Leasing at Prime

Fuel. I posted this somewhere else, and can't remember where...

First, we use a Comdata card, but you can also purchase your fuel with cash. Comdata purchases will appear on your settlement without you doing anything else. You submit a macro 10 to document the cash purchase, and scan the receipt with a trip report - that works with tractor or reefer fuel - not that a flatbedder will worry about reefer! (Cough, gasp - quit bogarting!) All of our in-network fuel stops accept our Comdata card, I only buy fuel for cash when I'm not near an in-network fuel stop, and I need to buy some reefer fuel within the 2-hour limit we have after hooking onto a trailer. If you purchase your fuel out-of-network, you will not recieve the corporate discount! This can amount to a lot of money that you won't keep!!



So, fuel is your number one expense on the lease side. Minimizing costs is the easiest way for an independent contractor to maximize what you can push across the bottom line, and into your pocket. There's only so much you can do in terms of pushing the miles, and we're not paid by the mile in any case. It seems that as you use more fuel to put the miles behind you that there is a diminishing return in your net profit; you're working harder to gain an increasingly small amount. IMO, it's better to get the fuel bill under control

There are two ends to the fuel problem: use and purchasing strategy. Simple... use less fuel, and you'll put more in your pocket. All of the usual things that we try to get the company guys to do will work here. Progressive shifting, easy on the throttle, learn to run the hills on the pedal efficiently, SLOW DOWN... will all lower the fuel bill. It's instructive to get a notebook, and keep a fuel log. Date, location, mileage, fuel used, fuel economy - all on paper. I used to breakdown each trip into legs, and see over time how my mileage improved or not. Also you can try different ideas to increase your mileage - and keep track of the results to see whether you're doing any good.

For incentive, consider two different trucks... one getting 6 mpg (Mr. Leadfoot) and another getting 8 mpg (Mr. Efficient). Using 100,000 miles per year, and $3.50 per gallon paid...

Mr Leadfoot: 16,667 gallons per year, at $58,333.33.

Mr Efficient: 12,500 gallons per year, at $43,750.00.

So Mr Efficient takes home an extra $14,583.33 EVERY year. That's not chump change! It's an incentive to work on your fuel economy every day. The low-hanging fruit in all of this is slowing down, and purchasing fuel efficient, low rolling resistance tires. You gain 0.1 mpg for every mile per hour you slow down. Dropping from 65 mph to 55 mph will increase your fuel economy by an entire mile per gallon. With fuel being as expensive as it is, even the sticker shock of buying expensive tires pales in the savings that you'll get with great tires. Go play with the Michelin tire calculator, and see what you come up with. A good pair of drive tires to play with are the Michelin XDN2 and X-One XDA wide singles. Both are available in the tire shop. HINT: the XDN2s are cheaper, but you won't like what you'll spend in fuel to roll them down the highway...

http://www.michelintruck.com/michelintruck/toolbox/FuelSavcalculator.jsp

Purchasing: My strategy is to buy as much as possible at the lowest price, in-route. It really doesn't pay to go out of route to save a few bucks - you'll probably burn more than you'll save. I've found over time that macro 27 does not always send you to the lowest price fuel stop in your route. It's optimized to keep the company guys out of trouble, and support the fuel contracts. If a station isn't getting enough business to fill the contractual requirements, I believe that macro 27 will send you to a higher-priced station than another one with lower prices nearby at times. However, if you're low on fuel, or in a hurry - use it.

Many folks think that not purchasing fuel just before settlement cutoff is a way to maximize how much you put in your pocket. In my opinion, that's short-sighted. Passing up a great bargain on fuel isn't very smart - and if you're managing your money properly, you don't need to do that. Besides all it does is push a fuel purchase into the next reporting period. Be smart, buy as much fuel as cheaply as possible when it's available - play the long game, not the short game.

When I'm planning a trip, I go to the corporate website, and use the "Fuel Price by State" page. It's updated once a day (rather than four times like the macro 27 database,) but has the advantage of showing all the fuel stops in every state. I also use a spreadsheet to help organize the information for my intended route, to calculate the base price, and sort for the lowest price. From that, I choose the best - cheapest - fuel inroute. Please note that the price of fuel can change daily, so it's best to review it on the day you plan to purchase fuel. Also, a normally cheap fuel stop last year may have changed their tune this year. Don't rely on memory!

The price information reported by macro 27 and on the corporate website reflects the current pump price, less our corporate discount. If you're looking for the lowest price in ONE state, it's all you really need. But we don't stick to one state very often. BASE PRICE is the discounted price less the state IFTA fuel tax rate. This is important to know because there is a definite savings that you can cash in on here because of how our fuel tax is calculated. You can find the IFTA tax rates in the loose leaf manual supplied to you when you checked out your truck, or you can go to the IFTA website...

http://www.iftach.org/

Their website is updated quarterly... so the information in the handbook may be dated by the time they print it. Choose the tax rate link on the IFTA page, and use the "Special Diesel" or "Biodiesel" columns to check the rates.

Unlike gasoline tax you pay to put in your personal vehicle - everything you pay at the pump goes to the gubbermint, you only pay what you owe for IFTA commerical fuel tax. The formula uses miles driven within a state, the amount of fuel pumped, your individual fuel efficiency for the period and the state tax rate - but the key is you only pay what you owe. When you pump commerical diesel fuel, the tax amount that you pay essentially goes into an escrow account just for your tractor. If you don't pay enough tax at the pump, they take it out of your settlement. If you pay too much tax at the pump, it's refunded to you.

State A: Fuel tax: $0.20 per gallon. Pump price: $3.58 per gallon.

State B: Fuel tax: $0.30 per gallon. Pump price: $3.62 per gallon.

From the face of it, you'd think you'd save money in State A... 4 cents per gallon. When you calculate the base price...

State A: $3.58 - $0.20 = $3.38 per gallon.

State B: $3.62 - $0.30 = $3.32 per gallon.

That results in a 6 cent per gallon savings on just what you pay for fuel. Filling up in State B. 350 gallons per week average is not unusual for us to burn, so in the course of a year if you were to save that kind of money on average at the pump, you'd be $1092.00 ahead of the game. That friends, is about a settlement check in savings. You'll pay more into the kitty in State B, but you'll get any overage refunded... or they'll take it out of your hide if you don't pay enough. Dang the tax man anyway!!

Fuel. It's your largest controllable expense - you have complete control over how rich you make the oil companies and their shareholders. Why help the fat cats get fatter? Be smart and put it in your pocket.

 

Well heck! You guys just have no more excuses, do ya? When are ya signing your leases? LOL!