Whether you’re an owner-operator or a fleet carrier, knowing the price range of diesel fuel across the country – as well as how a fuel card can help keep your costs down – must be in your wheelhouse. With maintenance, service and repairs often cited as the number one expense in the trucking industry, diesel fuel expense is regularly listed as number two. (source: Wex Inc.) On average, many car hauling business owners estimate that roughly 20% of gross revenue goes directly to paying for fuel. Since diesel fuel is a fixed expense (rather than a variable cost such as an incidental maintenance), it’s obviously a necessity, and therefore an integral part of any trucking business financial strategy should be to view fuel savings as a key strategic goal moving forward.
On average, many car hauling business owners estimate that roughly 20% of gross revenue goes directly to paying for fuel.
Two years ago, national average diesel fuel prices began to fall from $4/gallon. A year ago, the national average retail price of diesel fuel was down to roughly $2.50/gallon – which is about what it costs today. But a year from now, that national average cost will most likely be up again to about $3/gallon. (Source: EIA Short-Term Energy Outlook, October 2016) The question is, “How will a 20% increase in fuel price impact your car hauling business and is there any way to prepare for it?”
The question is, “How will a 20% increase in fuel price impact your car hauling business and is there any way to prepare for it?”
What if your car hauling business could be saving up to 15% on annual fuel expense? A fuel card, also known as a fleet card, is used much like a credit card at the fuel pump at gas stations and truck stops to pay for diesel fuel without having to pay by cash or another method. In addition, the fuel card allows you to get gas at the same price as if you were actually paying by cash – without having to have cash on hand! Furthermore, most fuel cards will allow your company to pay your diesel bills weekly or bi-weekly – which gives you more time to collect cash. Fleet fuel cards usually also offer an option to pay for other expenses such as truck maintenance, in the event of an emergency, which is another great way for owners to maintain control over their driver’s spending and closely monitor expenses.
Dozens of different companies offer fuel cards. From every major truck stop, filling station and trucking industry financial institution, your best bet is to ‘shop around.’ Since there are many fuel card companies to choose from, talk to at least five fuel card providers to compete for your business and thereby offer you the very best discount rate available anywhere. If you negotiate hard enough, you might also obtain an extra bonus in the form of “no transaction fees.” As every business operating on credit knows, transaction fees can add up, so be sure to ask for it. This advantage can also be tied to a preferred payment method option where your company payments are made by direct withdrawal to the fuel card provider.
With maintenance, service and repairs often cited as the number one expense in the trucking industry, diesel fuel expense is regularly listed as number two.
Fleet fuel cards improve efficiency and budgeting while reducing the risk of unauthorized spending and fraud. Fuel card programs also eliminate time-consuming paper receipt tracking which helps your business avoid hours of costly accounting work. And if your trucks are traveling cross country, you have the opportunity to access electronic tools and apps that can help you find the lowest priced fuel along the way. By closely watching fuel rates in different regions, you can instruct your drivers to fuel up only in those locations with the lowest prices and best discounts. This is known as “spot pricing” and in some states can help you save an additional 20% on diesel fuel. Historically, states like Missouri, Indiana, and Oklahoma offer cheaper fuel prices – and not only choosing the right state can make the difference, but choosing the right gas station, too. The retail price between various gas stations can sometimes vary up to 10%!
Not only does a fuel card offer your company the best fuel discounts, but it also provides several electronic conveniences through detailed software reporting tools on the back end. In this way, fuel cards and fleet cards allow owners and managers to receive digital expense reports in real-time, which can be invaluable when managing the ongoing business expenses of a company overall. In fact, fuel card electronic statements can automatically calculate IFTA reporting records with miles driven in each state by simply uploading the fuel card statements – allowing you to have IFTA reports finished instantly – saving, even more, time and money. Over the course of a single year alone, the time and effort saved with automatic report generation is a very clever and inexpensive alternative to manually sifting through receipts, fuel bills and invoices every quarter. Why would anyone do it manually ever again?
I talk to fleet drivers as well as owner-operators every day, and they all want to know how to save money. The more I learn about Fuel Cards, the more I realize how helpful they can be. Why wouldn’t you get a Fuel Card? Please let us know the good – and the bad – if there is any. Thanks, and keep on trucking.
— Super JayPublished on October 28, 2016
The new way to transport cars