Fuel Cards Offer New Services as Competition Intensifies
By Dan Calabrese, Special to Transport Topics
This story appears in the May 5 print edition of Transport Topics.
Competition among fuel-card providers to keep major fleets is intensifying as carriers seek to mitigate the $4-a-gallon cost of fuel by paying closer attention to how it’s purchased.
That includes where drivers buy fuel, how much they buy at each stop and which payment method they use to make the purchase.
Fleets used to let their drivers make the decisions on where to buy fuel, “just based on when they wanted to buy it,” said Bob Sneed, vice president of corporate payment solutions for Comdata, Brentwood, Tenn. “Now they’re routing drivers into locations where they have prenegotiated discounts.”
Beyond simply offering pricing discounts, executives with fuel-card providers said they are trying to gain business by teaching fleets how to use their tools and processes to maximize savings, while offering additional services tailored to the needs of fleets and drivers.
For example, Dave Rewers, group vice president for Fleet One, Nashville, Tenn., said his company sees fuel management as its goal, not just providing a purchase mechanism.
“It entails finding out where they’re buying fuel,” Rewers said. “If you’re driving down [Interstate 40] in Tennessee, it’s probably 300 to 400 miles long and there are going to be 100 truck stops, and the price varies. We try to work with the trucking companies such that, when they drive down I-40, instead of letting the drivers buy the fuel wherever they want, let’s consolidate at the stops. That way, instead of buying at 80 of the 100 stops, you’re buying at three.”
By maximizing the number of gallons purchased at each stop, Rewers said, purchasers will put themselves in a better position to receive discounts.
“If you’re going to buy 100 gallons every month, nobody’s going to give you a discount,” he said. “But if you’re going to buy 10,000 gallons, you’ve got some bargaining power.”
Card users generally enjoy at least modest discounts, pre-negotiated between card providers and fueling stations nationwide. Comdata and FleetOne say all their users can get 1-cent to 3-cent-a-gallon discounts at a network of stations that have signed on to the discount programs.
Sneed said the best fuel-purchasing strategy is based on a company’s individual usage pattern.
“We’ll speak to the fleet manager and get an understanding of the freight lines, then look at benchmark prices at travel centers along their given lanes,” Sneed said. “Then we make proactive recommendations on consolidating their gallons at certain travel center locations, so this can be negotiated below cash price.”
He added, “We can not only help them in the negotiation of the discounts, but we will administer that discount at the point of sale.”
T-Chek Systems, Eden Prairie, Minn., said it provides a carrier with tools designed to provide real-time visibility of its account and cards, including analytical reporting and the current retail and wholesale fuel prices across North America.
“This level of visibility allows businesses to make informed decisions that have a direct impact on the bottom line,” said Mike Otto, T-Chek’s marketing manager.
Less traditional providers of fuel cards also are getting into the game. Apex Capital Corp., Fort Worth, Texas, a freight-bill factoring company, recently launched its second foray into the fuel-card business.
“We don’t really know that much about fuel, to be honest with you,” said Lacey Nichols, the company’s marketing manager. “We had a fuel-card program in the past, and we were a little nervous about starting another one. We wanted to make sure we were doing it right.”
With a constituency of more than 100 factoring clients to give the program a head start, Apex negotiated cost-plus discounts with Pilot, TravelCenters of America, Petro, Wilco Hess, Ambest and 350 independent stops and arranged for the card to be accepted at 5,100 locations total, including Flying J.
Because its cardholders are also Apex’s factoring clients, they can fund the cards themselves, draw on their factoring reserves or charge against the schedules.
Fabian Con-treras, the owner of Codysur Trucks, San Benito, Texas, said he uses the Apex card along with other fuel cards but appreciates the fact that he can use it for purchases other than fuel at the locations where it is accepted.
Contreras said he wires money to his factoring account weekly to cover his purchases.
“We have a $75,000 line of credit, so whatever we use by Thursday, I pay on Friday,” Contreras said.
The effort to gain a competitive advantage also has led a number of fuel card providers including Wright Express, TransCore and Ameriquest to offer value in other ways.
For example, with the requirement that newer engines use ultra-low-sulfur diesel, THC — a fleet-card services subsidiary of Flying J Truck Stops — offers a mechanism by which users of its card would be blocked from buying any other fuel.
“We’ve actually set the card up to where, if the driver pulls into a pump and his purchase policy is set for ultra-low-sulfur, that’s all they’ll be able to purchase,” said Carl Kelly, vice president of THC, Atlanta.
“It’s starting to be an issue because, if you put in low sulfur (as opposed to ultra-low) it can affect the warranty on the engine,” Kelly said. “If they do make a mistake and pull into a low-sulfur tank, it won’t turn the tank on. Otherwise, if you make a mistake and blow an engine, I don’t know how some of these [original equipment manufacturers] are going to treat that.”
Comdata’s Sneed said he urges carriers to have an individual whose only job is overseeing any fuel card program.
“The most important thing fleets need to do is just have a program administrator who has the responsibility and is accountable for oversight of the overall program,” Sneed said.
