REPORT: UAE fuel price hikes risk fleet operator profits
By: David Nicholls, VP of situational awareness and telematics, Restrata
The UAE has experienced rising fuel prices month on month since the start of summer, and at present this trend shows no sign of stopping.
In a statement at the end of September, the ministry announced the per-litre prices of Super 98 at Dh2.12 from Dh2.02 (up 4.95%); Special 95 at Dh2.01 from Dh1.90 (up 5.79%); E Plus-91 for Dh1.94 from Dh1.83 (up 6.01%).
The diesel price has been fixed at Dh2.10 per litre for October, increased from Dh2 per litre in September.
For fleet operators, these price hikes have a serious impact on profits, driving the quest for improved efficiency in multiple areas of the business. Technology is being introduced as a solution in the key areas we all talk about regularly, such as increasing deliveries per vehicle, optimizing routes, improving vehicle maintenance schedule management, and of course improving safety.
However, with fuel now akin to gold dust, how is your business monitoring fuel usage and potentially, fuel theft? More importantly, how might your fuel be being stolen?
Drivers and personnel who have access to fuel can be tempted to steal it, causing an acute problem for organisations both large and small. The inability to monitor your fuel and prevent theft can lead to significant financial loss.
There a multitude of methods that can be used to steal fuel, and effectively profit at the expense of the business. However, with a few tweaks to your existing fleet management system, or the introduction of a new tool, technology can help mitigate the risk of theft.
Some of the main ways you might be pouring fuel down the drain include staff draining fuel directly from the tank. When fuel consumption is overestimated, drivers are provided with an opportunity to drain off the excess fuel provided, simply by putting a hose inside the tank. Monitoring technology will register the volume, date and time of refueling to ensure that there is a data record of the exact fuel added and time period of consumption.
Secondly, most vehicles and machinery are equipped with a supply and return line. This method of draining fuel requires the driver to add a T-fitting on the return line, allowing the collection of all fuel which should return to the tank. Having the right sensors in place allows you to monitor the flow of both the supply and return lines, meaning you can monitor consumption via both.
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Some companies use vouchers or cards as the mechanism for drivers to purchase fuel. Drivers can simply sell the cards, or fill a completely different vehicle with the fuel. However, by monitoring the tank with sensors as well as the acquisition of GPS tracking results, you are able to see the time, place and volume of refilling, which can be cross referenced with vouchers used and receipts.
The method of Odometer Reprogramming can fool even the most switched on Fleet Manager, and is in fact a serious crime. Sealing the dashboard can prove useless as many devices allow drivers to change the odometer without direct access. Fleet Management technology records the actual mileage of a vehicle. As such it will be apparent that the odometer has been tampered with.
Station operators are sometimes behind fuel theft, calibrating fuel machines to leave a percentage in their own tank, removing the difference at the end of the shift. Sensors can be used to determine how much fuel was added to the tank which can be cross referenced with the figure quoted by the station operator.
Drivers can also switch to a cheaper fuel while charging for a premium product, or mix in a chemical substance to the fuel tank so that less of the purchased fuel is required – the surplus can once again be drained off for personal use. Today, there are sensors available in the market that detect if liquid has been tampered with by measuring dielectric constant.
Theft isn’t always as direct as physically stealing the fuel for personal use or to sell on; Drivers can use company vehicles and thus fuel for personal errands or even to complete “work on the side” on company time – making this method a double blow. In addition, some drivers “invent” work which requires additional fuel. This fuel is of course, never used and instead, drained off by the driver.
A holistic fleet management system, including real-time vehicle tracking, electronic logging, communications and analytics, gives you full control over the movement of all vehicles and machinery in your fleet which means you will always know if a driver has taken a vehicle “off-route” or utilized it out of hours.
The behaviour of your drivers could also be wasting fuel; Aggressive driving styles use more fuel, so to improve efficiency a steadier approach must be enforced. This often requires regular training and a range of rules, processes and technology to be in place. Training gives drivers the right skills, processes ensure these skills are encouraged or enforced where necessary, and technologies monitor the drivers to ensure that improvements are made and maintained.
As an organization operating in today’s competitive world, it is important to keep operational costs as low as possible to obtain maximum profits. Fuel theft in any form, is an issue that must be taken seriously to prevent unnecessary costs impacting margins, especially in light of increasing fuel costs in the region.
Ultimately having this type of system in place should act as a deterrent to any staff considering fuel theft or even using vehicles and machinery for personal use.
In addition, a holistic fleet management system can improve other areas of your operation beyond prevention of fuel theft, driving efficiency and safety in your fleet overall.