Accounting for approximately 40% of the operating costs of fleets, the cost of fuel is huge for firms that rely on vehicles to provide products and services. To keep costs low, it’s often advised to prepare a budget and set spending targets. However an unpredictable global fuel market, it’s impossible to forecast accurately (and thus budget) for fuel expenditures.
Fleets are also under the constant threat of a loss via the cost of fuel theft. When costed, fuel theft accounts for around 5% of a fleet’s total fuel budget! Little wonder that fleets with fuel theft issues, always seem to have their expenses outstrip revenue. As a resource that makes up over a third of a fleet’s operating costs, fuel theft has a direct effect on the bottom line. Its poor management results in diminished cash flow, leaving the firm facing an uphill challenge to keep their vehicles on the road.
A Problem on a Global Scale
Fuel theft and fraud is a major problem in many fleet-based businesses, in fact its a problem that’s found on a global scale as well. Fuel theft isn’t an isolated issue, as diesel theft has been reported from the plains of Afghanistan to the back roads of Missouri.
- For example, the method of skimming between 20-40 gallons (a quantity small enough to go unnoticed by the fleet or driver and thus avoid detection), has also been found in use in India.
- As some fleets log fuel purchases manually, some drivers declare incorrect fuel volumes. They inflate the volume of fuel purchased and pocket the difference. This practice was also found in action in Afghanistan among military contractors, who sold the extra diesel on the black market.
Other methods include:
- Collusion with the gas station attendant to issue inflated fuel receipts.
- Draining a truck’s fuel tank using a hose, which is one of the most common ways of theft.
- Cheating the firm by committing fuel pass fraud.
Financial Cost to Your Business
The financial implications of all these actions can quickly add up. With fleets that use a manual logbook to record fuel purchases, let’s examine one possible scenario.
A commercial truck can easily consume more than $70,000 of diesel per year, which comes to around $5,800 per month. With diesel costing around $2.53 per gallon, that comes to 2,306.5 gallons per month.
Lets assume 1% of that volume is stolen from your fleet, that’s a loss of 23 gallons per month, per truck. This will cost you around $58, for every truck in your fleet. With 10 trucks, this costs $580. With a 100 truck fleet, that’s an unnecessary bill of $5,800 per annum.
The estimated 1% loss is a conservative estimate as some industry watchdogs put it closer to 3%.
Can you really afford to lose that much profit in a month, or throughout the year? And with the prospect of diesel fuel prices going higher, incidences of fuel theft will only go up.
Fuel Theft Prevention Tips
Serious issues like this often have multiple solutions available, however the efficacy of a solution will depend on the individual circumstances. Depending on your business model, one of these (or a combination) can help you stem the flow of fraud and theft from your vehicles:
- Ensure Secure Fueling Points: For firms that have their own fuel pumps in their yards, ptting up fences, installing bright lighting, and security cameras equipped with night-vision can curb theft from the site. In addition, the presence of a guard, signage warning of prosecution, keeping records of who has access to the yard, will deter would-be thieves.
- Security Devices in Vehicles: By placing locking gas caps and anti-siphon security devices around the fuel tank, one can protect against thieves armed with a siphon. To ensure there is no tampering with the fuel, these anti-siphon devices can be fitted with fuel level sensors to measure the volume of fuel in the tank. This allows managers precisely monitor fuel consumption.
- Get Employees Involved: Train employees to do their part by ensuring they follow prescribed safety measures. Your firm can keep a database of truck stops that are notorious for fuel theft (if they steal fuel there, it’s possible they can steal cargo too). Drivers should know how to find a safe place to park, one surrounded by adequate lighting and security. If the vehicle is to be left, drivers should park in a way that obstructs access to the fuel tank.
- Deploy Fleet Fuel Cards: To combat the falsification of fuel purchases, fleets should issue drivers with fuel cards. These are designed to prevent unauthorized fuel purchases as each card is associated with a specific company vehicle. Some models can even be used to track the vehicles they are assigned to. This tracking allows the specific location of the vehicle to be compared to the location where the fuel was purchased. Any inconsistencies can signal fuel fraud is taking place.
- Carry Out Regular Audits: Not all cases of fuel fraud involve the driver. They may be as clueless as you are that the station attendant is short-selling. Some fuel station operators calibrate their fuel pumps to always leave a certain volume in their own tank. At the end of their shift, they siphon this off for resale. In this case, the only way you can detect this (and exonerate the driver), is to audit your records meticulously and regularly. By cross-referencing invoices against alerts, you can pick up any inconsistencies and address them.
Individually, all these will strategies work, but most fleets find that their best defense is with a robust fleet management program; especially one that combines fuel monitoring solutions with your fleet management system.
Knowing the value of tracking multiple data points, at Perfit Computers, we developed a comprehensive fleet maintenance software, known as EMDECS. Plagued fuel theft? Our software can gather fuel information, allowing it to be compared against the vehicle average; any deviation may be an indication of theft.
The data gathered can also be compared against historical records, vehicle average and any discrepancies quickly detected. Monitoring a vehicle’s fuel economy can also signal an abnormal deterioration in vehicle parts.
Don’t let the 1% loss become 5% in your fleet, start tracking the metrics that matter in your business. Contact us here and lets show you how EMDECS can help to eliminate fuel fraud in your fleet.