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.

  2. SLOW DOWN
    “When I’m driving down the road at 70, and people pass me at 90, I think, ‘They must have some special fuel that I don’t know about,'” Aitken says. “If you slow down even 5 mph, you’ll save yourself a lot of money.”

    When a truck is running at 55 mph, half the energy expended is simply to fight aerodynamic drag, according to Kenworth’s new White Paper on Fuel Economy. Increase the speed to 65, and two-thirds of the energy is lost to air friction.

    On a 500-mile run, slowing from 65 mph to 55 mph increases fuel economy by 22 percent and adds less than 90 minutes to travel time, Bridgestone says.

    If you’re driving faster than 60 mph, Bridgestone says, what you lose in fuel economy is greater than what you gain in travel time.

    Slowing down doesn’t save only on fuel. Manufacturers estimate that maintenance costs for an engine that runs 75 mph may be 15 percent higher than for one that runs 55 mph. “It’s all about controlling the foot,” Kozeny says.

  3. REDUCE IDLING
    “I just hate to see a guy with a big diesel engine sitting there idling,” Aitken says. “They’d sure save a lot of money if they just shut that thing off.”

    The U.S. Environmental Protection Agency estimates that line-haul trucks idle 20 percent to 40 percent of the time the engine is running. Idling consumes about a gallon of fuel an hour. If you’re the type to idle throughout every truck stop visit, consider that eight hours of daily idling easily can cost you $5,000 in fuel alone per year – not to mention the needless wear and tear on the engine, which maintenance experts put at 14 cents per hour.

    All that idling will come back to haunt you at trade-in time, when the dealer calculates your truck value based not on mileage, but on engine hours.

    Aitken advises many of his clients to install generators and other auxiliary power units in their cabs. “I tell them that’ll be the best money they could ever spend,” he says. “They’re saving the engine, they’re saving fuel, they have heating, cooling and electricity, the whole thing is tax-deductible, and if they’re going to be in the business a while, it’ll pay for itself quickly and last a long time.” Kozeny isn’t so sure, saying generators would be more common in huge fleets if they were guaranteed cost-savers. Run the numbers in your own operation before buying, he advises. “I’m not sure it’s a home run.”

    Your anti-idling campaign needn’t be high-tech, though. You can work wonders in winter simply by stowing an extra quilt or using a quality sleeping bag, or in summer by opening the windows to catch the breeze, or year-round by installing an extra layer of insulation in the sleeper.

  4. TAKE CARE OF YOUR TIRES
    A third of a truck’s fuel consumption is spent overcoming rolling resistance in the tires, estimates Kenworth’s White Paper. Maintaining alignment and tire pressure is vital to keeping that percentage as low as possible. Checking pressure should be part of every pre-trip inspection; every week, fill up all 18 tires to the manufacturer’s specifications.

    Don’t overlook trailer tires. They account for more than half the tire-related fuel consumption, more than either steer or drive tires, so they stand to benefit the most from fuel-economy measures, according to Bridgestone. Owner-operators who haul someone else’s trailers might balk at doing the other guy’s PM, but that’s a shortsighted attitude. It may be his trailer, but it’s your fuel.

  5. DRIVE SMART
    Fast starts and sudden stops waste fuel. Slow acceleration is especially important on inclines, because it’s the most efficient way to counter gravity. As for braking, safety experts say you should be watching the road 12 seconds ahead anyway, which should be enough cushion to avoid slamming on brakes.

    If your truck has cruise control, use it; it gets better fuel economy than your foot does.
    Fuel-conscious truckers should avoid the upper end of the power curve. Short-shift at 1,100 rpm to 1,200 rpm in the low-range gears, and when stepping into high range, use 1,500 rpm as a maximum shift point. When it’s time to downshift, lug down to 1,150 rpm first.

    Driving with fuel economy in mind should start before you leave the lot. When you hook up to the trailer, get it as close to the back of the cab as possible: The narrower the gap, the better the aerodynamics.

  6. CUT OUT-OF-ROUTE MILES
    Out-of-route miles – lost to detours, side trips and simple “Did I just pass my exit?” confusion – claim 3 percent to 10 percent of a driver’s total mileage every year, Kenworth estimates. If you’re running 100,000 miles a year at 6 mpg, even 3 percent out-of-route travel could waste 500 gallons of fuel, or nearly $1,500 at today’s prices. Preplanning your route and keeping side trips to a minimum will pay off in fuel savings.
  7. PERFORM REGULAR MAINTENANCE
    Whenever you spot a consistent drop in your fuel economy, some maintenance is in order. It could be a wheel alignment, an engine tune-up or something else. But day-to-day PM choices can improve fuel economy, too. Don’t use a higher-viscosity oil than you need. Get any dangling bumpers or cockeyed mirrors fixed, as they’re adding to your truck’s air resistance. Anyone not getting 6 mpg in a fairly new truck has some maintenance to do, Kozeny says.
  8. SCHEDULE YOUR FUEL STOPS
    “Put a little forethought into fueling up, rather than just doing it wherever you happen to be,” Aitken says. “Print out a list every Monday morning of the prices around the country, and think about where the best buys are.”

    On a route from Cleveland to Albany, N.Y., for example, fueling up in Ohio makes more sense than waiting until you’re 20 miles into Pennsylvania, Aitken says.

