The transportation sector has undergone many transformations over the past two decades. Yet one thing remains constant — fuel management is still a bane for most fleet managers.
Freight costs can quadruple when fuel costs increase. High logistics costs, in turn, lead to customer rate increases, product cost inflation, underserving or abandonment of routes, and consumer dissatisfaction. No one benefits.
Yet blind cost reductions based on a hunch rarely lead to tangible cost savings. As an experienced fleet manager, you probably know that fuel management is more complex than the oil market economy. So how can you learn to balance fuel costs against a multitude of operational variables?
Enter digital fuel management systems.
What is a fuel management system?
Telematics-based fuel management systems enable fleet managers to continuously monitor fuel usage patterns and implement targeted optimizations to improve efficiency.
Typically, an automated fuel management system consists of two modules: onboard hardware and fuel management software (web-based, desktop, and mobile).
The necessary hardware can include:
- A vehicle telematics unit
- Data loggers
- Extra sensors (IoT devices)
- In-cabin and external cameras
Fleet fuel management software includes:
- A web-based, mobile, and/or desktop analytics dashboard
- A complementary mobile app for drivers
- Open APIs for extra integrations
The hardware component facilitates the collection of vehicle data, which is then transmitted to the core analytics engine for deep analysis. You can also choose to integrate big data from external sources such as traffic management systems or weather applications to get a better sense of the driving conditions across various routes and vehicle types.
Ultimately, the purpose of a fleet fuel management system is to provide you with granular, real-time insights on fuel usage to contain and optimize asset operating costs.
Benefits for fleet managers:
- Monitor asset use
- Generate compliance reports
- Mitigate operational risks
- Optimize fuel allocation
- Gain real-time fuel consumption data
- Improve route planning and asset utilization
- Develop better vehicle maintenance schedules
- Gain comprehensive insights on fuel economy
Benefits for drivers:
- Just-in-time refueling
- Streamlined receipt and expense management
- Route optimization for a better driver experience
What’s driving the growth of fleet fuel management system adoption?
Every sector has ramped up investment in technology. Fleet management is no exception. In 2021, 60% of fleet operators plan to increase their tech budgets.
As data indicates, a sizable portion of these budgets will be allocated towards fleet fuel management solutions in particular.
The fuel management segment was valued at $1,7 billion in 2020 and projected to grow to $3bn by 2030.
The interest in fuel management solutions makes sense given that fleet managers spend over 24% of their total fleet costs on fuel. That’s the second biggest spending category after driver wages (32%).
Beyond that, many fleet managers are also looking to expand their fleets with new assets — a decision that often leads to higher total fuel costs but lower costs per mile.
Respondent fuel costs per mile
Source: Trucking Research — An Analysis of the Operational Costs of Trucking: 2020 Update
Managers operating larger fleets can negotiate better refueling rates with petroleum suppliers. Plus, they can benefit from more attractive rates for employee fuel cards. However, to realize those savings, fleet managers need to understand their spending patterns and per-unit cost drivers.
How fleet fuel management systems contribute to bottom lines
Off-the-shelf fleet fuel management systems come in different configurations and have a varying set of native features. Some are plug-and-play SaaS solutions, requiring little configuration yet offering little to no extensibility.
Some are compatible only with certain hardware manufacturers. Others can be operated as a headless solution for any type of hardware and additionally integrated with other business systems at your disposal (e.g. a truck tracking system).
Custom solutions developed by a technology partner, in turn, can be individualized to your type of operations, hardware, and analytics needs.
What remains constant in either case are the operational benefits fuel management system software brings.
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Improved driver behavior
Driver behavior directly affects fuel costs. But to what extent?
A recent study of a sample of drivers found that aggressive driving increased fuel costs by up to 30%. Furthermore, regardless of the road grade, unsafe driving behaviors in urban areas drove air pollutant emissions up by 40% compared to calm driving.
Consumers, legislators, and business investors alike have a non-negotiable stance on improving sustainability in logistics and supply chains. Gaining more insights into drivers’ behaviors is another important step in that direction.
The best part? Fuel management systems paired with driver behavior monitoring solutions can help you not just proactively identify problematic behavior but prevent it from happening in the first place, making roads safer and the environment greener.
Learn how technology helps combat driver negligence
Apart from monitoring driver behavior and issuing alerts, some fleet managers are considering complementary hardware solutions. Speed limiters also play a role in improving fuel economy and road safety, as another report has concluded.
Driving speed significantly contributes to the miles per gallon (MPG) metric. Speed limiters force drivers to operate trucks at a measured pace and avoid rapid acceleration, speeding, and hard braking. Minimizing these behaviors can lead to fuel savings of up to 33% for highway driving and up to 5% in urban driving.
