Cutting Fuel Costs with the Help of Technology

0:00 | Steve Kepler

Why don’t we go ahead and get started? I’ve got three minutes past, and I’d like to welcome all of you to today’s webinar. It’s very pleased to have the speakers we have today. And as Minh said, unfortunately, you won’t be able to see our smiling faces. But certainly, hopefully, you’re here for the content anyway. You’re not here to look at us.

And as you said, we encourage you to engage throughout the webinar and ask questions in the question box. So today, my name is Steve Kepler. I’m the co-director of Scopelitis Transportation Consulting. I’ll be your moderator today. Aaron?

0:42 | Aaron Patterson

Yeah, thanks, Steve. I’m Aaron Patterson. I am the director of operations at Keller Trucking, located in Defiance, Ohio. We currently operate 250 tractors with about 300 drivers and 1,000 trailers. And we operate predominantly in the Midwest, Mid, and South Atlantic, and also into the South.

1:06 | Steve Kepler

Thanks, Aaron. Melinda?

1:08 | Melinda Tomaino

Thank you. I’m Melinda Tomaino. I’m the director of environment and sustainability at Associated General Contractors of America. We’re a national trade organization focused on general contractors and our members perform work in all different areas of construction, everything but single-family homes.

1:30 | Steve Kepler

Thanks, Melinda. Dave?

1:33 | Dave Schaller

Good afternoon. Dave Schaller with the North American Council for Freight Efficiency, or NACFI. I’m our industry engagement director and spend a lot of time at trade shows and private trucking events working with people on sustainability and efficiency.

1:47 | Steve Kepler

Fantastic. Thank you, everyone. So here’s what we’re going to cover today, kind of four blocks of time and certainly, we’ll leave some time at the end for Q&A, talk about the current fuel situation, some best practices, how to manage fuel purchases and savings, and a bit on alternative fuels, although that’s a webinar into itself and we’ll look to do something like that in the future.

First of all, I’d like to thank everyone who did complete the registration survey ahead of time. A couple of key outcomes from that, most of the fleets that are on the call today are about one to 20 trucks, a few are 20 to 80. And, the bulk of your concerns that answered the survey are prices, getting better miles per gallon, idling issues, fuel efficiency and maximizing savings, and the things that keep you up at night, rising costs, and lack of productivity efficiency.

So hopefully with what you’re going to hear today, we’re going to help address some of those issues and give you some tips for how to manage going forward. So to start with the fuel situation, the last decade has led to cheap and plentiful energy, the rise of fracking has unlocked cheap domestic supplies, cleaner energy has become less expensive, particularly solar and wind, which has pushed aside costlier and politically less popular coal and nuclear plants.

Historically, there’s an extremely high correlation between world energy consumption and the quantity of goods and services produced. The reason primarily is because it takes energy to perform each activity that contributes to GDP, not surprisingly, lighting your room or transporting goods. Energy consumption, which is cheap to produce and growing rapidly in quantity, is also ideal for increasing energy productivity since it allows factories to be built cheaply and raw materials and finished goods to be transported at low cost.

One thing we’re finding is, not surprisingly, intermittent wind and solar are not substitutes for fossil fuels. They’re just not always available when they’re needed. So this situation has more recently become undone, in part for a couple of reasons.

One, there’s been a haphazard transition to renewables. The price of energy has been too low for producers in recent years, and while the price of extraction has increased, there’s been reduced investment in oil and gas production, political inactivity, which has been an issue until recently, and we’ll talk about that in a second. Unexpected economic forces really triggered by the pandemic and lockdowns and the Russian invasion of Ukraine and its impact on world supply.

Demand has outpaced supply. First time ever, we’ve paid more than five gallons per gas and diesel. Natural gas prices have hit the highest mark in 14 years, and higher prices for energy means higher prices for everything, and wages aren’t increasing enough to keep pace with inflation. And as the economy changes from growth to shrinkage, the rate of shrinkage of the GDP will be greater than the rate of shrinkage for energy consumption.

With respect to interest rates, we certainly see them on the rise lately in energy supplies. As interest rates rise, energy supplies will become even tighter, leading to a shortage of goods, a potential increase in conflict to compete for energy, and rising debt.

Recently, there’s been legislation passed on Capitol Hill, the bipartisan infrastructure law passed by Congress back last fall, a number of provisions related to electric vehicles and charging infrastructure. And this week, the Inflation Reduction Act, a $745 billion bill, which $369 billion on all kinds of energy programs, including tax credits for buying electric vehicles of up to $40,000 per vehicle.

So this slide is just showing what we pay for a gallon of gas and diesel, what’s made up in that price. And you can see here, though, there’s a larger percentage of diesel that goes to refining, and transportation costs.

So this slide is indicating what the prices for gasoline and diesel in different regions of the country. On the left, you see gasoline, and on the right, you see diesel trending over the last year or so. You can see California, it’s a little tough to see the color lines, but California and the West Coast are leading the way on the high end of pricing, with the Gulf Coast is on the lower end.

Recent declines, as you can see, kind of peaked the end of around June, July. Recent declines have been sharper, you can see, for gasoline than they’ve been for diesel. So what lies ahead? So the U.S. retail price for gasoline averaged $4.56 per gallon in July. This is up from $2.78 in the first half of 2021. The average retail diesel price was $5.49 a gallon, up from $3.06 in the first half of 2021.