    Keep in mind, too, that other cost of a fuel stop: the 45 minutes or so you’re off the road. While owner-operators typically can carry 200-plus gallons of fuel, many opt to buy only 100 gallons at a time, thinking they’re saving time, money and weight. But all that downtime adds up, and so does the money wasted by filling half your tank in a more expensive region.

  9. MAKE FUEL TAXES WORK FOR YOU
    State-by-state fuel taxes are very complicated, but the main cost-cutting tips to remember are simple:

    • Leased owner-operators whose fuel taxes are paid for them gratis should buy where the pump price is cheapest.

    • Owner-operators ultimately responsible for their own taxes – including many leased operators and all independents – will save money by fueling according to the base price, which is the pump price minus state taxes. You have to pay fuel taxes at the pump or later, so that’s a wash, but knowing the base price offers the opportunity to cut your fuel bill.

    Fuel optimization information is readily available from fleets, in motor carrier atlases, via fuel-tax software programs and on websites such as www.etrucker.com.

    On April 25, for example, ProMiles reported that the average pump price for diesel in North Carolina was $2.88 a gallon, which looked expensive compared to pump prices in neighboring Tennessee ($2.84), South Carolina ($2.77) and Virginia ($2.77). Pump price alone might have prompted eastbound truckers to fuel up in Knoxville before heading into the Smokies.

    Minus taxes, however, ProMiles reported the North Carolina base price of $2.58 actually was cheaper than its neighbors': $2.67 in Tennessee, $2.61 in South Carolina and Virginia. Therefore, waiting until Asheville to fill up was the independent’s savvy choice that day.

  10. BUY THROUGH A FUEL NETWORK
    By taking advantage of the fleet’s fuel plan, a leased owner-operator can help control not only the cost of fuel but also its quality, removing much of the uncertainty from a fill-up.

    Truck stop chains and trucking organizations also offer fuel card plans that feature various discounts and perks. For example, the Truckers Advantage Card, from Fleet One and the Owner-Operator Independent Drivers Association, offers a monthly 2 cent-per-gallon rebate, Bridgestone’s National Preferred discount tire program, emergency road assistance, a fuel optimization program and a variety of fuel reports.

    As with any form of plastic payment, fuel cards should be used wisely. If a card has a $3 fee per transaction, use it only for worthwhile purchases, such as a fill-up, and not for every soda.

    Examine the monthly statement of any fuel card. You need to know what fees you’re paying in order to make sure the card is really a bargain and to help you at tax time, since all those fees are deductible business expenses. If the fees and the savings aren’t obvious in the statement, ask about them. If you don’t like the answers, change cards.

  11. GET A FUEL SURCHARGE
    Among Kenworth’s suggestions: Add aerodynamic features such as roof and chassis fairings, cab extenders and aerodynamic mirrors. Mount air cleaners under the hood. Use all-position tires on the rear, and make sure they’re the same tread as the steer tires. Match sleeper package to application; when you’re hauling tanks or flatbeds, for example, a flat-top sleeper is the most aerodynamic option. Do whatever you can to make gross vehicle weight as light as possible.
  12. SPEC WISELY
    Today’s diesel prices demand that owner-operators request fair surcharges from carriers, brokers and shippers. If a customer won’t pay a fair surcharge, don’t accept the load unless your calculations prove you’ll make money anyway.

    Most surcharges kick in when the national average price for a gallon of diesel exceeds a certain base price, traditionally $1.10 to $1.25. Assume a base of $1.25; if the actual price is $2.75, the ideal surcharge would cover the $1.50 difference. If your truck gets 6 mpg, divide $1.50 by 6 to get 25 cents per mile. If your base pay hasn’t changed much since fuel averaged $1.25, a surcharge of 25 cents per mile would fully compensate you for the higher price of fuel.

    Note that an owner-operator can profit from a fuel surcharge if his fuel economy improves. In the example above, assume your truck gets 7 mpg. Divide $1.50 by 7 to get 21 cents per mile. Now you need only 21 cents per mile to break even on fuel. If your surcharge is still 25 cents per mile, you have an extra 4 cents per mile in your pocket.

    Independents should base their fuel surcharges on a well-known source, such as the weekly diesel averages published by the U.S. Department of Energy, says trucking analyst Chris Brady. Customers who can check the calculations for themselves are “less likely to feel that owner-operators are using fuel charges to expand profit margins,” Brady says.

    Only 8 percent of owner-operators who receive surcharges believe they have completely offset high fuel costs, according to Overdrive research.

    Among leased owner-operators, only 77 percent believe all their surcharges are being passed along by the carrier.


THE COST OF SPEED
The typical argument against driving slower is that time is money: If you cover more miles, you make more money. But look at this comparison between one driver running at 70 mph and another running at 60 mph.

Driver A is 10 miles farther down the road than Driver B, but he also spent $8.75 more, and his cost per mile increased by 7 cents. At that rate, in a 130,000-mile year, Driver A will have paid $9,230 more in fuel than Driver B.

At the typical owner-operator net of 40 cents per mile, Driver A will have to drive an extra 23,075 miles a year ($9,230/$.40) just to pay the fuel costs of that extra 10 mph. That’s the equivalent of eight trips between Los Angeles and New York City.

By driving more slowly, Driver B saves fuel, saves on maintenance costs, and spares himself a lot of stress because he doesn’t have to run as hard.

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