Environmental Concerns Impacting Fuel Management Decisions

January 17, 2008

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Ninety-two percent of fleet executives predict fuel prices will remain high or rise over the next year, according to eyefortransport’s Fuel Management for Fleets’ 2008 report.

Traditional fuel purchasing strategies are still the most popular way to deal with high fuel prices, with 26 percent of respondents relying on negotiations with suppliers, 17 percent negotiating with fuel card companies, and 14 percent creating and implementing a fuel buying plan. Appointing a fuel manager, setting up a limited network, implementing the latest price gathering technology and using risk management (hedging) strategies are still low on the list of active strategies, but are on the rise, each seeing an increase of a few percent over the last year.

A combined 76 percent of fleet executives rated environmental concerns as being one of the most important factors in their fuel management decisions, of which a full 37 percent rate green issues as ‘Very Important’, and another 17 percent as ‘Top Priority’. When asked how they expect environmental concerns to impact their fuel management strategies over the next three years, another 76 percent said that they would either impact or greatly impact their strategies.

One of the more sensitive areas covered by the report is customer surcharging. While the hope is that, via hybrids, aggressive fuel efficiency programs, bulk fuel purchases and alternative technology, fleets can limit surcharges in the future, currently 18 percent of respondents in 2007, rising to 28 percent in 2008, divulged that they offset all fuel price increases with customer surcharges. A further 39 percent in 2007 and 31 percent in 2008 said that they cover at least some of the price hikes through this kind of hedging. A nearly even 26 percent in 2007 and 27 percent in 2008 said they do not apply surcharges, but seven percent each year said they were considering doing so as a way to hedge fuel increases in the future. By all accounts there will be no great short-term reduction in surcharging practices.

In order to survey the current landscape, respondents were asked to rate their current fuel management plans. The self-reported results were unambiguous, with an honest 16 percent reporting their fuel management is ‘Poor’. The majority of respondents settled for the middle ground, with 45 percent rating their management as ‘OK’ and 26 percent as ‘Good’. A contented six percent can be satisfied with themselves for their self-reported ‘Excellent’ fuel management strategies.

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