Why are diesel fuel audits important? It almost seems like an effortless question. It’s common sense really, right? Well…is your fleet auditing their fuel purchases? If I had to put a number to it, I’d guess that only 50% of fleets are doing it. Even that is probably a generous number. Out of the 50% probably half are only doing it as regularly as they should. It’s really a full time job, and the larger the fleet, the harder it gets.
Let’s create a scenario. You’re a decent sized fleet. You have about 350 tractors, and purchase between 350,000-400,000 gallons per month at your 8 locations. You have discounts with a few major truck stops, and some local mom & pop stops. Fuel program is set, now you can forget? Wrong!
You probably have a good 3,000 transactions per month. A lot of these discounts are programed through a system that has a lot of human interaction. They have people manually entering information in to the system, which of course allows for human error (Fat Finger Sally). A simple data entry error can cause your once strong discount to be not so strong. If you’re not checking with tools such as OPIS (Oil Price Information Service) how would you notice a few pennies here and there?
Take it a step further and assume that these fuel companies are out to make money like the rest of us. Their once generous discount is not making them enough money in their eyes. They want to maximize, even over maximize profits. Now they’re inching up your diesel fuel prices little by little. Again, without someone watching like a hawk, how will you notice?
You’d probably just assume it’s the market, if you even noticed at all. Let’s say that you told the truck stops or fleet fueling provider that you were going to give them X amount of gallons per month; and for whatever reason you were not hitting that X gallon mark. Are you being informed by those truck stops/fleet fuel providers that they will be raising your rate?
You have to constantly monitor and measure all aspects of your fleet management, right? Tires, maintenance plan, fuel management which for some companies has been outsourced for a long time. It’s a time consuming job, and you must have tools, knowledge and relationships to stay ahead. Of course if you don’t there are people out there that you can hire to help.
What we have all found out over the last couple of weeks at truck stops, was not something new to all of us. We have seen mistakes made by others, yes mistakes and probably not with intent but even a mistake not caught could cost your company hundreds of thousands of dollars. What we are seeing to unfold this week might be the biggest intent for 1 company to actually falsify numbers in the fuel industry.
Our company was started based on fuel audits. As a former owner of a fuel company, I saw how most people and companies didn’t understand pricing, indexes, taxes, especially since it’s always moving. We would lose clients because some other company was offering cost plus pricing. We were offering OPIS plus pricing. The other companies cost plus were cheaper, but how was the word “cost” defined? It wasn’t.
The truck stop company with 2 names put together does not look at this point like they did the ethical thing. We will let the court decide on that. If you have been in trucking, the second name in that truck stop that went bankrupt 5 years ago, was always messing with their clients diesel fuel prices. No point of sale. All rebates. You had to use their fuel card. It was based on a monthly average. All very interesting now, if you think back, right? Most people probably thought the actual truck stops were the most valuable piece, but perhaps it was the intellectual capital and maybe even the fuel card.
We are here to help 267-482-6159 Cproud@sokolisgroup.com