“That individual would look at what the fleet’s pricing was for the previous day and week and compare that against industry benchmarks to see how they’re performing,” he added.
Sneed said it also helps for a fleet to compare its overall per-gallon price with that of a specific owner-operator group. Because owner-operators are traditionally careful about what they pay for fuel, he explained, they make good benchmarks.
Software products designed to help carriers plan trips to optimize the value of fuel purchases also are gaining in popularity.
Expert Fuel is a program developed by ISDC Corp., Richardson, Texas, which recently was purchased by TMW Systems, Cleveland. It provides drivers with a trip route at dispatch to minimize out-of-route miles while maximizing the lowest-cost fuel purchases available on the route.
The software takes into account current prices, fuel level, vehicle fuel consumption, state taxes, tank-fill policies, driver amenities and other factors.
Ben Murphy, the TMW Systems senior vice president in charge of ISDC, said the recent spike in fuel prices has brought in 11 new carriers to join the more than 100 carriers already using the program.
Expert Fuel also helps drivers identify where their cards are accepted.
“There are several tiers of a network, the first being, in the primary level, ‘Where’s my card accepted?’ ” Murphy said. “So if they’re using a TCH card or Comdata, they’re accepted at certain stops. We have that information, so we will never recommend a driver go where his card is not accepted.”
Murphy said current transaction fees on fuel cards range from 20 cents to 30 cents per transaction on the low side to $1.50 per transaction on the other. Because most such fees are the same regardless of a transaction’s size, there is an obvious incentive to consolidate the number of purchases.
Ultimately, drivers make the fuel purchases, so the successful management of a money-saving fuel-card program requires just the right combination of driver empowerment and company control, the executives said.
Drivers may resist or even quit as a result of a fuel-card program being implemented, Sneed said, but fleets have no choice.
“When fuel prices were moderate-to-low, fleets would have to weigh the benefit of perceived driver turnover as a result of limited networks against the benefit [of the networks],” Sneed said.
“But in today’s environment, it’s a matter of success or failure. If you don’t take control of your second-largest operating expense, you won’t be in business,” Sneed added.
Besides limiting where drivers can buy fuel, some cards make it possible for carriers to limit the number of purchases they can make within a 24-hour period.
But Kelly said that approach often sacrifices the other needs of drivers on the road: “A lot of the time, those optimizers don’t take into account the creature comforts the driver needs. . . . If I had someone tell me to stay at the Super 8 every night, well, I probably would want something that has other amenities. A lot of these optimizers don’t take into account those amenities.”
Sneed acknowledged the problem, saying Comdata tries to address it by allowing fleets to use their cards for other driver conveniences, even running their settlements and payroll checks through their fuel cards.
This story appears in the May 5 print edition of Transport Topics.
Competition among fuel-card providers to keep major fleets is intensifying as carriers seek to mitigate the $4-a-gallon cost of fuel by paying closer attention to how it’s purchased.
That includes where drivers buy fuel, how much they buy at each stop and which payment method they use to make the purchase.
Fleets used to let their drivers make the decisions on where to buy fuel, “just based on when they wanted to buy it,” said Bob Sneed, vice president of corporate payment solutions for Comdata, Brentwood, Tenn. “Now they’re routing drivers into locations where they have prenegotiated discounts.”
Beyond simply offering pricing discounts, executives with fuel-card providers said they are trying to gain business by teaching fleets how to use their tools and processes to maximize savings, while offering additional services tailored to the needs of fleets and drivers.
For example, Dave Rewers, group vice president for Fleet One, Nashville, Tenn., said his company sees fuel management as its goal, not just providing a purchase mechanism.
“It entails finding out where they’re buying fuel,” Rewers said. “If you’re driving down [Interstate 40] in Tennessee, it’s probably 300 to 400 miles long and there are going to be 100 truck stops, and the price varies. We try to work with the trucking companies such that, when they drive down I-40, instead of letting the drivers buy the fuel wherever they want, let’s consolidate at the stops. That way, instead of buying at 80 of the 100 stops, you’re buying at three.”
By maximizing the number of gallons purchased at each stop, Rewers said, purchasers will put themselves in a better position to receive discounts.
“If you’re going to buy 100 gallons every month, nobody’s going to give you a discount,” he said. “But if you’re going to buy 10,000 gallons, you’ve got some bargaining power.”
Card users generally enjoy at least modest discounts, pre-negotiated between card providers and fueling stations nationwide. Comdata and FleetOne say all their users can get 1-cent to 3-cent-a-gallon discounts at a network of stations that have signed on to the discount programs.
Sneed said the best fuel-purchasing strategy is based on a company’s individual usage pattern.
“We’ll speak to the fleet manager and get an understanding of the freight lines, then look at benchmark prices at travel centers along their given lanes,” Sneed said. “Then we make proactive recommendations on consolidating their gallons at certain travel center locations, so this can be negotiated below cash price.”
He added, “We can not only help them in the negotiation of the discounts, but we will administer that discount at the point of sale.”
T-Chek Systems, Eden Prairie, Minn., said it provides a carrier with tools designed to provide real-time visibility of its account and cards, including analytical reporting and the current retail and wholesale fuel prices across North America.
