Managing and maintaining a fleet of government service vehicles can cost local taxpayers hundreds of thousands of dollars each year. As a result, fleet managers, among them city and county managers, are constantly seeking creative and innovative ways to keep costs down. (See “Maximizing Savings in Fleet Fuel Costs” in the September 2013 PM.)

Since fleets operate in hundreds of different ways, there is not one specific management solution for all. Here is a closer look at what some local governments are doing to achieve efficient, cost-effective fleet management.

Fuel Hedging

In fiscal year 2011, Palm Bay, Florida, saved taxpayers nearly half a million dollars using a practice called fuel hedging, which has continued to result in savings totaling nearly that much each subsequent fiscal year.1 Fuel hedging allows fuel commodities to be bought at a fixed rate, reducing the cost of each gallon of gas used.

Jim Proce, public works director at the time the Palm Bay program began, acknowledged that “Palm Bay must do everything it can to trim fuel costs because the city maintains a fleet of 650 vehicles, including police cars, fire engines, dump trucks, and heavy equipment vehicles. The city's fuel consumption amounts to approximately 440,000 gallons annually.”2

By buying fuel commodities at a fixed cost not only is a locality able to save money, but it also is able to create a budget with certainty. As former Palm Bay City Manager Lee Feldman, who is the current manager of Fort Lauderdale, Florida, where this program is also in place, observes: “When we start budgeting, we don't want to artificially inflate our budget to make sure we have enough money in the fuel budget to protect against price increases.”3

Clean Diesel Fuel Technology

Some communities seek to reduce fleet costs through initiatives that also have environmental benefits. Durham, North Carolina, for example, has embraced clean diesel fuel technology.As part of a public-private partnership with the Southern Research Institute, Triangle Clean Cities Coalition, Engine Control Systems, and NETT Technologies, Inc., Durham installed a new emissions-reducing  system on 16 heavy-duty diesel vehicles used by the solid waste management, public works, and water management departments.4

These new systems reduce significant amounts of nitrogen oxide (NOx) emissions from the exhaust of these vehicles and equipment, resulting in positive impacts on Durham’s air quality. NOx emissions contribute to the formation of harmful particulate matter, ground-level ozone, and acid rain. These emissions form when fuels are burned at high temperatures, with typical major sources being fuel combustion in vehicles and engines.

Shared Motor Pools

In Washington, D.C., the department of public works (DPW) and the department of environment (DDOE) reduced vehicle emissions by initiating a one-of-a-kind motor pool operation called Fleet Share.5

This initiative, which is based on the Zipcar model, eliminated more than 300 vehicles from its fleet. While that reduction is merely 8 percent of the fleet, the city government expects to save $6.6 million over a five-year period by consistently cutting down the number of fleet vehicles.

This program works through on online service, which allows D.C. government employees to reserve a vehicle on a first-come, first-served basis. The online aspect of this program allows for maximized use of fleet vehicles, ensuring that a high number of trips can be supported by a small number of vehicles. Similar programs are being piloted in such metropolitan areas as New York and San Francisco.

Innovative Hybrid Technology

Ann Arbor, Michigan, has begun to employ a new fuel-saving technology promoted right in its jurisdiction by the Clean Energy Coalition (CEC). On behalf of the city, CEC was able to secure approximately $120,000 under the American Recovery and Reinvestment Act of 2009, which it is using to help defray the incremental cost of purchasing hydraulic hybrid trucks.6

Using technology pioneered by the Environmental Protection Agency’s National Vehicle and Fuel Emissions Laboratory in Ann Arbor, new trucks have a unique hybrid system known as hydraulic launch assist (HLA) that stores brake energy in hydraulic fluid, rather than in a battery pack as most hybrid vehicles do.

This can be better for large trucks because of their constant stop and go, as well as overall efficiency and relatively low cost. The pent-up energy in the fluid is used as fuel, keeping the need for gas to a minimum.

Traditional Alternate Fuel Vehicles

Hybrid vehicles have gained popularity among fleet managers as both environmentally friendly and fuel-efficient. Indianapolis, Indiana, is on track to become the first city in the nation with an entirely fuel-efficient fleet.7

Mayor Greg Ballard’s intention is to lessen the city’s dependence on foreign oil as well as lighten the financial burden of maintaining a 3,100-vehicle fleet on an ever-tightening budget. As older vehicles retire, new vehicles will be purchased that use hybrid technology, electricity, or compressed natural gas to fuel them.

