I’ve got a question for all you independent contractors, pulp mill wood yard managers, scrap yard managers, industrial facility managers, landfill and waste transfer facility managers, and anybody else who’s in charge of procuring, operating, and managing mobile equipment: why do you not care about fuel burn in your equipment?
I can’t count the number of times I’ve been to job sites and asked specifically how much fuel a piece of mobile equipment burned. The small contractor who sees the bills knows exactly—it’s his money. But the larger businesses—especially publicly traded companies—don’t have a clue. “We take it all out of the same tank for everything and can’t track it”; “We have too much equipment to track that”; and “Our operators don’t have time to fill out that paperwork” are common answers.
Now let’s take those same people and ask them how much they paid for fuel the last time they filled up their personal vehicles. I’m willing to bet they’d know the amount to the penny. And if they saw a cheaper price across the street, they’d probably drive over there to get it. Why is there such a disconnect between the two?
It all starts at the top. Upper management must look at fuel as one of the largest controllable costs they have in daily operations. But is it controllable? You bet. And that starts with equipment choices. Just because a manufacturer of mobile equipment markets their equipment as “the most fuel efficient” doesn’t make it so. Every manufacturer of mobile equipment does that. But look at how they say it: “More fuel efficient”—than their older machines. “Guaranteed”—the fine print makes it less compelling.
Let’s look at a simple scenario. Mobile #1 and Mobile #2 belong to two different plants, but they are competitors selling the same product. Mobile #1 burns 4 gallons an hour. Mobile #2 burns 5 gallons an hour. Each machine runs approximately 2,000 hours annually. At $2.25 per gallon for diesel, that’s an operating cost differential of 2,000 gallons, or $4,500 annually. Even if you assume that diesel prices will stay the same for the next 7 years (and they won’t), that’s a $31,500 operating cost advantage to the business running the more fuel efficient machine.
Now let’s kick it up a notch. Let’s say we have two industrial operations in the same scenario running much larger equipment, and that equipment runs 5,000 hours annually. Mobile #1 burns 8 gallons per hour and Mobile # 2 burns 14 gallons per hour. That’s a fuel burn difference of 30,000 gallons annually! At $2.25 per gallon for diesel, that’s a cost advantage to Mobile #1 of $67,500 annually. Over a seven year period, that’s a whopping $472,500, and higher than that if diesel prices rise!
Now, multiply the number of similar units in service every day at these facilities. For example, five pieces of rolling stock with a difference of $31,500 fuel costs annually = $157,500 annually, or $1,102,500 over seven years. And the numbers really stand out when there are multiple machines in heavier hour usage facilities: five pieces with a difference of $67,500 fuel costs annually = $337,500 annually, or $2,362,500 over seven years.
And we haven’t even discussed the Tier IV engine requirements of Ad Blue DEF and the ratios of DEF to fuel each machine’s engine will need. Some need more than others. But telematics in the newest generation of machines should change the responses from “I don’t care” to “Damn!” For older machines, you will still have to physically monitor them individually by machine until you can move into Tier IV equipment. Even when continuing to use older machines without telematics, assign an employee to the fuel yard and have him record the fuel up for every machine for a week or two. Then dissect that information even beyond a machine’s hourly burn rate, and add that cost to the maintenance costs and look at each of them with a critical eye: