Rajan Wilcox
The cost of diesel fuel is a significant expense for trucking companies, which has risen in recent years. The cost of diesel fuel is dependent on several factors, including the type of equipment used, the skill of the driver, and the routes taken. Trucking companies have implemented various strategies to reduce their fuel costs, including the use of fuel cards, which offer discounts at specific retailers. Fuel cards are often provided by the trucking company, but some drivers may also use their personal credit cards and be reimbursed later. Owner-operators, who are independent contractors, usually pay for fuel out of their own pocket. Diesel fuel prices can vary by region, with higher prices on the West Coast and lower prices in the Southeast.
| Characteristics | Values |
|---|---|
| Average miles driven by truck drivers | 3,000 miles per week |
| Average miles driven by trucks per year | 104,000-156,000 miles |
| Average fuel economy of a combination truck | 6.5 (in 2020) |
| Average miles per gallon | 7 miles per gallon |
| Average cost of diesel fuel per gallon | $3.00- $5.55 |
| US annual average cost of a gallon of diesel in 2023 | $4.215 |
| Federal diesel tax as of January 2024 | 24.4 cents per gallon |
| Average state tax on diesel | 34.76 cents per gallon |
| Average consumption of fuel per truck per year | 9,564 gallons |
| Average cost of filling up a semi truck | $1,665 |
| Methods to lower diesel fuel expenses | Using fuel cards, buying wholesale fuel, implementing the latest safety technology, reducing idling, driving within speed limits, using cruise control, avoiding rapid acceleration and braking, and improving cash flow through freight factoring |
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What You'll Learn
Fuel cards
A fuel card is a payment tool that allows truckers to purchase fuel at a discounted rate. Discounts are often calculated either as a flat percentage, a cents-per-gallon reduction, or through a monthly rebate. Most fuel cards are network-based, meaning they work at certain fuel chains, while some allow out-of-network purchases with reduced benefits. For example, the TCS Fuel Card saves clients an average of 39 cents per gallon of diesel at more than 1,000 in-network locations. The Truckstop Fuel Card is accepted at 99.9% of truck stops nationwide and has no annual, monthly, or transaction fees.
When choosing a fuel card, it is important to consider the acceptance, fees, and fuel-finder features. Most fuel cards are only accepted at a limited number of retailers, so it is beneficial to get a card that can be accepted anywhere, even if it does not offer as many discounts. Many cards offer deep discounts but charge additional fees that eat away at the expected savings. It is also useful to have a fuel-finder feature that shows all fueling options, not just in-network locations.
There are several other fuel cards available for trucking companies, including the Apex Fuel Card, which offers savings of 3-5 cents per gallon on out-of-network purchases, and the Owner-Operator Independent Drivers Association (OOIDA) card, which offers discounts at over 8,000 truck stops nationwide.
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Reimbursements
The answer to who pays for fuel depends on the trucker's employment status and the nature of their contract. Company drivers, who are employed by a trucking company, typically have their fuel costs covered by the company as part of operational expenses. These drivers are usually provided with a fuel card or fleet card, which is a special credit card issued by the company for company use. The cards are often specific to certain fuel providers, and drivers can only purchase fuel from that provider.
However, there may be times when a company driver cannot use their fuel card, for example, if it is delinquent due to the company being late in paying its bills. In these cases, the driver may have to pay for the fuel themselves and be reimbursed later. Some companies allow their drivers to pay cash and get reimbursed in their next paycheck. In other cases, drivers may use their personal credit cards to pay for fuel and then be reimbursed by the company. While this can be advantageous for the driver, as they can rack up reward points, it is not a common practice as the company loses out on the discounts they get through the use of fuel cards.
Owner-operators, on the other hand, are independent contractors who typically pay for fuel out of their own pockets. Fuel expenses are part of their daily overhead and can be accounted for in their business expenses. Some owner-operators may also use fuel cards, which offer benefits like fuel discounts and simplified expense tracking.
To lower fuel expenses, some trucking companies purchase wholesale fuel or join fuel programs. They may also implement strategies such as improving fuel efficiency, reducing idling, and decreasing driver wait times.
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Diesel discounts
Diesel fuel can account for 25% or more of a trucking company's operating expenses, with fuel costs sometimes even surpassing driver pay. This figure can rise to 40% of a company's total expenses. Trucking businesses can estimate their fuel expenses based on the number of miles driven, the fuel economy of their trucks, and the price of diesel fuel.
