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Tuesday, July 23, 2019

Fuel Prices Drive Up Fleet Operating Costs



Wazzup Pilipinas!

Fuel prices, mainly diesel and gasoline, have been on the rise over the past several
months of 2019. They have been a major factor that contributes to high fleet
operating costs. This is because fuel costs comprise the biggest portion of fleet
operating expenses.


Factors causing the rise in fuel prices

So, what factors have been making the fuel costs rise? Well, the increase in fuel
prices has been a result of several factors including high customer demand,
sanctions, market uncertainty, and year-over-year reduction in oil inventories.

Another factor that has caused fuel prices to increase in some regions are natural
disasters like hurricanes. For example, fuel consumption went up due to Hurricane
Florence during September 2018, which resulted in catastrophic damage in the
Carolinas. The fleets that were going to help in the recovery mission consumed more
fuel than the expected amounts during the month.

Increases in fuel card fraud, which started to become prominent in 2016, is another
factor that has put upward pressure on fuel prices. Fuel card skimming has become
rampant, especially at fuel stations, and the best way to cope with it is to do
everything possible to prevent it from happening in the first place. Fleet
managements need to stay alert and educate their drivers so that they know of the possible risks and vulnerabilities.

Keeping constant vigilance for anomalies relating to cards is another way to deal with the menace since there is no fail-proof strategy yet to entirely avert fraud, which makes fleets lose millions every year.

Fuel prices influence vehicle selection
As earlier stated, fuel spending accounts for one of the biggest expenses for running
a fleet. As such, a vehicle‘s Miles Per Gallon (mpg) is one of the most critical
considerations in the vehicle selection process. Statistics show that fuel prices have an impact on vehicle acquisition decisions. The market for both new and used vehicles tend to register a reaction and fluctuation in fuel prices. With lower fuel
prices, buyers may consider larger, less fuel-efficient vehicles.

However, the converse is not happening in recent times, and this could be attributed to the fact that the rise in prices has been gradual.


Adoption of alternative fuel options and reducing miles driven

With fuel prices still on an upward trend, it is expected that more fleet managements
will think about alternative fuel options and put more emphasis on cutting down the total miles driven. The success of these strategies will depend on vehicle utilization
analysis, which relies on telematics data and vehicle inventory management.

Speaking of telematics and fleet inventory management, fleet operators can count on
Eyeride experts to help install various devices onto their cars as well as systems like 360-degree cameras, GPS tracking systems, and most importantly, e-logs that can help to monitor drivers’ compliance with various rules and laws.

Conclusion

Fleet managers are looking at possible strategies to reduce fuel consumption as the
prices are expected to continue increasing. Strategies that managers are adopting
include acquiring hybrid and battery-electric vehicles. In addition, as corporate
leaders think about environmental sustainability initiatives, they are encouraging focusing more on acquiring smaller displacement and fuel-efficient engines because fuel efficiency means fewer emissions.

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