The swap will be completed in 2025. This switch will save taxpayers an estimated $12,000 per vehicle over a 10-year span, even though the vehicles currently cost more than the gas-powered sedans they replace. In addition to the savings to taxpayers, there is also the possibility of a $7,500 federal credit for each alternative fuel vehicle added to the city’s fleet.

Smaller, Easier Changes.

In addition to major strategies, local governments can turn to some simple and creative ways to reduce fleet management costs:

• Institute non-idling policies; idling a vehicle for five minutes a day can waste more than 13 gallons of gas a year.A no-idling policy also reduces wear and tear on a vehicle, which helps keep costs down for maintenance.
• Plan more fuel-efficient travel routes. Localities are investing in GPS systems for fleet vehicles, which allow for the quickest, most cost-effective routes to be taken. In addition to GPS, employees are encouraged to carpool. This is not only to and from work, but also during the workday for such job-related errands as surveying property.

Lynchburg, Virginia, has distributed a list of suggestions, ideas, and facts to its staff members regarding such fuel conservation measures as making only right-hand turns (similar to a U.S. Postal Service policy) and observing speed limits to improve fuel economy.

No Universal Panacea

Any cost-cutting strategy is employed because it is found to work best for a particular local government’s situation. Some solutions can be applied in varying types of local governments, while others will only work in a government structured almost identically to the community that came up with the solution. Any strategy also has potential drawbacks that must be considered.

Fuel hedging, for example, merits careful evaluation from the outset. If a community buys futures and they do not pay off as they were expected too, it could end up paying more for fuel than if it had not done anything at all.

When buying fuel commodities, a manager needs to be extremely cautious and be aware of fuel trends as they have happened and as they are predicted to happen. Often this means bringing in an adviser who can best explain the market and suggest the most cost-effective options. If a city or county is able to successfully invest in fuel futures, then the payout can be extreme and the budget can benefit.

As for clean diesel fuel technology, he original cost could give taxpayers sticker shock, making it more difficult for them to initially accept the new type of fleet. The way that Durham, North Carolina, was successfully able to switch many of its vehicles over to clean diesel fuel was through a successful public-private partnership.

Fleet sharing, which has been proven to be an effective cost-efficient way to manage a fleet in larger communities, might not be well-suited for smaller, more rural areas. Larger places might have the space to offer a centralized, urban location for a motor pool while rural areas can have multiple, smaller motor pools that might not be as easily accessed by all employees.

Notwithstanding the obvious benefits of lower fuel costs, alternative fuel and hybrid vehicles have some not-so-obvious downsides. The cost of maintenance can almost always be higher for alternate fuel vehicles. They use full synthetic oil, require specialized parts, and skilled workers to fix them.

There is also the issue of drivability. Alternate fuel vehicles, whether they are hybrid, hydraulic, or compressed natural gas, do not have nearly the same abilities that a standard fleet vehicle has. The frames of these vehicles need to be lighter to cut down on fuel costs, which mean that safety may be compromised in certain situations.

So there is a lot for local government managers to consider when contemplating changes in fleet management. Just remember, that while there is no universal panacea, solutions do exist for cutting costs. It can be helpful to network with communities that have launched such new initiatives as those highlighted in this article.

Endnotes

1Garcia, Dan. ”Fuel Hedging to Save City Half a Million by the End of the Year.” Hometown News. 2011. 

2 Ibid. 

3Barsewski, Larry. “Fort Lauderdale Plans to Hedge Its Fuel Costs. Sun Sentinel. 2012. 

4 ICMA Knowledge Network. “Durham, NC Demonstrates New, Clean Diesel Technology on City Fleet”: http://icma.org/en/Article/101177/Durham_NC_Demonstrates_New_Clean_Diesel_Technology_on_City_Fleet. 

5ICMA Knowledge Network. “Washington, DC Announces First-In-The-Nation Fleet Sharing Program”: http://icma.org/en/Article/11677. 

6ICMA Knowledge Network. “Clean Energy Coalition Helps Ann Arbor, MI Acquire Innovative, Locally Invented Hybrid Technology”: http://icma.org/en/Article/100507/Clean_Energy_Coalition_Helps_Ann_Arbor_MI_Acquire_Innovative_Locally_Invented_Hybrid_Technology. 

7Callahan, Rick. “Indianapolis to Replace Entire Fleet with Electric, Hybrid Cars.” NBCnews.com.