So for projections, retail gasoline is going to average $4.29 in the third quarter, and it’s going to fall about $0.50 in the fourth quarter. Retail diesel is forecast to average about $5 the next quarter, and then get about $0.70 the last quarter. The estimated prices in gasoline and diesel reflect refining margins for products that are near record highs due to low inventories.

Natural gas, just a few points on natural gas and renewables. Natural gas inventories ended July 12% below the last five-year average. So as I mentioned, inventories are lower. And on renewables, the sales of electricity to customers are increased to forecast by 2.5% by the end of 22, really because of rising economic activity and hot summer. And projections for renewable sources are going to provide 22% of U.S. electricity generation by the end of this year, and 24% in 2023, up from 20% last year.

So this slide, just to round out kind of where we sit today, is really the trends for worldwide liquid fuel production and consumption, and you can see a large portion of the last two years consumption has outpaced production, which has certainly contributed to the increase in prices.

So with that, I’m going to turn it over to Melinda, who’s going to talk a little bit about some impact on construction.

8:29 | Melinda Tomaino

Thanks. We were very interested in participating on today’s webinar because this is such an important issue for our industry. The prices that we’ve seen increasing has been one of the major increases across the scale for our inputs, and we’re in the middle of the supply chain crisis, so that’s saying a lot.

Our energy costs are about 4 to 10% of the cost of construction, and it’s a very low-profit margin. Related to the fuel prices, we experience those direct costs from the fuel purchases. We also pay through freight rate increases and fuel surcharges for the cost of literally thousands of deliveries of equipment and materials, also includes operational charges like hauling away dirt and debris and moving equipment from job sites.

A lot of these materials that we’re dealing with require a lot of fuel to mine, mill, manufacture, mix, and as you all know, to transport. For the contractor, we’re not in control of these costs, and we often cannot pass them on to the customer, and there’s limited short-term and long-term fixes at the moment.

Hopefully, more options will open up in the long term, but right now, even when you’re looking at electric vehicles or alternative-powered equipment, those projections are further out than we’re dealing with now.

Thanks. I’m going to go back over to you.

10:21 | Steve Kepler

Yes. Thank you for that input. Certainly, the construction industry is a big part of our economy, and thank you for that.

Maybe a quick question here, and maybe I’ll start with you, Aaron. From your perspective, we talked a little bit about the survey with some of the fleets that responded, but how has the fuel crisis impacted on you and your concerns going forward?

10:45 | Aaron Patterson

Thank you. The fuel crisis is definitely impacting us in the trucking industry. We’re constantly monitoring fuel prices, and it really has driven us to coach our drivers on just fuel purchasing, really. That’s the biggest impact we find with our drivers.

We’re making those good fuel purchasing decisions, and as we get into it more on how to communicate with the drivers, what they can do from their seat to help the company as a whole.

11:21 | Steve Kepler

I think certainly coaching drivers has lots of value on multiple fronts, and we’ll get into that a little bit later. Dave, maybe from your perspective, you obviously deal with a lot of fleets. What are the top three things that the folks you’re dealing with from an impacts perspective? What have they told you?

11:44 | Dave Schaller

Well, obviously, the industry is very short on drivers, so it’s great that Aaron coaches his drivers, but a lot of fleets are just struggling to get drivers, period. Getting drivers that are focused on what the company wants them to do is a considerable challenge to fleets.

It’s a challenge to get them in the seat and then get them to behave the way Aaron and other fleets want them to take their training and run optimal routes and fueling and whatnot, so it’s not an easy task for fleets right now.

12:20 | Aaron Patterson

I will say as well, as the fuel cost rises and customers are getting that fuel surcharge, takes a stronger look at service as well.

If they’re going to be paying the rising rates that we need here, they’re going to definitely dive into that service factor.

12:40 | Steve Kepler

Great. Thanks for that. So let’s go ahead and transition to some best practices on the conservation front. So Dave, I’m going to go ahead and turn it to you for this. Go ahead.

12:54 | Dave Schaller

Thanks. NACFI, the North American Council for Freight Efficiency provides free information to fleets anywhere where all of this information is available at nacfe.org. We’re a nonprofit, so it’s a dot org. And we have confidence reports published on tire pressure systems, low rolling resistance, idle reduction, automated transmissions, engine parameters, and a lot of other things.

And a really interesting aspect of this is that these have all been done over the past decade with really in-depth dives in each one of these areas. So these reports are anywhere from probably 40 pages to 100-plus pages long with all kinds of manufacturers and suggestions, benefits, challenges. But the interesting aspect is, as the industry looks more and more to alternative fuels, whether that be natural gas, whether that is electrification or hydrogen fuel cell, et cetera, virtually all these same principles are in play.

The truck doesn’t care what power is underneath the hood. The aerodynamic challenges are the same. The tire challenges are the same. So we’ve probably got a lot of football fans or ex-football players on. This is basic blocking and tackling. These are the offensive line to run your fleet the right way. Strongly suggest you take this and run with it as help for getting your fleet to optimal performance.

