Convenience and Commercial Fueling Just Might Go Together

We all know that convenience is king when it comes to retail fuel. Location, location, location, right? We also have come to expect that when it comes to commercial fuel it has been just about the opposite. Banished to the distant back lot with a plain white canopy, old dispensers and archaic point of sale systems selling diesel to commercial operators has long been the poor sister of fuels marketing.

Yes I know that Pilot Flying J and Love’s are both investing in incredible new stores, cleaner bathrooms, WiFi, reserved parking, better food, you name it. But that over the road truck stop and travel center fueling is not what we are talking about. I am talking about the local “work trucks” that do not venture all that far from home – waste trucks, food trucks (the distributing kind not the one you bought that high end lobster taco from last week), construction, beverage trucks, local pick-up and delivery services from huge companies like UPS on down to small same day hot shot delivery services. Commercial Covenience Article Callout2

These kinds of commercial customers have typically just put in their own bulk tank for fueling if they had enough trucks on their yard in any given day to justify the investment. Much of the time customers have not had to spend their own capital on the tanks and pumps they would simply find an enterprising fuel supplier to make the investment for them.

This has become hard to do in some markets and nearly impossible in others due to either fire codes in places like Chicago or environmental constraints in markets like California. Despite those challenges for those willing to fight through the red tape and get a fuel island installed it has been very hard to beat the combination of cost and convenience offered by having your own in house fuel station. I have long been a proponent of such solutions and considered the math settled, but lately I am feeling a lot less confident in the numbers.

When we say convenience we really mean time and time is suddenly a very hot topic for commercial customers. Between driver hours of service (HOS) regulations and growing driver shortages as the economy finally hits a higher growth rate time is becoming more valuable than ever. Suddenly the 15 minutes it takes for the driver to fuel back at the yard or the 30 minutes it takes to drop off their route and find one of those back lot canopies has become much more expensive.

Just how expensive? Well when working with a customer last month who is with a company known for tracking every minute of their drivers day we came up with the following math:

Commercial Covenience Article Table

 

The conventional wisdom historically has been that buying in bulk by the truck load is always the cheapest way to fuel a commercial work truck fleet.  If one only considers the price of the fuel that is certainly true. Typically if one compares bulk fuel vs. either mobile fuel or retail fuel it is generally about 25 cents per gallon cheaper.

Commercial Covenience Article Table 3

 

Should a fleet spent $0.50 – $1.00 per gallon in labor to capture $0.25 per gallon in fuel savings? Obvious answer is no, but what is their real labor cost to do the fueling? Many fleets will argue that the driver is just going to spend that time on the clock anyway and that the real net labor cost is zero. If that is true then they should just fuel from a bulk tank, but if they can get that driver to clock out and avoid the extra labor costs then mobile fueling would actually be the most affordable way to fuel their fleet.

There is one last bit of math around these costs that is becoming increasingly relevant. If instead of clocking out the driver could actually use that time to produce more revenue making deliveries then we get another significant economic variable in the cost of fuel. This factor is becoming much more meaningful given the ongoing shortage of drivers in every sector of the economy. After all the whole reason a work truck exists is to make money for the owner and if that truck has fewer available hours to do work than it is going to make less money.

Commercial Covenience Article Table2

So if you have seen mobile fueling take hold in locations where in past years you never would have expected it to make sense consider the overall math and pencil it out to see why a customer would possibly make that choice. Which brings me back to our opening, if you could pull into a gas station like the old days and receive full service for the same price or less than self-service why wouldn’t you?

This holds true for the drivers of the fleets just like it would for you driving your personal car, if you could have someone else do it for you why wouldn’t you. Which is the final piece of this puzzle to consider. Once mobile fueling takes hold it is very hard to displace, because as we have all learned time and again in this business, convenience wins.

As published in Fuel Marketer News Spring 2017

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