Fuel in the debate

The price of oil has rarely been more volatile than it is at present, with September seeing the biggest one-day rise on record.

The increase, by more than $16 a barrel, followed a decision by Opec to curb production by around 500 000 barrels a day as it moved closer towards a period of peak winter demand.

Despite oil prices previously falling amid expectations that the weakening global economy would undermine oil consumption, economists have warned that price rises at the pump can be expected for the next decade.

Goldman Sachs was even reported to have recently advised its airline and haulage clients to buy oil supplies now for up to eight years in advance.

On UK roads, however, it’s not just hauliers that have struggled to cope with the rising costs of fuel. Vehicle fleets of all sizes have felt the squeeze, not least those belonging to m&e contractors, and this has been compounded by the overriding economic downturn.

For many firms, both major industry players and smaller operators, the prospect of passing on their rising costs to customers is an unpalatable, and frequently unrealistic, option. As a consequence, the pressure is on to find ways of making significant efficiency savings – and the introduction of technology seems to offer one of the few possible solutions.

Slash fuel consumption

The latest telematics systems, in particular, impart the depth and breadth of information that can be used to keep a lid on costs and generate considerable productivity gains.

Tony Neill, executive vice-president of vehicle-tracking specialist Navman Wireless, explains.

“Companies need to establish what it is that they’re looking for in a fleet management technology system before they invest, but there has been no shortage of evidence to demonstrate the effectiveness of vehicle tracking in reducing operating costs,” he says.

“It has a proven success rate of reducing business mileage, saving companies thousands of pounds a year through enhanced routing, eliminating private or unauthorised mileage and better allocating vehicles to jobs.

“In fact adopters of advanced telematics systems have been enthusiastic advocates of how such systems are able to slash fuel consumption, typically by up to 15%.”

Businesses operating in the UK service industries have been among the most forward-thinking in recent years, and have reaped the rewards. The m&e contracting sector is, consequently, well placed to take advantage and, given the prevailing economic conditions, it can ill afford to be left behind.

Popular fuel cost-saving features of Navman Wireless’ telematics system have included downloadable speed analysis reports, detailing how a particular vehicle has been driven in comparison with the rest of a fleet. Neill illustrates how such information can be used to directly impact the bottom line.

“Assuming an average industry cost of 93p a mile to run a fleet van, around 16p will typically account for fuel consumption,” he says.

“This fuel figure could rise to more than 20p a mile for vehicles exceeding 70 miles per hour. With the right system in place, however, companies can monitor this and ensure vehicles are driven more economically.

“In 2003, a service company operating a fleet of 25 vehicles that use a Navman Wireless telematics system made an annual fuel saving of £60 000 in its first year. At today’s fuel prices, its savings amount to almost £100 000 a year.”

Increases in productivity can be generated by using telematics technology in a number of ways. Navman Wireless' integration of tracking, messaging and navigation technology reduces the need for drivers to plan their routes in advance. This allows firms to send job instructions to their workforce via text message and to give satellite navigation directions to the location at the same time.

Live tracking is markedly cheaper and faster than a phone call to drivers to find out where they are and how long it will be before they arrive at a customer site. In addition, instant messaging between an office PC and a terminal in a driver’s cab is less expensive than the price of mobile phone text messaging.

The wealth of functions that continue to be used on a regular basis also include the capacity to receive alerts, either by email or via an online software system, if a vehicle has been at a standstill for too long. This can help to tackle abuse of rest breaks, or monitor whether it moves outside working hours.