Fuel is the second-largest expense for trucking fleets, after labor. Every penny a fleet saves on fuel goes directly to the bottom line.
While fleets can implement best practices in driver behavior training and incentive programs, where and when carriers buy fuel has a dramatic impact on the prices they pay.
Where a fleet buys fuel and the various prices they end up paying are largely a function of the differences between locations, taxes and discounts that a fleet may have with specific truckstop chains. Route-line optimizers were built to help carriers find the most efficient place to buy fuel.
Route-line fuel purchasing optimization systems have been around for about two decades. FreightWaves’ late co-founder, Ben Murphy (RIP Ben), was involved in developing one of the first fuel route line optimizers. Effectively, it would determine the lowest cost of fuel along a route line, comparing the prices of the truck stops that a truck would see between pickup and delivery. Route-line optimizers are built to help fleets maximize discounts from chosen truckstop networks and take advantage of price variance along the route.
Timing of when to buy has always been a bit more difficult to manage. After all, it is hard to time purchases without knowing how much diesel prices would move within a 24-hour period.
But with recent advances in data-science, this is now possible. Using deep-learning algorithms that study how prices move at the wholesale racks, FreightWaves SONAR can now predict the price of wholesale rack diesel for the next 24 hours.
The reason this works is that diesel prices at the wholesale rack are linked to trading activity that happens on the CME futures exchange. Wholesalers adjust their prices after trading activity is closed and wait to change their prices until the next day. By studying how oil companies reprice diesel at various delivery points, SONAR can develop a forecast at the rack. The next-day forecast is accurate 90% of the time.
In test environments, fleets that have implemented next-day forecasts and have adjusted their purchasing accordingly have saved around 3% on fuel bills. In other words, telling their drivers whether to fuel up tonight or tomorrow can have a big difference on fuel bills at the end of the year. In fact, assuming fleets see 3% savings in their wholesale fuel bills, they will save approximately $1,000 per truck per year in their diesel bills.
Forecasted Overnight ULSD change and ULSD next-day price are now on available on the SONAR platform and free to current SONAR subscribers through Valentine’s Day. If you are interested in learning more about SONAR or the new Forecasted Overnight ULSD data-set, click here.