What is Fuel Management? 6 Best Practices

Efficient fuel management is fundamental to long-term success in the transportation industry. As fuel costs fluctuate, sustainability rises in importance, and supply chains face continuous scrutiny, transportation leaders seek innovative solutions to reduce fuel reimbursement inefficiencies and enhance accuracy, all while staying within budget.

Fuel management is a strategic necessity that combines cost control, efficiency, and sustainability to drive success.

Key takeaways

• Fuel management focuses on optimizing and tracking energy consumption. By identifying the best-fit energy type for each lane and load and tracking the actual fuel consumed, shippers can calculate an accurate fuel reimbursement.
• The primary benefits of a robust fuel management strategy include cost savings, improved operational efficiency, and data visibility for sustainability goals.
• Implementing fuel management best practices, such as adopting market-based reimbursements and considering fuel efficiency, creates a more transparent supply chain.
• Breakthrough provides data-driven solutions that help shippers streamline their fuel management practices, from accurate reimbursements to advanced emissions tracking. 

What is fuel management?

Fuel management refers to the process of monitoring and optimizing energy consumption within transportation networks. For shippers, it considers a variety of factors including the time, price, tax, and geography of a shipment to ensure you are paying only for fuel that is consumed during actual freight movement—not for extra costs attributed to inefficient practices or ineffective surcharge programs.

Fuel management programs should integrate with all modes and energy types to provide a comprehensive solution for managing costs and improving operational efficiency. It’s a growing field; the fuel management system market is expected to grow from $1.24 billion in 2023 to $2.07 billion by 2030, reflecting the increasing demand for fuel efficiency optimization and fleet management.

What are the benefits of fuel management?

Accurate and efficient fuel management is a critical component of modern transportation operations. By carefully monitoring and optimizing fuel consumption, transportation leaders can build a strategic fuel management program. When your operation prioritizes fuel management, they can:

• Reduce costs
• Improve efficiency
• Support sustainability goals 

Reduce Costs

Smart fuel management takes into account key factors like time, tax, price, and geography to calculate an accurate, market-based fuel reimbursement. Transitioning from a national average fuel index to a market-based fuel calculation allows shippers to align more closely with the actual fuel costs carriers incur, ultimately safeguarding their bottom line.

Improve efficiency

By aligning fuel reimbursements with industry benchmarks for class 8 truck fuel efficiency, shippers can create more fair and transparent partnerships with their carriers. While efficiency metrics will naturally vary based on equipment and geography, leveraging accurate data to reflect carriers’ actual performance ensures reimbursements are aligned with real-world operations.

Support sustainability goals

With global and consumer pressure to reduce carbon emissions, fuel management plays a pivotal role in achieving sustainability targets. By using load-level emissions tracking to pinpoint and address high-emission areas, transportation leaders can cut their carbon footprint by up to 6% in emissions intensity within their first year on the CleanMile program.

These benefits underline the critical need for a strategic fuel management program. But what are the best practices for implementing and maintaining such a program?

Who should implement a fuel management program?

Every shipper can benefit from a formal fuel management program. For shippers focused on controlling costs, boosting efficiency, and advancing sustainability, a dedicated fuel management strategy delivers the data and visibility needed to make impactful changes and stay competitive in a dynamic market.

Ideal roles and functions

Within the transportation team, several roles are perfectly positioned to champion and execute fuel management strategies. Logistics leaders can use the program for operational efficiency and productivity gains. Procurement professionals can use the fuel program simplify carrier negotiations. Finance departments benefit from the cost control and financial forecasting that a robust fuel program offers. Finally, sustainability officers can use the emissions data from the fuel management program to track progress toward corporate sustainability goals. These roles are essential for transforming fuel data into actionable business intelligence.

Organization type and sizes

No matter the size of your business or the industry you’re in, managing fuel spend is a powerful way to drive financial and operational improvements. Large enterprises with complex, multi-modal supply chains stand to see the most significant savings, as even small efficiency gains can translate into millions of dollars. However, mid-sized companies can also gain a competitive edge by implementing these practices, allowing them to operate more efficiently and compete with larger players. Any shipper looking to create a more transparent and cost-effective supply chain will benefit from fuel management. 

