Fleet owners realize they cannot do much to reduce the high price of gasoline or diesel, so they are beginning to look for other cost-cutting measures.
“As fuel costs have continued to go up, labor costs have become a larger concern,” said Steve Williams, marketing director for Easy Fuel, a mobile refueling company in San Jose, Calif. “Since it’s difficult for business owners to manage the effects of the current fuel market, they want to get a handle on costs they can control.”
One way fleet owners can do this is to hire a mobile fueling service, ensuring their delivery drivers don't waste time at the fuel pump. This service is onsite during off-hours; when drivers report to work, their vehicles are ready to go. Otherwise, Easy Fuel estimates the average driver spends 30 minutes a day traveling to fueling facilities and pumping fuel. For the companies who pay their wages, this adds a hidden cost to the already high price of fuel.
Given the costs of complying with government regulations, onsite fuel storage is not an option for most fleet owners. “We service everything from refrigerated railroad boxes to fire engines, and even commuter ferries, tour boats and Coast Guard vessels,” said chairman Ed Burke of Dennis K. Burke Inc. Based in Chelsea, Mass. The company's typical mobile fueling customers are building contractors, retailers and other delivery-oriented businesses.
Burke and Easy Fuel represent two different models for the “wet hosing” business. While mobile fueling has been the main business for Easy Fuel since its founding in 1994, Burke is primarily a bulk fuel supplier for whom mobile fueling is a comparatively small enterprise. But for commercial customers who might want the service, it is better they turn to Burke than a competitor.
A third model, however, is suggested by Shipley Energy of York, Pa. Already active in retailing and wholesaling, in 2005 the company saw a potential for profit by adding a mobile fueling division.
“We’ve seen tremendous growth and have gone from zero to an annual volume of 12 million,” said Brian Kottcamp, who heads mobile fueling for Shipley Energy. “Our customers don’t want their trucks in truck stops. It could take drivers 20 minutes to fill up, but then they get coffee and talk to the clerk. Next thing you know, they’ve wasted an hour.”
Focus on Mobile Fueling
Mobile fueling customers generally have one thing in common — they are not in the fuel business. Retailers prefer to focus on sales. Contractors want to focus on construction. Delivery services, from food vendors to florists, need to concentrate on packages and parcels. So to manage their fuel, they hire a fueling company.
For these and other customers, Easy Fuel positions itself as a specialist whose only business is in mobile fueling. The pitch has attracted local and national fleet owners throughout Northern California. “Other companies who offer this service are more focused on bulk delivery and then might supplement it with wet hosing,” said Williams. “But our focus is solely on mobile fueling.”
The labor costs for even small fleets can be heavy. “Consider a moving company,” Williams said. “They might have three or four people sitting in the truck, all twiddling their thumbs while the driver is filling up the van.”
For fleet owners who are already paying big bucks for fuel, the added cost of lost wages is difficult to bear. But while price swings in gas and diesel are now the norm, mobile fueling can at least bring some stability to labor costs. “Once we educate customers on the concept, they see the value,” said Williams. “Though actual savings depends on the size of the company, in general our customers save 40 to 50 percent on labor costs.”
Easy Fuel achieves these savings for its customers in two ways. First is by fueling vehicles during off-hours so that trucks and vans are ready for work when drivers report. But second, because Easy Fuel personnel are specifically trained in fueling procedures, they can perform the task more efficiently than customers could themselves. These savings are then passed along to fleet owners.
“We have trucks designed for mobile fueling, operated by drivers who are trained for mobile fueling,” Williams said. Compared to fuel pumps at commercial cardlocks, Easy Fuel delivery trucks pump at faster flow rates. The need for specialized driver training arises from the fact, he said, “that mobile fueling is different than special bulk delivery. Mobile fueling is much more labor intensive. Drivers service yards of different shapes, sizes and layouts, in all types of weather, in the middle of the night and the wee hours of the morning. So if you're going to enter the mobile fueling business, put driver training at the top of your to-do list.”
Williams said his company's main task is to “getting in and out—quickly, safely and cleanly.” Technology plays a key role. “We couldn’t do mobile fueling without the latest barcode technology,” he said. Easy Fuel trucks have onboard computers equipped with software that is specifically designed for mobile fueling applications. Each delivery is quickly and accurately recorded, reported to the main office and billed daily or weekly to customers, who in turn can easily access their account information online.
Accurate information likewise enhances the scheduling of deliveries. “We consult with customers, look month-to-month at their overall fuel consumption and then work backwards to design a schedule to suit their needs,” explained Williams. Fleet owners can get only as much as they need, when they need it, rather than tie up capital as high-priced fuel sits in inventory.
Because fleet owners hire Easy Fuel as their fuel specialist, Williams and his team provide other services to help customers manage their fuel. “We send a biweekly newsletter to let them know about what’s going on in the fuel market and where we think the market is going,” he said, “and we also help with security. Break-ins and siphoning are on the rise. Thieves will steal fuel cards or even break in to truck tanks themselves.”