Next slide, please. NACFI has worked with these fleets whose logos are shown up here. There are a lot of leading fleets in the industry on their adoption of nearly 85 different technologies. And yes, that totally looks like spaghetti and it’s a useless graph to most people. I show this intentionally to show that none of these technologies went from zero to 100% in under a decade.

The trucking industry does not change quickly. We’re fairly slow and hesitant to adopt new technologies. We want to make sure it works for someone else, that we tend to respect in the industry before we’ll make that move ourselves. So as you see things changing in the industry, know that it’s not going to change overnight. There’s no history of that. We will take quite a while to make these changes as we move forward.

Next, please. One of the areas we really push on is tractor aerodynamics. We strongly suggest where possible, and if possible, use what the OEMs have developed for your product lines, like the image on the left that’s actually in a full-scale wind tunnel checking how the air goes around the vehicle. You want to open up the smallest window you can into the air as you move forward. I know Erin and I live in the Midwest where it snows. Think of it as a snowplow. You only want to push out of the way what you need to have out of the way and nothing further.

Additionally, on the right-hand photo, you see a truck where it has a flat side of the trailer pulling straight into the wind. That person’s losing about 10% of their fuel economy because they’ve got a big flat surface hitting the wind. You don’t want to carry a sail as you’re going down the highway. The middle truck’s an example as we move forward with alternative fuels.

Alternative fuels are great, don’t get me wrong, but a lot of situations where we put alternative fuels on the vehicle, we start losing things like the cab extenders and chassis skirts that simply aren’t available or developed for that particular fuel tank combination for that alternative fuel. There are situations where we take two steps forward and one step back. Frequently aerodynamics is one of those.

Next, please. Final reduction to something I’m getting more and more requests to talk about, that there are a lot of different ways you can help your fleet control idle. As you look at the two trucks in the upper right, you’ll notice that the black truck has a solar windshield cover in it.

Another really cool, weird suggestion from a driver that I talked to, he makes a tent over his lower bunk, if you will. His bunk air conditioning system comes out in the lower bunk area, so he takes a thermal blanket, tucks it in underneath the upper bunk, keeps the upper bunk down, and that way all the coldest air stays right around him as he’s sleeping. He doesn’t need to cool the whole compartment, he cools his area very well.

The second one is using a diesel or battery-powered APU. Diesel APUs can be very expensive, they offer a lot of benefits, a lot of drivers love them, but you need to know how to work them, and they can easily be more maintenance all by themselves than the main engine. A lot of fleets are now looking at battery-powered APUs or EAPUs.

There are off-board things, there are driver trainings. The last one on new vehicle orders, two things I want to absolutely strongly talk about here. Those two trucks in the picture, one’s white, one’s black. The black truck’s going to easily have 20% more energy used to cool that truck because it’s absorbing heat. White is the color you want.

Additionally, most OEMs have something called an Arctic package, which is additional insulation. Just because you don’t run in Canada doesn’t mean you need an Arctic package. If you’re familiar with Yetis and other coolers, it doesn’t matter whether it’s a hot thing on the inside or the outside. More insulation helps keep your vehicle the temperature you’re trying to keep it on the inside.

So, know that these things all help but are going to vary depending on what your starting baseline is, the weather you operate in, how well your drivers accept it, and the execution and support your maintenance staff provides.

Next, please. Tire pressure systems, there are a lot of them out there. It’s becoming very common for fleets to run automatic tire pressure inflation systems on trailers. The drivers simply don’t pay a lot of attention to the trailer. They’re not going to have that same trailer in a couple of days. Why would I worry about it? It’s not mine.

So, fleets are putting those on. There are more fleets. They’re using tire pressure monitoring systems and more and more fleets focusing on low-rolling resistance tires to get the best possible fuel economy they can. Next, please.

19:17 | Steve Kepler

Thanks. Thanks, Dave. That’s a great first set of helpful tips and information. Melinda, you want to take it over here?

19:27 | Melinda Tomaino

Yes, thank you. Earlier this year, AGC ran a short survey to establish a baseline for sustainable practices related to construction. This could be recycling or the use of electric equipment and tools. Got about 150 respondents and we’re going to continue to query our members periodically.

What we saw related to today’s discussion was that there’s already a lot of familiarity with using electric or battery-powered tools and some smaller equipment. But as soon as you start going into the heavier duty, larger price tag areas, then that’s where there’s a big unknown. And I just wanted to echo Dave, the construction industry is a pretty slow-changing industry as well.

So some of that heavy-duty equipment can last for 25 or 30 years and they do cost quite a pretty penny. So investment in new equipment is just that. It’s an investment that has to be planned and accounted for.

And this can also be difficult when you may have just invested in tier-four equipment as well. We are seeing interest, especially on the vehicle side, and there is interest in future of looking at those equipment choices that might be coming out for when they’re replacing some of the older equipment.

So I found that quite interesting for this discussion here. Thank you.

21:17 | Steve Kepler

Great. Thanks, Melinda. So we’ll move to some questions. I guess first, maybe, Dave, start with you, and then Aaron, we can kind of move to you. But, you know, you mentioned in your presentation, you know, you’ve got 85 different, you know, technologies. There’s all kinds of adoption rates. You know, there’s all kinds of stuff that you can look at.

Really, what should they, how can they wade through all that? You know, what kind of measures are important? Really, what should they be looking at, and how will they measure success? What are your thoughts there?