6 Best practices for fuel management

Adopting the following best practices for fuel management can set your organization up for success. Below are six best practices transportation leaders can adopt to build a modern, effective fuel management strategy:

1. Adopt a market-based fuel reimbursement program
2. Increase fuel efficiency
3. Implement fuel price risk management strategies
4. Manage your fuel surcharge program
5. Optimize your routing guide with AI
6. Reduce emissions for sustainability 

1. Adopt a market-based fuel reimbursement program

By shifting to a market-based fuel reimbursement model, you can calculate fair and accurate payments based on real-time prices instead of weekly averages. This approach mitigates risk in turbulent fuel markets and provides a fair reimbursement structure.

2. Increase fuel efficiency

Improving fuel efficiency is a smart and impactful way to reduce costs and cut emissions. With insights driven by a trusted, strategic transportation partner, shippers can align their freight movements to industry benchmarks. This allows them to add an extra layer of oversight to their fuel management strategy.

3. Implement fuel price risk management strategies

Fuel price volatility presents a challenge for shippers—but a robust risk management strategy minimizes exposure to market volatility by securing a fixed fuel price, tailored to the location and timing of your freight movements. The implementation process can be quick and easy, especially if you are already a Breakthrough Fuel Recovery client!

4. Manage your fuel surcharge program

Refining your fuel surcharge program to separate base rates from the linehaul rate is essential to gain greater visibility of each component. Leveraging a zero-base rate strategy empowers you to eliminate operational inefficiencies and enhance your fuel management strategy.

5. Optimize your routing guide with AI

Utilizing AI-enabled tools to uncover freight efficiency opportunities is a game-changer for a robust fuel management strategy. AI-driven solutions can analyze millions of data points to optimize freight routes, suggest more fuel-efficient carriers, and reduce empty miles.

6. Reduce emissions for sustainability

Focusing on emissions management positions your company as a leader in sustainable transportation. Leveraging transportation emission management tools ensures your sustainability goals are met without sacrificing operational efficiency.

Fuel management FAQs

1. What is fuel management in transportation?

Fuel management is the process of tracking and optimizing fuel consumption across a shipper's transportation network. It involves using precise data on factors like time, price, tax, and geography to calculate fair and accurate reimbursements. The goal is to reduce costs, increase operational efficiency, and minimize environmental impact by ensuring payment is only for the fuel used during the shipment.

2. Why is fuel management important for shippers?

Fuel management is critical for shippers because fuel is one of the largest variable costs in transportation. An effective fuel management strategy moves with market dynamics. It also drives transparency in carrier partnerships, improves operational efficiency, and provides the necessary data to track and reduce carbon emissions, supporting corporate sustainability goals and enhancing brand reputation.

3. Who should use a fuel management system?

Any shipper with significant freight spend should use a fuel management system, regardless of company size. This includes large enterprises with complex global supply chains and mid-sized businesses looking to gain a competitive edge. Roles that benefit directly include logistics, procurement, finance, and sustainability leaders who need accurate data to optimize costs, negotiate contracts, and meet environmental targets.

4. How does market-based fuel reimbursement work?

Market-based fuel reimbursement calculates fuel costs using data specific to the time and location of a freight movement, rather than relying on a weekly national average. This method reflects the actual price a carrier pays for fuel at the pump, creating a more fair, accurate, and transparent reimbursement that protects both shippers and carriers from market fluctuations.

5. What are the best practices for fuel management?

Top fuel management best practices include adopting a market-based reimbursement program for accuracy and implementing strategies to manage price risk. Other key practices involve using data to improve fleet fuel efficiency and managing fuel surcharge programs separately from base rates. 

Improve transportation operations with Breakthrough

Fuel management is more than just a cost-cutting measure; it's a tool to future-proof your transportation strategy, ensure transparency, and stay competitive within an evolving industry.

Breakthrough empowers shippers with innovative and data-driven solutions to streamline their operations and tackle inefficiencies head-on. From market-based fuel reimbursements to advanced emissions tracking, our tools deliver industry-leading insights to optimize your approach to fuel management.