Optimized routes have the power to reduce fuel consumption and operating costs by as much as 20%. It’s one of the best ways to improve your trucking company’s profits.
Did you know that fuel card data is a powerful tool for improving profit margins? Fuel cards through a freight factoring company offer discounts on your fill-ups. Discover what a fuel card tracks and how that data helps you improve route planning and profit margins.
Data That Fuel Cards Provide
While different fleet card companies have their own data sets, most provide:
- Date
- Time
- Location
- Amount of fuel purchased
- Total cost of purchase
- Driver ID
- Truck ID
- Fuel type and grade
In many cases, the data is real-time, which makes it easy to identify issues. If a truck is suddenly consuming more fuel than in the past, there could be an issue with the truck. Taking care of small issues before they grow into costly engine problems or part failures lowers your maintenance and repair costs.
Fuel cards also add safety features that give you control of the use of all fleet cards. You can set caps limiting:
- The hours when the fuel card is active and can be used each day. (Makes it easy to restrict card use when your drivers aren’t on the job.)
- How many transactions can be made in one day, week, etc. (Prevents use of the card for filling up personal vehicles, unless you allow that.)
- How much fuel is purchased per fill-up. (Keeps others from filling up after the truck pulls away from the pump or while the driver is inside eating.)
- How much money is spent per transaction. (Limits fraudulent purchases.)
- The type of fuel that can be purchased with the card. (Ensures that diesel is the only thing going into diesel trucks and vice versa.)
Not only can this help you save money, but it also prevents misuse if a card is lost or stolen. With fuel cards, you can set individual PINs for each card. Only a driver can use the card at truck stops or gas stations.
If overspending occurs, you can track purchases to an exact employee and find out what is going on. It allows you to determine if you’re budgeting enough for fuel or losing money to long idle times or traffic congestion.
You can also set reminders for maintenance using the information provided on how many miles a truck is driven. When trucks are maintained properly, they run efficiently and limit downtime. All of this helps with your trucking company’s revenues.
Optimizing Route Planning With Historic and Recent Fuel and Trip Data
Looking at the fill-ups in real-time, after a week, after a month, and all year helps you see which drivers use the most fuel. You can look back at those and use additional information you’ve stored to see which routes cost the most. If you’re barely breaking even or find you’re losing money on certain routes, it helps you look at how to improve your revenues.
It might be the case that your per-mile rate is too low. More often, however, those routes are not as efficient. They may be the shortest distance between Point A and Point B, but you can look at road reports and see that major bridge construction causes a lane closure that doubles the amount of time it takes to get through that area.
Now that you have more information, you can optimize route planning by looking at alternative routes. Instead of coming into the city on that interstate, your drivers could save time and consume less fuel by using a highway instead.
Here’s how you optimize your routes using all this data.
- Identify inefficient routes using higher fuel consumption or extra mileage data.
- Analyze weather, construction, and traffic data on the current routes being used.
- See if your driver had any harsh driving behavior like rapid acceleration or harder-than-normal braking.
- Look for excessive idling and the reasons drivers sat idling at a loading dock or warehouse for longer than normal.
- Compare fuel card data with telematics data and see if there were any changes to the planned or recommended route, if so, ask your driver why they changed routes.
- Look at more efficient routes and compare those paths to the convenience of gas stations and truck stops. See if there are low-cost gas stations that aren’t miles off the newly planned route.
Using that information, build efficient routes with the help of route optimization software. When you have the most efficient routes that factor in traffic delays, average weather conditions at that time of year, distance to truck stops, and delivery time windows, you save money on fuel costs and lost time while idling at a warehouse or loading dock or in heavy traffic.
Boosting Profit Margins With Optimized Routes
Optimized routes help you improve your profit margins. You have the money you make for each delivery, but you have to subtract any expenses like maintenance, insurance, repairs, wages, etc. The remaining funds are your profits.
Divide your profits by your revenues and multiply by 100 to get your profit margins. Most trucking companies aim for a 6% to 8% profit margin, but niche sectors like hazmat and oversized loads often have profit margins of 10% to 20%.
The higher your profit margins, the more likely your trucking company is to succeed in a turbulent economy. With optimized routes, you lower your expenses in a variety of ways.
- Lower fuel costs
- Reduced repair costs
- Accurately planned maintenance schedules
- Less risk of drivers being on the road too long
- Accessibility of fuel pumps with the lowest gas or diesel rates
Once you’ve optimized your drivers’ routes, focus on boosting your profit margins. It’s important that you continually analyze your fuel card data, current routes, idling times, and mileage. If anything changes, you need to continually adjust. Seasonal construction projects, seasonal roads, and mistakes in GPS directions all impact how optimized your routes are.
Other Tips for Improving Cash Flow and Profit Margins
Fuel cards help you optimize your profit margins, which helps with cash flow, but there are other ways to improve your cash flow. Partner with a specialist in freight factoring to have a consistent stream of money coming in.
Most truck drivers complete a haul and return with a bill of lading. That’s used to generate an invoice to send to the client. If you’re lucky, the client pays automatically. However, some clients wait until the end of the month to pay all invoices at once.
You end up waiting weeks or months to get paid. In the meantime, you have fuel costs, wages, maintenance, and repairs to pay for. If you don’t have enough, late fees or insufficient funds penalties impact your profit margin. Freight factoring ensures you get paid immediately.
Contact Saint John Capital to learn more about the many benefits of freight factoring. We are here to answer your questions about freight factoring and how it helps improve your cash flow.
