Margin management and fuel invoicing were at the top of the list of business priorities in the second annual Eye on Energy survey conducted by FuelQuest.
The survey, conducted at FuelQuest’s annual Grail conference, spotlights the 2014 business priorities and challenges of more than 180 market leaders from retail, distribution, supply, and transportation companies. The results also address sentiments and strategies around margin management, hurricane preparedness, alternative fuels and U.S. energy independence.
Key insights from the FuelQuest Eye on Energy survey revealed:
Margin Management, Fuel Invoicing Top 2014 Business Priorities
With an increased awareness of the new normal of fuel volatility, margin management was ranked as the No. 1 business priority (42%) among respondents this year, while improving the fuel invoicing process closely followed behind at No. 2 (40%).
According to FuelQuest calculations, a single truckload of fuel costs approximately $30,000 and on average 10% or more of these invoices have inaccuracies. These costly mistakes highlighted by recent invoicing scandals signal a need for improved invoicing in the industry.
Other priorities that are top of mind include business acquisitions (38%) and improved fuel management (32%).
Bulletproof Hurricane and Disaster Preparedness
With the Atlantic hurricane season now under way, retailers, suppliers and fleets are well aware that they should be prepared for hurricane season and are implementing necessary preparedness strategies. Even though reports state that this year’s season could be a quieter year than normal, it is important that businesses not neglect the implementation of emergency preparedness strategies.
According to the FuelQuest Eye on Energy survey, basic preparedness seems to be understood and implemented as over half of respondents have contracted supply (54%) and emergency preparedness plans (52%). However, businesses overwhelmingly do not consider generators to be a top priority despite their help in emergency situations as witnessed during Hurricane Sandy, with only 22% of respondents currently prepared with installed generators.
Furthermore, very few are applying other key strategies. Only 28% have secondary or tertiary supply arrangements, and less than a quarter (18%) have fuel management automation.
Strategies Revealed to Combat Fuel Price Volatility
With today’s fuel volatility and the possibility for an increase in volatility throughout the hurricane season, fuel companies shared strategies that will help mitigate market fluctuations and improve margins that have traditionally been difficult to calculate. Survey respondents indicated that real-time margin visibility is the best way to combat fuel price fluctuations (34%). Improved demand forecasting ranked second with 28%. Other strategies include:
- Diversified supply portfolio management (26%)
- Greater forecourt automation (18%)
- Automated buy recommendations (16%)
- Improved credit terms (6%)
Natural Gas Plans Remain in a Holding Pattern
Despite price disparities between compressed natural gas (CNG) and liquefied natural gas (LNG) to traditional diesel fuel, the industry is uncertain about their future plans related to these. Thirty-two percent of participants were ‘unsure’ about how CNG and LNG fit into their company’s future plans. However, 28% of respondents indicated that natural gas was part of their existing portfolio.
Other responses include:
- Don’t plan to adopt (20%)
- Under review (12%)
- Plan to adopt in the next 1-3 years (6%)
- Plan to adopt in the next 3-5 years (2%)
According to the U.S. Energy Information Administration, last year’s biodiesel production reached 1.35 billion gallons and ethanol production reached 13.8 billion gallons due to the recently released U.S. Renewable Fuel Standards (RFS). Survey respondents agree with this call-to-action with 46% citing biofuels as a key driver helping the U.S. achieve energy self-sufficiency. Respondents also stated increased exploration as the single most important factor (48%) while also citing less governmental regulation (34%).