Rising diesel fuel prices are stressing truck operators, as crude prices have pushed toward $80 a barrel for the first time in more than three years.
In Brazil, truck drivers rioted and brought the roads outside Sao Paolo and other cities to a complete standstill for days, over diesel fuel prices that have doubled in the last two years. The Wall Street Journal reports that the recent upturn in oil prices is putting pressure on transportation operators everywhere, and may even threaten economic growth in some parts of the world. In the US, the average price for diesel fuel rose to $3.277 per gallon in mid-May, up nearly 74 cents from a year ago and the highest since December 2014.
Profit margins in US road transportation are already razor thin, and rising diesel fuel prices are the bane of truck fleet operators’ lives. With truck routing and scheduling software, you can reduce the number of truck-miles driven to the bare minimum, avoiding the worst implications of costlier gas. But, if you’re still performing routing and scheduling tasks manually, as many operators continue to do, you risk allowing rising diesel fuel prices to put a heavier and heavier burden on your bottom line.
Fuel typically accounts for 30-40% of the cost of a truck-mile and, with fuel prices skyrocketing, that is only going to get worse. The latest available data from the American Transportation Research Institute (ATRI) estimates the average trucking cost per mile in the U.S. at $1.59. For a 50-vehicle private delivery fleet, where each vehicle racks up 50,000 miles/year, driving 20% more miles than necessary means nearly $800,000 in lost profit annually.
Optimizing your routing and scheduling operations could save you 10-30% of fleet operating costs, a substantial part of which is fuel savings. And yet, many private fleet operators continue to perform routing and scheduling manually, which breeds inefficient, costlier routes.
Skyrocketing diesel fuel prices should, in fact, be a prompt to reevaluate whether it’s worth implementing routing and scheduling automation software. ROI for the software is strong for fleets of 10 trucks or more, and businesses with fleets smaller than this have seen a solid return.
One of our US customers recently told us that they had cut 1 million miles from their fleet’s activities last year. Taking the Federal Highway Administration’s 2015 estimate of 5.29 miles per gallon for an average freight truck, that represents a reduction of 189,035 gallons of fuel consumed, or nearly $620,000 in today’s prices. Even if you’re operating at a far smaller scale, the savings can’t be ignored.
Routing and scheduling software minimizes the amount of time spent and miles driven to perform delivery operations, so you save not only fuel, but driver wages, and maintenance and repair costs. Sophisticated routing and scheduling software will even enable logistics operations to accurately compare planned versus actual levels of fuel consumption, leading to greater fuel savings.
Rising fuel prices are a huge threat to operating profit. Continuing to route manually means you’re increasingly vulnerable as prices go up. In contrast, routing and scheduling software allows you to squeeze the most out of every last drop of fuel.
So don’t allow yourself to be scared by rising diesel prices. If it prompts you to make your routing and scheduling operations more efficient, there’s a whole host of silver linings.
Indeed, it is worth asking the question: In light of rising diesel fuel costs, can you afford to continue to manually route your delivery trucks?
