Forget the cost of the truck, forget even servicing costs, it's the cost of the fuel that presents the biggest challenge to truck operators - large and small. No operator can do without is - so what are the pointers to bear in mind?
Like most commodities, the more you buy, the cheaper the fuel can be. It stands to reason that a 30,000-litre tanker of diesel should cost less per litre than the 60 litres it takes to fill up most cars. Usually this is the case. However, smaller operators usually can't justify tying up their money in a tanker of diesel - even if they had the tank and dispensing equipment to put it in.
There are two main sources of diesel for a truck – from a bulk storage facility in a transport yard or from truck stops and petrol stations.
A Guide to Bulk Fuel Storage for Truck Operators
If an operator has more than five or so heavy trucks operating out of one operating centre, then the chances are that the option of installing a bulk fuel tank becomes economical. Typically, an operator will have a number of credit accounts with local oil suppliers and will phone for the best price for delivery when required. If all of the vehicles work in a local radius and always return to the depot every night, then it is likely that a bulk diesel storage tank will make economic sense.
One of the many concerns for a small operator or owner-driver is cash flow and the availability of credit. Buying diesel in bulk for delivery into a tank may be cheaper per litre, but as far as cash flow is concerned, it is usually out of the question.
The economics of operating a bulk fuel facility improve the more fuel is required from the base, but there is also a significant convenience factor, for example, the trucks can be refuelled overnight by night staff, meaning that they are working during the day, rather than waiting to refuel.
To get the best price, an operator would need to buy a full-load tanker of 30,000 litres – at today’s diesel prices this means tying up more than £30,000.
Having smaller quantities such as 5-10,000 litres will mean the price per litre increases but even at these small volumes, having just 5,000 litres delivered means tying up at least £5,000 for somewhere between a few weeks to a few months.
If oil companies were generous with their credit terms, this would be less of an issue, but thanks to many oil company credit controllers receiving burn fingers over the years, credit terms are less than generous for most companies and non-existent for new start ups and owner drivers.
If none of the issues with bulk fuel storage put you off, to find your local supplier, simply search online for ‘local oil distributor’.
Environmental concerns also have to be taken into account as well. A truck operator cannot simply store diesel in any old tank. The tanks storage system must be protected with a bund wall to stop leakage into the environment. The Environment Agency is able to impose significant fines, running to the tens of thousands for people found contaminating the environment with diesel. Interceptors in the drainage system are a must as well. Check out the Environment Agency’s guides here.
Storing fuel onside is the same as leaving money in an open safe if the tank and dispensing equipment is not properly secured. All of the extra security measures cost. For small operators this is unlikely to be cost effective.
In addition to keeping out unwanted thieves, the system needs to be secured against pilfering from members of staff hoping to fill up their diesel cars. This means an access device, activated by a key or card which is allocated to an individual – and then the manpower to monitor the information that is recorded.
Buying Diesel Fuel On The Road
So what alternatives are there for an owner-driver? Of course, many simply pay by cash or with a standard credit card at the pumps, shopping around for the best deal they can find - making sure the truck will fit in the station as well.
Paying as you go is OK, but you will be paying the retail price for the fuel - not knowing from one day to the next what the cost will be. If the credit cards are on their limit, then the credit for fuel has to come from elsewhere.
Even if a company has decided to take the plunge and invest in their own on-site fuel facility, there may still be a need to refuel from truckstops and petrol stations where the truck cannot return to base – or if there is a problem with the on-site facility. Alternatively if there is not space on-site, or the depot is in a sensitive environmental area, a bulk diesel tank simply may not be a possibility.
A truck operator could simply fill up at the pumps as most car drivers do, paying by cash or card and saving the little VAT receipts to make sure that the company can reclaim the VAT. With a number of vehicles and drivers this becomes unwieldy, difficult to manage and definitely open to abuse.
There are many different types of cards - retail fuel cards do exist but usually offer little benefit in terms of the price paid for the fuel. There is often a charge for the cards and usually restrict the operator to one brand of fuel – the most popular example of these cards over the years is the Shell fuel card.
Retail fuel cards
These types of cards certainly help with administration. There is just one invoice per week or fortnight to reconcile, rather than collating and storing hundreds of till receipts. The downsides are that the cards are usually ties to one oil company’s sites and will often demand a fee for each card.
As fuel only cards, these are less open to abuse by drivers than cash or credit cards, but the company should keep a careful eye on the transactions to make sure that the family car is not refuelled alongside the truck. Watch for weekend refuelling and fills under 80 litres – often the tell-tale signs of something going amiss.
Bunker fuel cards
Bunker fuel cards are a hybrid of the on-site, bulk fuel system and the retail petrol station network. The most popular are not linked to the retail price of fuel at garages, but more closely to the 'bulk' price that larger operators tend to pay when buying by the tanker load.
The cards use a bunkering network, such as Keyfuels and their small user 'Diesel Direct' brand to make the system work, but can essentially sell the small truck operator fuel on account at a pre-agreed price from some 1,500 outlets across the UK.
There is a smaller bunker network operator, UK Fuels that operates a similar system, make sure to ask which network you card can be used at. Search for fuel card dealers online.
The oil company will deliver into a prearranged site with one of the networks and then the customer will be allowed to draw down on the stock of fuel from any site in the network using a smart card. It works in the same way a bank will take your salary and allow you access up to your limit from any of their cashpoints.
The refuelling stations are usually typical truckstops and petrol stations, although there are some standalone facilities which use ‘hole in the wall’ technology to access the fuel.
For this service, the bunker network will make a charge of a couple of pence per litre – still leaving enough of a saving from the retail price to make sense, yet is still a cost that must be taken into account when reviewing the fuel policy for the company.
VAT reclamation is made easy – one invoice from the bulk fuel supplier and one from the bunker network.
The bunker system is good for companies drawing reasonable quantities of fuel away from base – say more than 20,000 litres per month. For those companies that simply need an emergency fall back facility or operations with a small number of 7.5 tonne-trucks, using a reseller, or ‘dealer’ of the bunker systems will get the best results.
With these cards being smart chip driven these days which makes them more secure than in years gone by – the cards can only be used for diesel (some allow engine oil and red diesel too), which means that any employees using the cards may not subject them to abuse.
Bunker card dealers
Both networks have 'dealers' who you will have to apply to for an account - you will be supplied by the dealer, not Keyfuels or UK Fuels directly. It pays to shop around with a number of dealers.
Ask how they set their prices and what their credit terms are - most will invoice weekly with terms 14 days from invoice. Once you have decided on a dealer just apply to this one - multiple applications to the network may ring alarm bells at the network head office that processes the cards – like they would with any credit card system.
Managing refuelling information
In the days of on-board telemetry systems in modern trucks, where the operator has MPG information and driving style at his fingertips, why is it important to calculate the fuel consumed by a truck using refuelling records?
There is one very good reason – if the truck’s on-board system is recording 10MPG and yet the fuel apparently going into the truck is indicating this is closer to 8MPG, alarm bells should ring. Either the truck’s tank has a leak or fuel is being siphoned from the tank – or the card used for personal use.
If all the fuel is drawn from the company’s own tank, the pump supplier should provide a package to calculate the MPG based on the fuel going in – check what is available before buying the system.
The problem of monitoring refuelling information is worsened if a truck obtains fuel from a number of sources, including fuel cards. There is a solution to the problem – the bunkering networks provide the transaction information electronically for import into fuel management packages.