Fuel cards are a popular way for trucking companies to manage their fuel expenses and access diesel discounts. Fuel cards can be used by owner-operators, company drivers, small trucking companies, or large fleets. They can be customised for different types of users and offer flexibility and control over fuel expenses.
The TCS Fuel Card is a popular option that offers average savings of 39 to 48 cents per gallon of diesel fuel at more than 1,000 to 2,000 in-network locations. The card can be funded through various methods, including Zelle, ACH credit, Western Union, and third-party checks. TCS also provides a secure account management website for clients to monitor their purchases and set purchase limits.
The Mudflap Card is another option that offers discounts of up to $1.00 per gallon at various fuel locations. The card is accepted anywhere Visa is accepted, providing flexibility and convenience for users.
Other ways to improve fuel efficiency and reduce fuel costs include buying trucks with automatic transmissions, installing auxiliary power units, driving within speed limits, and avoiding quick acceleration and braking.
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Diesel tax
Fuel is one of the most significant variable expenses for a trucking business, and diesel can account for 25% or more of a trucking business's total operating expenses. The US annual average cost of a gallon of diesel in 2023 was $4.215. This means that it costs about $40,264.44 to fuel a combination truck for a year. Owner-operators, who drive more, may pay as much as $60k or $70k for fuel in a year.
Both federal and state governments impose taxes on diesel. As of January 2024, the federal diesel tax in the US was 24.4 cents per gallon, while the average state tax was 34.76 cents per gallon. However, state diesel taxes vary significantly across the country. For example, operators may pay higher fuel taxes on the West Coast compared to the Southeast.
Trucking companies usually provide a method to cover their employees' fuel expenses. This can be in the form of cash, a fuel card, or reimbursements in paychecks. Fuel cards offer discounts at specific retailers, which can help keep expenses within the budget for both company truck drivers and their employers. Trucking companies can also benefit from buying fuel in bulk, which often comes with a discount.
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Fuel efficiency
Fuel is one of the biggest expenses for a trucking business, sometimes even surpassing driver pay. Diesel can account for 25% or more of a trucking business's operating expenses. The US annual average cost of a gallon of diesel in 2023 was $4.215, which means it costs about $40,264.44 to operate a combination truck for a year. Owner-operators, who usually pay for fuel out of their own pocket, may spend $60k or even $70k on diesel fuel per year.
There are two basic ways to improve fuel efficiency: set up vehicles to use fuel more efficiently and operate vehicles in ways that use less diesel. Here are some ways to improve fuel efficiency:
- Buy trucks with automatic transmissions.
- Close the gap between the power unit and the trailer with trailer gap devices.
- Install auxiliary power units (APUs) and/or bunk heaters to reduce idling.
- Avoid aftermarket devices that block airflow like radiator covers and grille guards.
- Drive at a consistent speed, maintaining the speed limit or just below.
- Avoid quick acceleration and braking, which take more energy and increase the risk of accidents.
- Use cruise control whenever possible.
- Avoid idling for more than five minutes. A gallon of gas is consumed in one hour of idling.
- Use fuel cards to access diesel discounts.
Many modern trucks come with onboard computers that provide valuable fuel efficiency data. These systems can track fuel consumption, trip data, and provide alerts for potential fuel-wasting issues. Telematics and eco-driving programs can also help drivers improve fuel efficiency through in-cab coaching and performance tracking.
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Frequently asked questions
It depends on their employment status and the nature of their contracts. Company drivers are typically issued a fuel card or a fleet card by the company, which they can use to pay for fuel. Carriers, on the other hand, are usually responsible for their fuel costs. Owner-operators, who are usually independent contractors, pay for fuel out of their own pockets.
Fuel cards are a popular payment method for trucking companies and owner-operators. They offer benefits like fuel discounts and simplified expense tracking. The TCS Fuel Card, for example, saves clients an average of 39 cents per gallon of diesel at over 1,000 in-network locations.
Fuel is one of the biggest expenses for trucking companies, sometimes surpassing driver pay. The cost depends on various factors such as the type of equipment, the skill of the drivers, and the lanes and loads chosen. For example, a combination truck with an average fuel economy of 6.5 miles per gallon would consume 9,564 gallons of fuel per truck per year. At a diesel price of $4.215 per gallon, this would cost about $40,264.44 in diesel fuel alone.
Trucking companies have implemented various strategies to lower and control fuel expenses, such as improving fuel efficiency, reducing driver wait times, and purchasing wholesale fuel. Some companies also use fuel cards to take advantage of discounts and simplified expense tracking. Additionally, freight factoring allows truckers to sell their invoices to a factoring company at a discount, providing immediate access to cash.