21:56 | Dave Schaller

Well, Steve, the annual fleet fuel study that generated that graph, our website has the ability to share with you all the different features that those fleets are using, and they’re not all the same. We don’t expect all fleets to run the same. They don’t all have the same types of equipment, same types of operation.

So, it’s going to vary depending on what you’re doing, how you’re doing it, what your fleet goals are. But some of it, idling aerodynamics and other things are fairly straightforward. But just as I say that, to some fleets that are hauling flatbeds and odd loads, the aerodynamics are never going to obtain optimal configuration.

So, we provide a lot of different information because there are so many fleets doing different things.

22:48 | Steve Kepler

And so, yeah, you’re certainly right. I think that’s a testament to all the different solutions that are out there. I guess maybe, Aaron, from your direct experience, what types of things are you guys looking at in terms of measuring and your success on fuel conservation?

23:10 | Aaron Patterson

Yeah, and Dave’s talking. He hit the nail on the head. We’re not looking for that magic bullet. You know, we want incremental changes to make a difference. Anything that can help us with tenths or hundredths or thousandths of miles per gallon change is what we’re looking for.

And he talked about how slow-moving we are. We want to be able to see the data on things like the tire inflation system, tire pressure monitoring, things like that, to where we’ve got all that information and then we can go communicate that to the drivers of this is why we’re making that move or this is what we’re thinking about making.

23:54 | Steve Kepler

And that’s probably a good segue. So you talked a little about coaching and drivers and clearly, they’re a big part of the solution, right? They’re the ones that are in control of the truck. So you talked a little bit about that.

So maybe from your perspective, what types of incentives and things you can do that are with your drivers that are useful that are having impacts?

24:19 | Aaron Patterson

Yeah. So from our drivers, we do incent them on things like improving out-of-brow fuel miles per gallon. And then like I touched base on earlier was fuel purchasing. But to kind of gamify the job is what we’re looking for.

How can a driver see what they’re doing making an impact not only on the company but on themselves? What decisions are they making daily that is going to benefit them in the long run? And then from the operations side with our fleet managers to be able to coach them to make those best decisions is what we’re looking for.

25:04 | Steve Kepler

Okay. Yeah. That’s obviously communication and engagement. So a question has come across from Eric. Maybe, Dave, this might be for you. And I think it’s pivoting off of the question. His question here is we split improvement opportunities into two categories, equipment improvements and driver improvements.

What are the top one to two things to do in each bucket? For example, he mentions, should we try to improve idling or cruise control or lower average speed? What’s the biggest bang for the buck? Anything you want to respond to that?

25:41 | Dave Schaller

Well, certainly if you’ve got high-idle percentage times, there’s an enormous opportunity. When you’re burning fuel and making no progress moving down the road, that is just not a good thing for any truck fleet. I fully respect that drivers need to stay cool or warm depending on the season and the sleeper. They need to have their hotel loads and whatnot.

But running a 13 or 15-liter engine for 10, 12 hours at night is an enormous hit to your fuel budget. So idle controls, whatever works for you and your drivers, whether you provide them with solar reflective shields for windshields or you gamify it and give prizes for the people with the lowest, it’s asking questions like I do.

You find out these clever little things about making sure that whenever possible you park on concrete rather than blacktop because blacktop retains the heat or the guy that puts the blanket over his upper bunk. There are a lot of little tips that can, as they get better and better, they find out what they can do that helps.

For moving down the road, tires. Make sure you’ve got low-rolling resistance tires. They’re properly inflated. We’re all touching the road every single day. Do it in the best way you can to maximize your fuel economy. I think that’s good.

27:03 | Steve Kepler

That’s good feedback. I need to wrap this section. Clearly, you know, each fleet’s a little different and the things that are working, you know, do more of. It’s an obvious thing, but let’s also pay attention to results, right? What you’re implementing and how it’s impacting.

So let’s go ahead and shift to the next section to move on again. We’ll have some opportunities for questions at the end. So, Aaron, maybe we’ll start with you. If you could talk a little bit about some fleet strategies for cost management and cost reduction.

27:42 | Aaron Patterson

Yeah, absolutely. So some strategies that we use here at Keller.

Obviously, we utilize fuel networks and anything that we can do to negotiate discounts at the major truck stops in North America and have our fleet know what they’re going to pay when they go to that particular stop.

We have rolled out an app on our intercompany-based app that a driver can pull up their route and see the price of fuel at each one of those stops and give them the training and the tools to make the best decision on where to fuel at.

And then, while we’re utilizing that fuel network, incentivizing the driver on those decisions that they’re making that I touched base on. And ranking them from best decisions to worst decisions. From an operations side, there’s nothing more frustrating than seeing a driver go off an exit with four truck stops right there and choosing the highest price truck stop.

And I’ll call them or the fleet manager call and just walk through the decisions they’ve made. And most of the time, they didn’t look or they were in a rush. And then it’s, you know, how can we improve upon that? And to go back to the incremental changes along with the fuel. That may be a $5 loss that we took there.

But if, you know, 200 drivers make that decision 100 times a year, then you’re talking about where those dollars really add up. And then as well as, you know, just coaching on un-routing. You know, if you were hauling a customer load that they say is a thousand miles and paying that fuel surcharge, but it takes you 1200 miles to run it.