Changing driver behavior can lower fuel costs. But even marginal improvements in fuel economy can result in substantial savings when projected across the entire fleet.
Timely fleet maintenance also reduces fuel bills. Individually, minor vehicle issues can appear negligible. But when multiplied across all assets, they can add hundreds of thousands of dollars to your operational bills.
Fuel costs are affected by the following vehicle issues:
- Flat or under-inflated tires reduce mileage by up to 3%
- Minor engine issues reduce mileage by 4% on average
- Faulty oxygen sensors cut up to 40% off your mileage
- Leaking or dirty engine oil can lead to more serious issues
- Brake drag affects both driver safety and fuel consumption
A simple fuel tracking system can notify you about anomalies in fuel consumption that are indicative of potential maintenance issues. More comprehensive software, especially when paired with vehicle sensing technology, can communicate harder-to-spot manifestations of asset deterioration in a timely manner.
When you fuse fuel usage data with other insights on asset use and add an analytics layer on top, you can detect potential issues early and provide just-in-time maintenance.
Additionally, custom fuel management systems can be enhanced with a predictive analytics component that can not only forecast fuel costs but indicate when certain assets need maintenance.
For example, predictive fleet maintenance solutions let you identify the best sequence for scheduling vehicle repairs to maximize on-site engineers’ time. Or they can identify assets that can benefit from preventive maintenance today to avoid breakdowns during periods of heavy exploitation.
Learn more about the technology needed for predictive fleet maintenance
Fuel cost monitoring
You can’t optimize fuel consumption across the board when you don’t know precise MPG numbers for individual trucks and/or drivers. Basic fuel tracking systems can supply these. But they rarely allow you to discover the why behind usage patterns.
That’s why it makes sense to expand the range of data sources you’re collecting and analyzing. Especially if you’re also looking to purchase connected trucks — vehicles already equipped with in-vehicle sensors, data loggers, and telematics modules that can collect and transfer real-time data.
Data from these sources can be plugged into your fleet management system development for subsequent multi-vector analysis and detailed fuel cost reports for:
- Specific routes
- Vehicle models
- Truck loads
- Driver performance
Also, you can achieve an even more comprehensive view of cost-driving factors by augmenting your system with data from route planning software, vehicle scheduling applications, or even external location-based services.
After all, long-haul trucks often stay idle for six to eight hours a day. By having full visibility into asset use, locations, and route conditions, you can develop a better dispatch schedule without ballooning fuel costs.
Learn how we helped develop a telematics-based fleet management platform
Detecting fuel theft
Unfortunately, fuel theft remains an issue. A survey from 2015 found that 54% of fleet managers felt “somewhat” or “very concerned” about fuel theft. What’s more, unidentified or unreported cases of fuel theft lead to suboptimal fuel cost projections for the next year.
When left unresolved, such issues can lead to continuous overbudgeting, making your operations less profitable.
We can assume that the volume of fuel theft has been reduced as many managers have improved their data collection on fuel usage patterns and introduced fuel cards for drivers to minimize the temptation of tampering with refueling and expense reporting.
Fuel cards, in fact, are another great asset and data point worth integrating with fleet fueling management systems.
First of all, cards serve as another data point you can use to estimate, attribute, and analyze fuel costs across the board. By integrating fuel cards with telematics, you’ll receive accurate fuel reports for each vehicle. This, in turn, lets you map any inefficiencies to specific assets and uncover problematic driver behavior.
Moreover, fuel cards directly contribute to a reduction in fuel theft. For example, fuel cards can help prevent fuel skimming, when a malicious party replaces card readers at gas stations with skimmers that collect cardholder data and reroute funds to a third-party account instead of paying for fuel. On the surface, charges made by card skimmers will appear as regular transactions in your financial records, making detection of this type of fuel fraud complex.
On a more positive note, fuel cards also contribute to a more pleasant driver experience. By paying with a connected card, truck drivers:
- Gain a better sense of security as they don’t need to carry cash
- Don’t need to bother with expense management
- Receive real-time information on the nearest gas station
- Can benefit from perks offered by the card provider
Given that fuel cards offer savings for fleet managers and convenience for drivers, it makes perfect sense why the demand for fuel cards is booming. By 2027, the global fuel card market is projected to reach $1.21 billion, growing at a CAGR of 13.9%.
Fuel management is a tedious and intricate process. Especially when you can’t access crucial bits of data, explain usage patterns, and pinpoint the main cost drivers.
A fuel management system serves as a data aggregator, offering secure data collection, storage, and analysis. What you receive in return is a comprehensive view of your historical, current, and projected fuel costs as well as granular reporting functionality and integration with other fleet management systems.
Contact Intellias specialists to learn about standalone fuel management software development or how to extend your current fleet management system.