“This level of visibility allows businesses to make informed decisions that have a direct impact on the bottom line,” said Mike Otto, T-Chek’s marketing manager.
Less traditional providers of fuel cards also are getting into the game. Apex Capital Corp., Fort Worth, Texas, a freight-bill factoring company, recently launched its second foray into the fuel-card business.
“We don’t really know that much about fuel, to be honest with you,” said Lacey Nichols, the company’s marketing manager. “We had a fuel-card program in the past, and we were a little nervous about starting another one. We wanted to make sure we were doing it right.”
With a constituency of more than 100 factoring clients to give the program a head start, Apex negotiated cost-plus discounts with Pilot, TravelCenters of America, Petro, Wilco Hess, Ambest and 350 independent stops and arranged for the card to be accepted at 5,100 locations total, including Flying J.
Because its cardholders are also Apex’s factoring clients, they can fund the cards themselves, draw on their factoring reserves or charge against the schedules.
Fabian Con-treras, the owner of Codysur Trucks, San Benito, Texas, said he uses the Apex card along with other fuel cards but appreciates the fact that he can use it for purchases other than fuel at the locations where it is accepted.
Contreras said he wires money to his factoring account weekly to cover his purchases.
“We have a $75,000 line of credit, so whatever we use by Thursday, I pay on Friday,” Contreras said.
The effort to gain a competitive advantage also has led a number of fuel card providers including Wright Express, TransCore and Ameriquest to offer value in other ways.
For example, with the requirement that newer engines use ultra-low-sulfur diesel, THC — a fleet-card services subsidiary of Flying J Truck Stops — offers a mechanism by which users of its card would be blocked from buying any other fuel.
“We’ve actually set the card up to where, if the driver pulls into a pump and his purchase policy is set for ultra-low-sulfur, that’s all they’ll be able to purchase,” said Carl Kelly, vice president of THC, Atlanta.
“It’s starting to be an issue because, if you put in low sulfur (as opposed to ultra-low) it can affect the warranty on the engine,” Kelly said. “If they do make a mistake and pull into a low-sulfur tank, it won’t turn the tank on. Otherwise, if you make a mistake and blow an engine, I don’t know how some of these [original equipment manufacturers] are going to treat that.”
Comdata’s Sneed said he urges carriers to have an individual whose only job is overseeing any fuel card program.
“The most important thing fleets need to do is just have a program administrator who has the responsibility and is accountable for oversight of the overall program,” Sneed said.
“That individual would look at what the fleet’s pricing was for the previous day and week and compare that against industry benchmarks to see how they’re performing,” he added.
Sneed said it also helps for a fleet to compare its overall per-gallon price with that of a specific owner-operator group. Because owner-operators are traditionally careful about what they pay for fuel, he explained, they make good benchmarks.
Software products designed to help carriers plan trips to optimize the value of fuel purchases also are gaining in popularity.
Expert Fuel is a program developed by ISDC Corp., Richardson, Texas, which recently was purchased by TMW Systems, Cleveland. It provides drivers with a trip route at dispatch to minimize out-of-route miles while maximizing the lowest-cost fuel purchases available on the route.
The software takes into account current prices, fuel level, vehicle fuel consumption, state taxes, tank-fill policies, driver amenities and other factors.
Ben Murphy, the TMW Systems senior vice president in charge of ISDC, said the recent spike in fuel prices has brought in 11 new carriers to join the more than 100 carriers already using the program.
Expert Fuel also helps drivers identify where their cards are accepted.
“There are several tiers of a network, the first being, in the primary level, ‘Where’s my card accepted?’ ” Murphy said. “So if they’re using a TCH card or Comdata, they’re accepted at certain stops. We have that information, so we will never recommend a driver go where his card is not accepted.”
Murphy said current transaction fees on fuel cards range from 20 cents to 30 cents per transaction on the low side to $1.50 per transaction on the other. Because most such fees are the same regardless of a transaction’s size, there is an obvious incentive to consolidate the number of purchases.
Ultimately, drivers make the fuel purchases, so the successful management of a money-saving fuel-card program requires just the right combination of driver empowerment and company control, the executives said.
Drivers may resist or even quit as a result of a fuel-card program being implemented, Sneed said, but fleets have no choice.
“When fuel prices were moderate-to-low, fleets would have to weigh the benefit of perceived driver turnover as a result of limited networks against the benefit [of the networks],” Sneed said.
“But in today’s environment, it’s a matter of success or failure. If you don’t take control of your second-largest operating expense, you won’t be in business,” Sneed added.
Besides limiting where drivers can buy fuel, some cards make it possible for carriers to limit the number of purchases they can make within a 24-hour period.
But Kelly said that approach often sacrifices the other needs of drivers on the road: “A lot of the time, those optimizers don’t take into account the creature comforts the driver needs. . . . If I had someone tell me to stay at the Super 8 every night, well, I probably would want something that has other amenities. A lot of these optimizers don’t take into account those amenities.”
Sneed acknowledged the problem, saying Comdata tries to address it by allowing fleets to use their cards for other driver conveniences, even running their settlements and payroll checks through their fuel cards.