Williams recalled one fleet owner who lost $10,000 in two days when the company’s fuel cards were stolen. Easy Fuel, even though its business is mobile fueling, suggested how the customer could distribute fuel cards in ways to decrease the risk of theft. Always on the lookout for new markets, the company offers a fuel maintenance program for generator users. Fuel is regularly inspected to ensure it is clean, bug-free and ready for use when emergency generators are turned on.
Providing value is a key to Easy Fuel's success. Because mobile fueling companies serve a wide variety of customers, they must prepare for the ups and downs of each customer segment. “Activity has slowed in certain markets,” Williams said. “For example, when construction was booming, we increased our service to building supply companies. But now building is in a slump.” Yet by constantly selling value, Easy Fuel has maintained an impressive volume.
Fueling Your Niche
Easy Fuel was founded in the 1990s when increasing government regulation of fuel storage facilities prompted many end users to give up their own onsite fueling. By contrast, Dennis K. Burke entered mobile fueling in the late 1960s and early 70s. “Trucks were just starting to become diesel,” explained Ed Burke, “and so we designed a two-part truck that could deliver both gasoline and diesel.” Because the company was already well known across New England for its bulk fuel deliveries, the mobile service soon caught on.
In fact, mobile fueling kept going during the 1979 oil embargo while other businesses may have struggled. “When the government began allocating fuel,” Burke said, “a lot of our mobile fueling business served mail trucks, food service and sanitation. These were considered priority fleets and so our fuel supply wasn't cut back.”
Though Burke has chosen not to aggressively pursue growth in mobile fueling, its service enjoys a loyal clientele. “Customers want reliability,” he said. “It's a tough business. One slip and that’s it. Drivers get used to always starting with a full tank. So they don’t even look at their fuel gauges. If they run out of fuel, you get blamed. On the positive side, though, mobile fueling is an easy sell. I ask, ‘How much are you paying your driver?’ The vehicle has a cost per hour. So if a guy loses 30 minutes filling up, it really adds up—especially if he’s getting overtime.”
Dennis K. Burke is very conscious of maintaining and building its regional reputation. In recent years its involvement in biofuels has garnered wide attention in the local media. Mobile fueling can also bring benefits to the communities that Burke serves. “We utilize our mobile fueling trucks for emergency services such as generators, snow removal equipment and snow melters at Logan Airport in Boston,” Ed Burke said. For example, when Hurricane Bob struck southeastern Massachusetts in 1991, relief efforts were expedited with the aid of mobile fueling.
Under normal conditions, however, most customers are serviced at night. “We have exceptions such as bigger boats, cranes or field equipment,” noted Burke. In the main, however, the company must look at its existing routes and decide if adding a given customer is a good fit. “You must look carefully at your routes and consider the profit-and-loss,” he advised. Moreover, customers in some industries might have equipment coming and going at different times of the day, so that Burke personnel might be required to make two mobile fueling visits per day.
Over the years Burke has seen the mobile fueling business go through numerous business cycles. Fleet fueling “really took off in 1998,” he said, “but then in 2002 there was a lot of industry consolidation, so that customers got merged and purged.” In such a cyclical market, Burke himself must wrestle with decisions about how much his company should invest in its mobile fueling business.
“Some mobile fueling accounts insist on a ticket for each vehicle,” Burke said. “Many want to capture and coordinate the miles that the drivers did that day. Filling out a sheet of paper is less acceptable these days. So we’ve investigated several automated systems on the market and are looking at migrating to one of these solutions.”
All in the Details
Shipley Energy also realizes, said Brian Kottcamp, “that mobile fueling is about efficiently utilizing our trucks.” Because its mid-Atlantic territory encompasses numerous interstate highways, many of Shipley's mobile fueling customers are haulers. Some of these customers have more than 200 vehicles, so Shipley soon learned that writing delivery information on yellow tablets was not going to cut it.
“We knew we had to make a substantial investment in technology in order to grow. Now all our drivers have handheld computers with scanners, and we barcode the customer's vehicles,” Kottcamp explained. The delivery trucks needed for mobile fueling also represent a substantial investment. “Multi-pod trucks will cost you $175,000 each, but they're absolutely necessary to handle different fuels,” he said. “You must be flexible. In most cases, depending on the route, we have to carry two types of fuel.” The trucks carry 4,000 gallons and are equipped with special hoses to fill up vehicles quickly.
Investing in efficiency, however, is an indispensable element of Shipley's success. With its own costs under control, the company can offer real value to potential customers. “We do a financial analysis for them,” Kottcamp said. “We look at their fuel records, see how much they use, and show them whether it makes sense for them to use our service. We show them how our service gives them accurate records, so they know exactly how many gallons each vehicle uses.”
After three years in the mobile fueling business, Kottcamp has learned to cope with its challenges. “Aside from the large investment in trucks and equipment, finding a qualified driver who wants to work at night is tough,” he said. “The work has to be done in any weather, seven days a week. And in our climate, it might be 10 degrees outside at 2 a.m. But with the nature of the work, drivers don’t have a chance to get warm very often.”
Kottcamp’s advice to those who would enter the mobile fueling business consists of three words: “Details, details, details. You must be flexible. You must ready to find another driver if the one who is responsible for a delivery gets sick. If your customer’s trucks are all empty at the same time, that can be a challenge. The key is to have multiple contingency plans ready—for whatever might happen.”