There’s a loss there in fuel burn and things of that sort. So coaching our drivers, our fleet managers, what to look for, and then tracking those high percentages of out-of-route drivers and getting them the tools and resources to make better decisions there.

Trip planning and best practices. Here at Keller, we have students that come in new to the industry, and we take time during their orientation and their training program here with one of our trainers to go over what they’re looking for, where they want to fuel up, and big on trip planning. In our area, you want to make sure that you’re fueling up more in Ohio than Pennsylvania based on just the cost of fuel there.

And I’ve touched on fuel surcharge has been a big thing moving in these past two quarters. Spot freight was where it was at in the beginning of the year and the end of last year, and you could get really good rates there. And now we’re seeing where that need for customer freight and to have that fuel surcharge supplement has been great.

Even with our independent contractors, have them on our fuel networks, and they’re now working with our fuel surcharge and everything like that. So one thing that I would say from an operations and customer standpoint is to work on converting that spot freight to customer freight. And with those customers that you had flat rates on, working on getting that line haul, plus the fuel surcharge in that.

31:21 | Steve Kepler

Anything on fuel cards you want to mention? And I think on a related point, one of the things that, you know, how do you manage to use driver scorecards to help fuel efficiency? And you talked a little bit about gamification. Any thoughts there?

21:42 | Aaron Patterson

Yeah, so our entire fleet is on the same fuel card system. You know, the more that you’re spending at these places, the better discounts that you can get when you go to negotiate. And then as far as gamification, we’re taking everything from, you know, fueling decisions to productivity, safety.

And that’s a big thing there as well. When you’re looking at what can I do to, you know, help with the cost of fuel and fuel strategies there, safety is key. It’s proven that a safe driver is a fuel-efficient driver. You know, there’s less hard brakes, less hard accelerations.

You know, a safe driver is projecting their eyes down the road and they’re seeing that the stale green light and preparing themselves instead of having to slam on the brakes or, you know, hard cornering, anything like that. And the studies have definitely shown that safe drivers do make the most fuel-efficient drivers out there. And our numbers speak to that.

32:46 | Steve Kepler

Yeah, I would agree. I’ve talked to a number of fleets and this gets back to Eric’s question from a little before in terms of driver behaviors and speed and hard accelerations, heartbreaking and acceleration, all of those things.

And your telematics system and motive solution can help you track all that. And so that’s important. So let’s go ahead and shift to Melinda. You can talk a little bit from your perspective and your members on the construction side.

33:17 | Melinda Tomaino

Okay, thank you. I know there might seem a little bit repetitive here, because some of the fuel changing, saving options are similar to what has been mentioned earlier. One of the most immediate options available for you to reduce fuel is anti-idling.

And I think we’re going to sound a little bit like we’re beating that drum today. But one of our members likes to say that the worst mileage a vehicle can have is zero miles per gap. So that’s just going to, it might throw a wrench in all your plans if there’s no check on the idling of your fleets.

With construction, the fleets range. So you have not only the tools, but vehicles ranging from smaller cars to trucks to your heavy duty and owner and not for vehicles. So there’s a huge range of possibilities with idling and with some of the fuel efficiency options that you’ll see here.

During the survey that I mentioned earlier, 36% of the respondents indicated that they currently have an anti-idling program. So it’s pretty well adopted. Some local areas will have them as well that you’ll have to follow if you’re working within certain city limits or something along those lines.

The idling policy really needs to take into account some issues. You can’t just say no idling, period. There are certain instances where you’ll need it for occupant safety and health as well. And their comfort levels, if it’s extremely hot or extremely cold, you might need to do it to reach operating temperatures for certain equipment. So whatever policy that you want to set in place, you’re going to have to look at those things.

And there are some strategies that you can put into place, depending if you’re on a building site and it’s extremely hot, then you might have an opportunity to have a more central kind of cooling-down station so that people don’t have to have the AC on in the cab.

It can be a little bit hard on some of the highway projects out there that might stretch on for miles, but there might be ways to include more central areas where people can congregate and get out of the sun and cool down while they’re working.

Or the equipment side of things and just making sure, again, that you’re looking at the right sizing of that equipment and your vehicles. You may have to have a heart-to-heart with your equipment manufacturers. I don’t think you’re going to solve this by sitting in an office and just looking at charts and figures. You might not even have those charts and figures, but have a heart-to-heart with your equipment folks.

You may need to retire equipment to weed out some of the poor performers so that you can prioritize some of your more fuel-efficient options. You can do similar strategies with some of the vehicles that you use so that you’re maximizing those with better mileage rates, especially if you have someone who travels from site to site to site and they can rack up several hundreds of miles in a week or a day.

You can also consider maybe if you’re going to upgrade and change out to your fleets to consider some hybrids for those types of purposes as well so that they can travel between projects and maybe use the pickups for hauling and when you need that horsepower.

Vehicle maintenance is going to be similar to what has been discussed before. It’s important to keep that up so that you can get the best out of your engine. There’s also an option to, maybe when you’re looking at some of your equipment, to upgrade just the engine instead of buying a whole new piece of equipment. So that could be discussed as well when you’re going through that process and seeing where you can really tighten the belt a bit.

