Mike Waters' blog: 21 April 2010 - Distress fuel purchases prove costly to business
21 April 2010
Mike Waters is head of market analysis at Arval
With fuel prices hitting an all time high, even small fuel saving measures can add up to a big cost reduction in a fleet's overall bill. If businesses are looking to take more control over their escalating fuel bills, then I suggest a good place to start is by looking at where and when employees buy their fuel.
Evidence suggests that distress fuel purchases, where employees hit the red and find the nearest petrol station, could cost as much as £109 per driver per year in route deviation alone. That doesn't sound a lot but on a 500-strong fleet that adds up to almost £55,000 a year. This figure comes from our consultancy team which estimates that on average a driver loses five miles each time they fill up, 2.5 miles to find the petrol station and 2.5 miles to get back on route again.
In reality I think distress fuel purchasing is actually costing fleets much more than this. The £55,000 figure is based on drivers refuelling twice a week but it doesn't take into account the fact that they are likely to be paying a more expensive price for their fuel when it is bought as a distress purchase. There is also the wasted time factor to be taken into consideration. If a driver spends 15 minutes deviating from their route to buy fuel and they are paid £10 an hour, it will also cost the company £2.50 every time.
Getting drivers to plan their fuel purchases and fill up their tanks at the best price is one way to significantly reduce overall fleet bills. It is also a good habit to get into to take advantage of lower cost sites if you happen to be passing one, eliminating both the need to deviate from your route later or to buy at a high cost location.
Planning fuel purchases into their schedule makes sure drivers buy at the best price and are less likely to panic buy when they run out of fuel and waste time leaving their planned route to find a petrol station.
Having a clear fuel policy on where and when drivers should buy their fuel isn't being over the top, it is actually a very simple way of cutting fleet fuel bills.
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