in a fuel-saving device such as an auxiliary generator or a cab heater. And only 11 percent use an online fuel price service to plan their fuel stops.

Those who have taken steps to improve their fuel economy have gained an average of 1.3 miles per gallon, according to the 2005 Overdrive Owner-Operator Behavior Report. That’s a huge advantage. For an owner-operator who runs 130,000 miles a year, the difference between 6 mpg and 7.3 mpg is 3,859 gallons. At today’s pump prices, that’s easily a savings of $10,000 a year.

“You wouldn’t think a few cents a gallon would make much difference, but at the rate truckers buy fuel, it really adds up,” says Gary Aitken, whose Indianapolis accounting firm has specialized in owner-operators for 37 years.

“When I started in the business in 1998, fuel costs were running about 20 percent of an operator’s gross,” says Doug Kozeny, vice president of Truckers Professional Services in Omaha, Neb. Today, they’re 40 percent, even in a well-run business, he says. “Anything you can do to cut back on that is good.”

The average client of American Truck Business Services in Denver, which handles the books for 30,000 owner-operators, ran 123,880 miles in 2005 and spent $52,053 on fuel, for a per-mile fuel cost of 42 cents. If you’re not running an extreme application, but your fuel expenses are significantly more than that – or if you don’t even know your per-mile fuel cost – consider remedying the situation. Here are 12 ways to start doing something about fuel costs:

  1. TRACK FUEL COST AND ECONOMY
    You can make wise business decisions about fuel only by knowing your fuel economy, expressed in miles per gallon, and your fuel cost per mile, Aitken says. That means doing the calculations yourself, not relying on the mpg reading on the dashboard’s “idiot gauge,” he says.

    “It might say you’re getting so many miles per gallon, but that could have been downhill with a tailwind,” Aitken says. “On the trip back, it might be a very different story.”

    Calculate your mpg by tracking your mileage between fill-ups and dividing the total by the number of gallons you burned. Do this not just for one trip but for all trips. “You can’t have an honest evaluation with just one fill-up,” says Aitken, a former owner-operator.

    It’s helpful to know mpg on a monthly, weekly and even per-load basis. That occasional haul of steel across the Appalachians, for example, may cost you more in fuel than it’s worth.

    Armed with your mpg, calculating your fuel CPM is easy. If your truck gets 6 mpg and you ran 6,000 miles in a month, you would burn a total 1,000 gallons. If the cost of diesel averaged $2.75 per gallon that month, your total diesel cost was 1,000 x $2.75, or $2,750. Your fuel cost per mile was $2,750 divided by 6,000, or 46 cents – likely the largest single chunk of your total CPM.

    Another reason to track fuel economy constantly, says Bridgestone’s new Guide to Large Truck Fuel Economy, is that it changes constantly. It’s affected by such factors as weather, loads, routes, traffic, road conditions and tire inflation. Many of these challenges may be out of your control, but no problem can be remedied if it passes unnoticed.

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