Some of these other options, well, I do want to mention carpooling and then some of the other options might cost a little bit more money. But for the carpooling and transit incentives, this is more usually discussed when you’re looking at ways to reduce your carbon emissions or associated with your company and your operations. But if you are moving a lot of people from, say, a more central location to a remote project, there might be some opportunities there to carpool.

Also, I know that we hate going virtual again sometimes when you can meet in person, but if you can, there might be that option, too, to have virtual meetings and site visits. I know that’s not always feasible, but that might be an option as well to help conserve fuel in the short term.

Alternative fuels, I know we’re going to go into that later, so I don’t want to use up our precious time here on that.

Telematics are also used a lot in the construction industry, and this can really help with those driving practices, such as speeding or rapid changes in speed, like the stop and go. Aaron was talking about just making sure that you’re promoting safe driving and smart driving as well. They can also help with routes and reducing any kind of fuel costs by that process.

This is also when you’re talking about incentives, it might be a good way to help tie that back to individual operators as well. I know that our members who have had success with the anti-idling policies have done that in combination, likely, with the telematics, so they have that data that they can follow.

Hybrids and electric, this is a brief mention for future consideration. It’s not going to change you tomorrow, because some of these and getting them is a long-term proposition, but there is that potential there. It’s starting to perhaps move in that direction. I think the industry is recognizing that that direction, that they’re heading in that direction.

Again, just to remember that fuel costs are not necessarily your energy costs. Even with those options, you are still going to have energy costs, so energy security is going to be extremely important regardless. I think I talked pretty fast in there. I am from New Jersey. We do tend to talk a little bit fast, but we’re staying on time a bit.

I mentioned earlier that contractors really have limited options for passing along some of those costs, and this slide demonstrates it. There are very few options, and a lot of these you’re going to have to go back and ask. The rise in fuel costs is not business as usual. It’s to this degree. It doesn’t represent the normal fluctuations that you would expect a contractor to plan for and accommodate in their bids and in their business plans.

But anecdotal evidence and polls at conferences and different conversations have shown that they’re starting to get more acceptance within the private sector for some of these contractual strategies. But you have to get that buy-in. You have to talk to the owners. You have to talk to your subcontractors to have this become really effective.

So, unfortunately, there’s a few different changes that you can look at, like contingency clauses, price escalation clauses, or change orders. But you’re likely going to need kind of an all of the above strategy, including the slides before this one.

I just want to point you to two resources that are free. Consensus Talks Price Escalation Resource Center is a good one and has some tools to use … and they have objective indices that are used by industry for fuel and some other of the key materials used in construction.

You’re looking for some of those numbers. And then on the supply chain side of things where fuel is often wrapped into this with the material price increases that we’ve been experiencing. The AGC’s Construction Inflation Alert is also a great resource for you.

42:42 | Steve Kepler

Great. Thanks, Melinda. Both you and Aaron gave some good input on cost management strategies.

If you were to give … and maybe, Dave, we’ll start with you here. When fleets are looking for how they purchase fuel, any key factors, like what are one or two key things that they should be, a couple of key things they should look at and how they’re, when they’re making an evaluation on how they’re doing that. Any thoughts there?

43:23 | Dave Schaller

Well, there are any number of organizations that can help small fleets that have fuel discounts. So, look at your different alternatives and figure out which one works best for your fleets and your drivers in the areas that you cover and make sure they’re using it as much as possible.

It sounds like Keller does a lot of that and that’s exactly what small fleets need to do. Copy the larger fleets like Keller and take those steps, educate the drivers and minimize your costs.

43:55 | Steve Kepler

And that’s a good point. You know, hopefully, what all of you are hearing from the conversation today is everyone’s looking for that quick solution, right? One or two things is going to help, but it’s really a comprehensive strategy, right? And you’ve got to be looking at a number of things.

And there are resources that can help you. And maybe sticking with you for a second, Dave, we talked a little bit about tire solutions with tire inflation and rolling resistance tires. Anything else with respect to tires? That’s obviously a big factor here, right? Anything else on the tire front that you could relate to those on the line?

44:34 | Dave Schaller

Well, it’s kind of interesting. In the last five to ten years, a number of fleets were switching to wide-based tires for more, lower rolling resistance opportunities. And it’s really gotten to the point where duals have become so low rolling resistance that that trend seems to have stalled out.

And now it’s predominantly fleets that need the additional weight savings, that they’re a bulk carrier, a frozen food carrier, etc. Weight is just extremely valuable to them. They’re the ones that are saving that 100 pounds per tire location by making the change for wide-based tires. So it’s good to see that the industry has caught up with low-rolling resistance duals now.

45:23 | Steve Kepler

Well, we’ve got a lot more questions I think we wanted to get to, but for the sake of time, let’s continue to move. And then we’ll hopefully after time at the end, we can throw in some other questions. So let’s just for a few minutes to talk about alternative fuels. And Dave, I’ll hand it to you here.

45:43 | Dave Schaller

Thank you. There are a lot of things going on in the industry. I first created this slide probably three, four years ago, pre-COVID. And I’ve only been adding squares with more companies and more venture capitalists adding more options into what you can do for fuels. Leave it at that there’s a lot of changes that might be easy for you.

