March 07, 2005
Volume 1 Issue 3       

Staying On Top of Fuel Will Save $  

We have discovered certain trucking companies are paying up to 8 cents less than the national average for fuel. How do they do this?

One of the ways is by monitoring and controlling daily fuel purchases. One internet based service, Prophecy’s “Fuel Logic,” helps trucking companies find the shortest routes, as well as the cheapest fuel on those routes for the trucks. This method is very cost effective and not as expensive as more sophisticated truck routing packages that do not recommend where the cheapest fuel is just the shortest routes for your trucks.  In theory, cutting fuel costs seems simple. Drive the shortest routes, discourage idling, and buy at the cheapest prices.

Although most food guys aren’t trucking companies, that’s all the more reason to use these tools. Most smaller food distributors don’t have the clout to add fuel charges, and bundling the extra costs into the price of product is generally not acceptable to the price sensitive nature of your business.

Another creative way to hedge fuel costs are Co-ops. Fuel Co-ops, like food Co-ops, were designed to help the smaller guys buy at volume prices. Some names to research are “Quality Plus Network” and “Truckers B2B”. Quality Plus is a network of member stations where you purchase fuel at a set margin. If the published price is lower than that “margin” you buy at the published price. B2B has over 400 affiliated fuel stops and by using those stations to refuel you receive a monthly rebate check of about 3 to 4 cents a gallon. However, you might be too small for these programs, but isn’t it worth a phone call? Maybe they can direct you to a Co-op more suited for your type of business.

An innovative way to cut the cost of fuel is to guarantee a supplier all your business, and negotiate a “hedge” price with that supplier. He may be willing to guarantee a price for 12 to 18 months if your numbers are big enough. This has been very effective for smaller truck fleets that are near refueling stations and can minimize their fuel travel by going to the same spot every morning or evening before the days run.

Lastly investing in Diesel or Gasoline futures is a great way to counterbalance fuel increases. Just like food futures, they provide a hedge against rising prices that can be sold as contracts for a profit if the price of fuel rises.  Although a little risky if done in a conservative way they provide excellent contributors as the price of fuel accelerates. 

These are just some tips we’ve found, we hope they are helpful to reduce your fuel expenses.

REMEMBER AT $54 A BARELL IS PAYS TO BE CREATIVE !!

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