Controlling Fuel Costs to Maintain Profitability

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Controlling Fuel Costs to Maintain Profitability

• By Ranger Kidwell-Ross
• Editor

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Understanding the 15 Rule

• Only 15 of fuel actually does something useful
  like moving the vehicle.
• Good upkeep vital.

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Get Pre-Purchase Info

• Check fuel economy with chassis manufacturers
  prior to purchase.
• Talk to other contractors/users about their
  experiences.
• Consider advantages/disadvantages of diesel vs.
  gasoline vs. hybrid
• Check at www.fueleconomy.gov

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Train Your Operators!

• Curtail aggressive and high speed driving.
• Speeding and rapid acceleration and braking cut
  mileage up to 33 percent at highway speeds and by
  5 percent in town.
• Gas mileage decreases rapidly above 60 mph.
• Use GPS system to track
• Compare mileage driver-to-driver
• Consolidate routes, other trips.
• Minimize unneeded engine idling.
• Shut off auxiliary while blowing, etc.
• Operators dress appropriately dont idle engine
  to run A/C or heat to stay comfortable.

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Train Your Operators!

• Set up routes to avoid left turns.
• UPS got 2 billion in fuel savings.
• Cross-train operators.
• Check differences in time taken to service
  accounts, as well as fuel usage.
• Investigate differences, both plus and minus.
• Specify transit routes, not just customers and
  order of service.

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Train Your Managers, too

• Get them to key in on equipment costs.
• Compare routes for efficiency.
• Know why fuel economy and other costs vary.
• Train to read GPS properly to gain needed data.
• Consider bonus system based on overall job
  performance by operators set up rating system
  that includes route economy, checklist reporting.
• Find out while still in business...
• Contractors tell stories of buying out
  unprofitable competitors then, they reduce of
  sweepers needed for routes by 50 and make money!

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Maintenance Procedures

• Proper maintenance 50 longer svc.
• A tuned engine gains 4 fuel economy.
• Faulty oxygen sensor can cost 40 in fuel.
• Air cleaners can cost up to 10 in fuel.
• Proper tire inflation gains _at_ 3.3 (and improves
  tire safety and longevity). Every 1 psi drop in
  pressure of all four tires can lower gas mileage
  by 0.4 percent.
• Look for "Energy Conserving" on oils API
  performance symbol to ensure friction-reducing
  additives are included. Gains 1-2.

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Preventive Maintenance

• Maintenance software provides great data.
• More frequent oil changes a plus?
• One contractor tracks that 50 more frequent oil
  and other lubricant changes more than pays for
  added cost via chassis longevity.
• Use synthetic oil to stretch out oil changes?
• Better lubrication longer engine life.
• Extended time between oil changes lower overall
  cost.
• Fuel filters are cheap to replace until they
  fail.
• Communicate with drivers.
• Drivers daily written checklist a must.
• Must be in writing for accountability.
• Have a place for Other.

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Fuel Purchasing Basics

• Fuel costs less when ground temps are lower.
• Dont fill tank in fast mode to reduce vapor
  loss.
• Dont pump when fuel truck is filling storage
  tank.
• Reduce vapor loss via keeping top half full.
• Gasoline vehicles especially.
• Get your own tank(s) and bid refill prices.
• Bid between vendors and save a few cents/gallon.
• Get a tanker trailer if you have enough volume
  and buy at wholesale prices.

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Developing Accurate Costs

• Whats better, single-engine or twin?
• See page of handout.
• Depends upon average debris load twins might be
  able to pick up in one pass while a single-engine
  makes several.
• Whats better, diesel, gas or hybrid?
• Excise tax claim can be more aggressive with dual
  tanks.
• Whats place of tow-behinds, pick-up mounteds?
• Calculate fuel economy and other total costs
  (including time taken to clean) when evaluating
  equipment.
• No curb broom costs time.
• Shoveling out costs time.
• Weak or inappropriate performance costs time.

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Think Outside the Box

• Real World Example
• Contractor had a small route that required
  10/hours per week of sweeping, all in a town
  located 45 minutes away from his office.
• Following are the calculations for the
  twin-engine sweeper he historically used, versus
  switching to a Victory T-500, and a new local
  employee, for the route.