The renewable diesel is probably a really easy alternative fuel to use if it’s available to you. It’s not widely available yet. If you’re running CNG vehicles, jumping to renewable natural gas is a big step in the right direction. What the industry is most excited about in many ways are battery electric vehicles.

And I’ve got another slide coming up here. Let’s jump to that. I’ll take it a little further down that. Every two years, we do a quote-unquote run on less event teaching fleets how to use less diesel fuel. And we did our demonstration in 2017 with sleeper tractors, 2019 with regional haul tractors. And in 2021, our most recent one last fall, we monitored 13 different battery electric trucks all over the U.S. and Canada.

So if you’re wondering, are these things real? Are fleets using them? Clearly, the answer is yes. And probably the biggest and best application for battery electric vehicles are in-yard tractors. I don’t know if you’ve got a lot of small fleets on the line that they need yard tractors, but certainly, for larger fleets, it’s an enormous opportunity. As is the opportunities for e-commerce delivery vehicles and whatnot.

Next slide, please. So I already mentioned that we’ve done these runonless.com has all the information from all three of these demonstrations available for any of you that want to look at it. I think we’ve probably got a fair amount of long-haul folks on here.

So if you clear back in 2017 when we did it for the first time and the industry was averaging around six and a half miles per gallon, seven different fleets let us monitor their best tractor with the best trailer and one of their best drivers. And they came in with ordinary production options at 10.1 miles per gallon. So that’s clearly the benchmark of what can be done.

Next slide, please. Now, following Run on Less, for those of you that are under pressure from your leadership to better understand electrification, if you go to runonless.com, we’ve got five different reports out there, one on the overall demonstration.

But then there’s reports that are specific to market segments. So there’s a report on terminal tractors, one on bands and step bands, one on regional haul tractors, and one on medium-duty box trucks. So we’ve written information that is segmented to match up to what you do. Next slide, please.

48:43 | Steve Kepler

Well, thanks, Dave. I think just a couple of things here quickly. This slide is showing kind of a global look, if you will, at a couple of things. One, the kind of infrastructure, the alternative fueling stations of different types of fuel, alternative fuels shown by type, and also the vehicle inventory.

This is not just trucks. This is across the vehicle population, as you can see on the on the infrastructure side. Today’s point, electric, clearly is leading the way, followed by ethanol and propane. And on the vehicle side, ethanol, electric, biodiesel, and hydrogen are leading the way.

The last thing I’ll mention, just very briefly, to Dave’s point, they’ve done a lot of fantastic work, as you can see, a lot of resources available. Also recently, the American Transportation Research Institute did a study on zero-emissions trucks and looking at different types of data sources on trucks powered by diesel, by electric, and by hydrogen.

I won’t go into the details of those due to time. But there’s a resource there that, if you’d like to reach out to them, they’ve done some work in this space. So I think, you know, one quick question, and maybe I’ll start with you, Dave, and then we can go to Aaron and Melinda.

So with one quick question, alternative fuels, what factors should fleets be looking at when they’re contemplating whether or not they want to jump in? What should they be thinking about?

50:33 | Dave Schaller

That’s going to depend on where the fleet is located. You have more options, more infrastructure, and things for many of these alternatives. If you’re in California, if you’re in New York, it will widely vary by region as to what’s available. And it also depends on the type of application that you’re running.

Certain applications, you know, just the easiest example, battery electric trucks are not ready for long haul applications right now. So if you’re a long-haul sleeper tractor, no, electric is not for you. Not right now. Expeditors fall into that category.

Other vehicles, we’ve had several timber companies approach that are under a lot of pressure to green up their operations. And I’m sorry, when you’re running off-road vehicles and don’t have access to electricity, there aren’t a lot of good alternative choices. If you’re running regional haul or running urban operations, there are a lot of different choices.

51:38 | Steve Kepler

Thanks, Dave. And maybe Aaron, your thoughts on alternative fuels. Where are you guys at on this right now? What are you thinking about?

51:52 | Aaron Patterson

Yeah, actually, we just put our first electric yard spotter into service the beginning of last month with two more on the way. And currently we’re building data from that and looking at where else we could utilize those.

And also starting the conversations with the OEMs on the alternative fuel options that we would have moving forward within our network.

52:21 | Steve Kepler

Great. I think the key is they’re working with them, right? And understanding, I think, at Dave’s point, the application and … because there are options out there.

There is a lot of focus on batteries right now, but there are other options that are out there. Melinda, is there anything else you wanted to add? I know you covered a little bit of this in your presentation earlier, but anything else on alternative fuels you want to cover?

52:47 | Melinda Tomaino

Sure. I think that the market for that has opened up a lot over the last few years. I know, not to date myself, but I know that there were concerns about voiding out your warranty before with some of the alternative fuels in them. I don’t want to discourage you from checking your warranty on the vehicle, but there’s greater acceptance of higher blends of fuel.

And there’s different types of alternative fuel out there, too, that can be experimented with. As far as EVs go, I think that there is that acknowledgment that we’re going to be looking to that technology for the future. Even if you had this fair cash to completely update your fleet now, there aren’t that many options out there for you on the construction side.

So, you wouldn’t be able to. So, we’re going to have the diesel-powered yellow iron for a long time into the future. But some of the concerns with some of the EVs are related to the cost. Just put that out there and then also the performance of them in the long haul. Not being able to recharge on site could be difficult or long recharging periods.

