How Many Gallons Do Your Trucks Deliver?

Written on: January 1, 2020 by Phillip J. Baratz

As insurance rates keep going through the roof (if you can even find someone willing to write a policy for you), the notion of having “those extra trucks” is facing more scrutiny than ever before. The theory that the older, “paid for” trucks were good to have around is flying in the face of the questions over the real costs to have some extra trucks for deliveries that just might (or might not) be needed. At a cost of $150,000 for a new truck, it is well understood that new truck purchases (leases, etc.) need to be carefully thought through, but we don’t see the same sharpening of the pencil when it comes to the size of the delivery fleet. The notion that “more is better” needs some investigation.
Of course you need enough trucks to handle all of your deliveries. You also have to consider the number of trucks that will be needed for your peak delivery days in the middle of the winter. But what is the right number? Is it “X trucks” per customer? Per gallon? Per heating degree day (HDD)?
We asked a number of owners and dispatchers a simple question: How many gallons does a truck deliver per year? Interestingly, many of those asked seemingly heard, How many gallons can a truck deliver per year? To that question, we often got responses of about a million gallons. So, that was our starting point—a truck can deliver a million gallons. Does it make sense? It definitely does. If you figure that a truck delivers about 4,000 gallons on a regular/busy day, and then consider that there are roughly 250 delivery days per year, the math is pretty simple:
4,000 x 250 = 1,000,000
However, not all trucks are delivering every day. Actually, most trucks are not even used every day. We surveyed a group of our clients and tracked the usage of 780 trucks over the course of the year. We looked at the number of days they were used, the number of stops, the number of gallons and the number of miles.
On average, a truck is delivering fewer than 500,000 gallons annually—not the million gallons that they can deliver. The average truck is on the road fewer than 800 hours per year, or about 40% of the time. It does make sense when you consider that for about half of the year, say May–September, almost all of your trucks are sitting around not doing anything.

What is the best way to maintain a fleet – get rid of old vehicles or
keep extra ones on-hand? Author Phil Baratz has suggestions.

Trucks galore
This historical logic was pretty straight-forward: You need a lot of trucks in the winter, and if you need them in the winter, you will have them in the summer. However, as the costs of owning these trucks continue to rise, not to mention the challenge in finding drivers (let alone seasonal drivers), the size and the usage of the fleet need to be reconsidered.
There are many approaches to lowering the number of trucks that are needed in the fleet. They range from simply making bigger deliveries, to delivering a little more every day from the trucks that are on the road, to finding more logical ways to make deliveries to customers with different K-factors and at different times of the year.
The age-old, three-step process (determining a tank’s reserve, determining when that reserve level will be reached and then delivering on or around that date) is a logical approach. However, there are other approaches to determine all three—reserve, reserve date and delivery date—that you might want to consider as well.
Before anyone looks to improve things, companies need to acknowledge that there is a problem. If having your trucks on the road less than half of the time, making deliveries while tanks are still half full and then having your trucks return each day with more than 1,000 undelivered gallons does not bother you, and if skyrocketing insurance rates are just a cost of doing business, then maybe there isn’t anything that you should be doing.
If you realize that there are tools out there—including some that Angus Energy has developed—to better plan your deliveries, schedules and routes, and if you think that it is worth your time to learn about them, now is the time to start that journey.
If you want to increase your profitability, you do not need to take on big risks or hire a team of analysts and computer programmers. What you do need is to be open to the notion that there might be a better way to run your fleet and plan deliveries than the ways that were invented a half-century ago. Feel free to contact us if you know that you need to start to change your thinking, but need some direction. ICM