Fueling Optimization: Navigating a Complex Fuel Delivery Market

Choosing how your fleet receives its fuel can be a difficult choice. Fleet managers and fuel procurement personnel must choose among options such as bulk fueling, cardlocks, retail fueling, and mobile fueling. How do each of these work, and which one is right for your fleet?

Mansfield recently offered a free webinar on reducing fleet costs, and one of the topics covered was fueling mode optimization. It’s not too late to hear the webinar. Click below to register and tune in.

Click here

Retail Fueling

We’ll start with the simplest fueling method – retail fueling, filling up at a gas station or truck stop. Every consumer in America is used to stopping at a gas station to fill up, so retail fueling is often an intuitive choice. All your drivers need is a credit card or fleet card, and they’re ready to begin buying fuel. Drivers can conveniently stop at any of the 125,000 retail stations throughout the country and fill up when they need fuel.

The problem with retail fueling is the cost. Although fleets benefit from not having overhead or tank maintenance costs, they must pay a premium. As we noted in FUELSNews recently, rack-to-retail spreads average 20-30 cents, sometimes higher, which can add up if you have a high-volume fleet.

Cardlocks

If you’re feeling the pain at the pump and want to switch to a lower cost (but still quite simple) alternative, perhaps cardlocks are an ideal solution. Cardlocks are truck stops that usually have no service personnel on site. They often are well-lit and have high ceilings to accommodate heavy duty vehicles.

The benefit of cardlocks is the convenience – designed for large trucks, it’s easy to get on and off site. In addition, prices are generally lower than retail prices, and can usually be based on a wholesale index rather than the local retail price. Of course, there are negatives – cardlocks are far less common than retail stations, so they may not always be located along your drivers’ route. If a driver can’t get to a cardlock in time, they risk running out or having to fill up at a retail station.

Mobile Fueling

Mobile fueling is a fueling method with growing popularity. Fueling professionals drive onsite with a bobtail truck and fill each vehicle directly, while drivers are off the clock. This method reduces driver labor time – if drivers spend just 10 minutes each day filling up their tank, that’s nearly an hour of extra wages, per driver, each week.

Mobile fueling can be a costlier method of fueling, depending on how many vehicles need to be filled. The longer the fueling professional is on site, the more you’ll pay. Often, fleets choose mobile fueling anyways for the convenience, and reduced labor costs can offset or even exceed the higher fuel price. With a driver shortage forcing companies to innovate new benefits for drivers, letting them skip the fuel pump may be a notable added perk.

Bulk Fuel

We’ve reached the most affordable – and complex – option for fleets. For large fleets consuming over 10,000 gallons per month, a bulk tank may be the most economic option. While there are costs associated with tank installation and repair and maintenance, the 20-30 cents savings relative to retail prices will quickly help the project pay for itself. For lower volume sites, mini-bulk tanks (100-5,000 gallons tanks) can also provide some price relief.

Bulk tanks ensure you have supply inventory during emergencies, when retail fuel supplies become limited. They are also convenient for your fleets – you can fill up vehicles on-site, so they don’t have to travel off-route to get fuel. Bulk tanks come with a significant upfront capital cost though, which can be daunting. In addition, managing the environmental component requires frequent tests and maintenance, though your fuel supplier may be able to help with these.

 

Choosing the One for You

Choosing the right fuel delivery method can be a complex decision. Change can be daunting, so if you’re considering making a switch, reach out to your fuel supplier to see how they can help you navigate the process. If you don’t have one, seek out fuel suppliers with experience across all fueling modes, to help you navigate the decision between different modes.

A few factors to consider:

  1. Capital Costs. Cash-strapped companies, or small fleets with lower cash flows, should probably opt for solutions that do not have large up-front costs.
  2. Fuel Costs. Of course, a top priority of fleets will always be fuel price. The opportunity to save 20-30 cents is hard to overlook, and where appropriate can be a great way to reduce costs.
  3. Operational Fit. Reducing costs are important, but if your operations are affected you may need to consider paying more to get a better service. Labor time, ease of fueling, reliable supply, and convenience for drivers are all factors that must be considered in addition to costs.

 

If you’d like to learn more about picking the best fueling method, tune into the webinar mentioned above, or contact me at aapthorp@mansfieldoil.com to learn more.

Market Condition Report - Disclaimer
The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures or options contracts.

Sign up for FUELSNews for daily market information and insights
Sign Me Up
Make a Call

We are happy to discuss your business challenges over the phone and answer any questions.

800.695.6626

Send Email

Ask your toughest questions. We'll get back to you with the best answer humanly possible.

Send Email

Find a Location

Need to contact a specfic office? View contact information for offices across the country.

View Locations

Get a Quote

Let us know what type of fuel or service you need and a team member will get a quote to you quickly.

Get a Quote