Managing the fuel needs of a fleet of trucks is tricky at the best of times. When faced with an unexpected war and the accompanying fuel shortages, it gets nearly impossible. Fuel prices are rising exponentially as demand continues to increase while supply falls. To give you an example of the impact that the fuel shortages are having, a load of diesel purchased on January 3rd would have been roughly $15K cheaper than the same load purchased on Wednesday, March 9th.
What To Do Today
If you’re worried about rising fuel prices and disrupted supply lines, there are a few things you can do to make sure you’re covered going forward.
- Don’t Panic: Supply allocations are challenging but not impossible. In fact, the fuel shortages the Southeast faced during the Colonial Pipeline outage in 2021 were worse than what we’ve seen so far. You’ve got this.
- Follow DES’ Guidelines: Take time to review DES’ articles Maintain Timely Deliveries and Driver Shortages for tips on how to manage your fuel tanks during challenging times.
- Review Your Price Risk Management policies: DES is not currently recommending locking in prices for extended periods at wartime valuations. Nonetheless, the current environment will expose where your company is at risk. DES recommends a strategic and thoughtful approach to price risk management, not knee-jerk reactions to price escalations.
What To Do Tomorrow
Going forward, there are things you can do now to ensure that you are prepared for anything the market has to throw at you in the future. Fuel deliveries can be impacted by the whims of traffic, acts of nature and groans from an aging national fuel distribution system. It’s important to have a strategy on hand to deal with whatever happens in the fuel marketplace.
Dial-in your inventory forecast.
Your inventory forecast needs to answer two essential questions:
- When will a load of fuel fit into the tank?
- When will the tank run out of fuel?
If your answers are off by too much, you risk a fuel spill or a backup of drivers waiting to fill their tanks. To answer these questions accurately, you will need to understand your fueling patterns. Do your vehicles fuel before they leave the facility each day, or do they fuel when they return? Perhaps it is a mix of the two. Maybe they fuel throughout the day.
One way to get to these answers is to use your tank gauge to measure usage throughout the day. The changes in fuel levels will show how many gallons are used between each reading. You can also use your transaction data from your dispersal controller to see exactly when vehicles are fueled.
Expand loading options.
One potential delay in fuel deliveries happens at the fuel loading terminal itself. If your fuel supplier only has access to one terminal, your delivery will be delayed if there are any terminal delays. Make sure you’re working with suppliers who have access to multiple loading terminals in your market. That way their driver can go to another loading terminal where there is no wait.
At DES, we refer to the process of giving more focused attention to filling troublesome tanks as “hypercare.” We advocate “walking those loads to the ground,” recognizing potential problem orders beforehand, and setting checks along the way to ensure the troublesome load makes its way safely into the customer’s tanks.
Our “hypercare” steps include:
- Confirm the load with the carrier the day before the delivery is scheduled.
- Double-checking tank levels the morning of the delivery to ensure the forecast was sound.
- Verifying the order was loaded onto the truck.
- Validating the load was received either verbally with the site or by using automatic tank gauge confirmation.
- Automated customer notifications for delivery milestones.
In challenging times it is important to know you are working with a strong partner. Diversified wants to be that partner. Please let us know how we can assist.