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Comparison Chassis-Mounted

• Travel Fuel/Month
• 2 gallons/hour x 1.5/hours travel/day x 20 days
  60 gallons/week _at_ 3/gallon 180/month
• Sweeping Fuel/Month
• 2 gallons/hour x 40 hours/month 80
  gallons/month _at_ 3/gallon 240/month
• Est. Employee Cost 1.5 hours travel/day x 20
  30 hours travel/month 40 hours of
  sweeping/month. Cost 70 x 15 1050/mo.
• Sweeper Payment Portion (at 1200/month)
• Usage in Example 40 hours sweeping/month 30
  hours transit/month 70 hours use/month 44 of
  total usage 528 is payment cost.

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Comparison Chassis-Mountedpage two

• Sweeper Payment Portion (at 1200/month)
• Usage in Example 40 hours sweeping/month 30
  hours transit/month 70 hours use/month 44 of
  total usage 528 is payment cost.
• Total Cost of Chassis Sweeper Operated 40 hours
  travel 30 hours is 1998/month. (180 240
  1050 528)
• Amount of Sweeping Time Still Available
• 160 total hours available 70 hours used 90
  hours still available (56 still available)

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Comparison Tow-Behind

• Employee Cost (includes fuel) 44 hours/month at
  17/hour.
• includes using his truck and he buys fuel 187
  (cost per wk.) x 4 748
• Cost of sweeping 44 hours
• assumes 10 slower sweeping
• including all 220/month sweeper payment cost)
  220 748 968
• Amount of Sweeping Time Still Available
• 160 total hours available 44 hours used 116
  hours still available (73 still available)
• Cost savings using above assumptions and example
  1998 - 968 1030 savings/month.

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Related Cost-Saving Ideas

• Purchase a one-grade-lighter trash bag, and
  negotiate cost with suppliers. 
• Previously, the company purchased ten or twelve
  cases at a time for about 39 per case of 250. 
• Now gets lighter grade bag and buys full-skid
  minimum. Cost reduced by 17 per 250, for a total
  of 22 per 250.
• Downside is more out per each purchase.

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Related Cost-Saving Ideaspage two

• Buy oil and air filters for the sweepers from
  NAPA, not OEM.
• This saves almost 50 over the dealer prices,
  even in quantity. Check NAPSAs discount price
  over local prices.
• Get onsite dumpsters from clients where you
  change-out trash bags.
• Reduced bags in hopper often means all night
  sweeping with no dumping.
• Lower debris disposal costs less non-sweep time.

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Related Cost-Saving Ideaspage three

• Provide vehicles to sales personnel and other
  managers who now use their own vehicles.
• Advantage 1 Saves money over mileage
  reimbursements.
• Advantage 2 Allows you to control first
  impression image to customers via vehicle
  choice.
• Pre-mix all two-cycle fuel by one person.
• Get better mix get better machine life.
• Pre-mix all two-cycle fuel by one person.
• Get better mix get better machine life.
• Pre-mix all antifreeze before use.
• Not premixing can create glycol hotspots that, in
  the extreme, can cause engine failure.

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Related Cost-Saving Ideaspage four

• Do not over-service air filters wait for
  indicator.
• Many reported instances of engine loss from
  over-service.
• Read all the tips at the WorldSweeper.com Tip
  Clipboard.
• www.worldsweeper.com/TipClipboard/

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Fuel Surcharge Basics

• Know your fuel and other costs!
• Calculate fuel costs at years end.
• Estimate highest price for coming year.
• Bid on price per sweep notify re possible
  escalating fuel recovery charge.
• Example 5 if 4.00 to 4.25 6 if 4.26 to
  4.50, etc.
• Dont wait stay under 10 at one time.
• Take fuel charge off when price of fuel drops
  back down.
• Raise cost per sweep if customer would prefer.
• Have the facts to offer customers if they ask.
• Resources and graphics at www.eie.doe.gov
• Use your knowledge to negotiate with vendors.

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Fuel Surcharge Advantages Disadvantages

• ADVANTAGES
• Provides immediate cash flow help.
• Perceived by customers as temporary, not a new
  long-term cost.
• Need is widely understood because knowledge
  widespread.
• DISADVANTAGES
• Some customers wont pay.
• Some may get bids to take business elsewhere.
• Some may not be able to pay fewer sweeps.
• Takes time to implement and defend (phone calls)

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Excise Tax Rebate Guidelines

• Single-engine sweepers do not qualify.
• Must be conservative in usage warm-up time.
• Get engine gallons/hour stats from manufacturer.
• Generally available for off-roadway fuel usage
  only.
• Not all states allow check your state regs with
  Excise Tax Dept.
• Check re state excise tax rebate availability.
• Municipal contract rebates if card lock system
  used and municipality pays the bill.

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