Gas Price Special Edition –
Facts, Figures and GPS Solutions

Right now the media is fixated on the “pain” that higher gas prices are causing consumers. But what about your pain, and just exactly how painful is it? I’ll try to put it in perspective by looking at the impact higher fuel prices have on your business. To accomplish this goal, we’ll look at the recent fuel price increases and share some thoughts on how GPS can help you bring your fuel costs under control. As you’ll see below, you could see a yearly savings of over $3,000 a route as a result of deploying a LinksPoint GPS solution. I’ve also included some “fun” facts and resources relating to gas prices.

Fuel Price Changes 2004-2006

We’ll start by looking at the average US price for regular gasoline and diesel fuel. In September 2004, regular gas sold for $1.91 per gallon and diesel sold for $2.03. As of 5/30/06, regular gas is selling at $2.85 and diesel is selling for $2.95. This is actually down a bit from last month, but analysts are predicting prices to spike during the summer travel season.

This represents a 50% increase in the price of gas and a 45% increase in diesel in just over two years.

Fuel Prices and Distribution Cost Per Mile

Now, we’ll look at what higher fuel prices are doing to cost per mile for a distribution fleet. I’ll start with cost per mile data for 2004 released by the Food Marketing Institute. 2004 is the latest year for which figures have been released, and it serves as a good baseline. Cost per mile represents the cost of keeping a distribution vehicle on the road for one mile including labor, maintenance, fuel, licenses, insurance, depreciation, taxes, and leases.

In 2004, the FMI figures showed a distribution cost per mile of $2.01. Fuel accounted for about 25% of the total with labor being the largest cost item. Looking only at the fuel cost increases of the past two years, you see a significant increase in cost per mile. Based on my calculations, at an average price of $3.00 per gallon this would drive the cost per mile up to about $2.27 – a 13% increase just from fuel costs alone.

So what can you do about it?

The best thing you can do to get a handle on rising fuel costs is to gain better control over your field operations to eliminate unneeded miles on the road and unproductive time. GPS provides a powerful means to increase your control of fleet performance.

Vehicle history tracking and analysis using a solution like LinksPoint’s RouteTrak can provide unprecedented visibility into actual behavior in the field and allow you to take control of your fuel costs by:

• Decreasing out of route mileage
• Eliminating unauthorized mileage and the unproductive time that goes along with it
• Fine tuning your route planning and optimization to decrease travel distances between stops and add more stops per day per vehicle
• Reducing speeding

For service and other fleets, vehicle navigation solutions like LinksPoint’s Field Force Navigator not only help improve productivity and customer service, they also result in lower fuel costs as well. For example on large company reported that they were able to decrease travel times to service calls by between 15% and 30% by employing a navigation solution. They were also able to add on average, ½ stop per day per service technician.

GPS Return on Investment

Let’s look at a simple example where GPS can save a fleet on average five miles a day and an additional half hour per week of worker time. Based on a $2.27 cost per mile and $20 per hour for the additional labor time, it works out to a yearly savings from GPS of $3,337.50 per route! These savings result in a payback time of just a few months for a LinksPoint GPS solution and a very favorable overall return on investment.

With fuel prices climbing and no relief in sight, I think this makes it pretty clear why a LinksPoint GPS solution should be part of any mobile computing deployment in distribution or field service.

For more information on LinksPoint GPS solutions, please contact us at sales@linkspoint.com.

Mike Forbes
LinksPoint, Vice President
Marketing & Product Development