So, if the vehicle or equipment can only be online for six hours, then that kind of inhibits your ability to finish work for the day. So, I think that’s something that we’ll be interested in watching about the battery capacity moving forward on some of those.

54:36 | Steve Kepler

Okay, great. Thank you. So, just one point here. For those of you that aren’t familiar, Motive does have a fuel card solution that offers a lot of benefits. Looking at detailed reporting and spending and saving both for drivers and vehicles and which includes discounts on fuel, maintenance, and more.

And also advanced spending controls. There’s more resources you can go there to their website. And I think we got a couple of minutes left and maybe one thing that’s a couple of questions.

One of the questions in the chat box is maybe this is for you, Dave. How important is the age of the equipment? It somewhat gets to something you talked about is understanding the application and maybe relating to that when you’re specking equipment. What are any advice you can offer to fleets there?

55:33 | Dave Schaller

It’s probably got more to do with the maintenance they do with the vehicle than it does with the age of the equipment. Just so you know, our studies indicate that for every year newer a vehicle is, it tends to be 2% better in fuel economy.

That the OEMs are ever continuing to introduce new products. Just yesterday afternoon, International introduced a new engine. That they claim the vehicle is now somewhere in the 14-15% better fuel economy. That’s an amazing increase. But every year there’s a couple percent increase. And the reason I say maintenance is because a fair number of fleets don’t maintain the aerodynamic features. They don’t maintain other aspects.

And if you’re not going to maintain them, you need to have fairly decent turnover. A typical large fleet is turning over their vehicles every three to five years. Smaller fleets may keep their vehicles a lot longer. I’m not going to say you can’t have great fuel economy with an old vehicle.

We’ve got an owner-operator we know of that’s running, if I remember right, it’s a late 90s international 9400. And he is a fuel economy maniac. He’s pulling down 10 miles per gallon. He even designed his own bumper deflector splitter when we were at a NASCAR garage. He was busy taking notes on how they do NASCAR vehicles and created something custom for his truck.

So you can have great results with old equipment. But as a general rule, newer equipment will have better fuel economy.

57:10 | Steve Kepler

Yeah, I think that that’s a good tip. And, you know, I think clearly having a management and replacement strategy right is part of that. I think your point on maintenance is very well put. And I think the point, you know, Aaron mentioned to you earlier that understanding the application that you’re using it and what options are available.

So we have another question here. I think this might be for you, Dave. A fleet that ships a multi-stop route within 150 air miles from Roland, 150 air mile radius. Would shutting off the engine instead of idling at every stop make a significant difference?

57:50 | Dave Schaller

It might. It depends on how long they’re shutting off for and where you’re running. What are the temperatures? It’s going to vary depending on a lot of different aspects. You know, it made a 20% difference just in the color of the paint on the vehicle.

So I’d love to be able to give you some exact numbers. I can’t do that. If you’re doing multi-stops where you’re stopped for more than 10 to 20 minutes, heck yes. Turn that engine off. Crack the windows. When you get back in, crank the air conditioner.

58:27 | Steve Kepler

Aaron, in your experience with your drivers, how do you, you know, your operation is a little different. But, you know, what’s kind of the general guidance you’re using with regards to idling and stops and things like that?

58:41 | Aaron Patterson

Yeah, with us, it’s a balance between driver comfort in that idling. We don’t want to have a driver leave a truck, you know, idling for 10-plus hours at a time. But, you know, what can we do to help mitigate those, you know, discomforts that could be in the truck with turning it off?

So, just talking with our drivers about where that balance is for them. What’s going to be the most fuel-efficient, but also not put them in a spot where their comfort has to suffer.

59:14 | Steve Kepler

All right. Well, I think we’re at time. We’re over by a minute or two. I think I’ll give, you know, our participants any other final thoughts before we wind up? Maybe to start with you, Melinda, any final thoughts you’d like to share?

59:32 | Melinda Tomaino

No, I think basic themes would be the anti-idling and vehicle maintenance, but thank you for having me.

59:46 | Steve Kepler

And Aaron, Dave, anything from you all before we sign off? I do think you’re right. I think the other to me, the other thing is it’s not a one size fits all solution.

And you have to have a method to your madness, if you will, and to understand what you’re doing and how it’s impacting on your fleet and what are the best solutions. So, Dave or Aaron, any final thoughts from you?

1:00:15 | Dave Schaller

My final thought is just to share with the audience that our information is intended to help truck fleets for this exact reason. So, check us out at NACFI.org, drop me an email and tell me you’d like to be on our monthly newsletter. We only send it out once a month. There’s just a lot of information to share and we’d be glad to help you out.

1:00:38 | Aaron Patterson

And from my side, it would be, you know, communicate with the drivers, you know, on those changes you’re making, why you’re making them, and that those small changes make a big difference in your operation.

1:00:51 | Steve Kepler

Well, fantastic. Well, again, I want to thank everyone, thank all of you. Great information today. I think we packed a lot in an hour and hopefully all of you listening got something out of it.

Feel free to follow up if you have any additional questions we could not get to or any additional information, we’d be happy to help you. So, feel free to reach out, and thanks for your participation today.

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