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Why total fuel spend is a vanity metric
It is easy to look at a Profit and Loss statement and see "Fuel: £5,000." But that number hides the truth. It treats every mile as equal, which they rarely are.
A mile driven on a motorway at a steady 60mph uses significantly less fuel than a mile driven in stop-start city traffic. If you only track the total, you might assume a long rural delivery is expensive because of the distance, when in reality, a short city route with heavy traffic and idling could be costing you more per package.
The problem with poor planning
Routes are often planned based on postcode grouping rather than fuel efficiency. A driver might crisscross a town three times to meet time slots, wasting petrol and diesel with every turn.
Furthermore, traditional planning ignores the reality of the road. It doesn't account for:
- Detours: The roadworks that force a five-mile diversion.
- Idling: The 15 minutes a driver sits with the engine running while checking paperwork.
- Traffic: The crawling pace that destroys fuel economy.
When managers guess fuel impact instead of calculating it, they lose the ability to optimise their pricing. You cannot price a delivery accurately if you don't know what it costs to get it there.
How to calculate fuel cost
If you want accurate numbers, stop relying on general averages and start focusing on specific details. Here is the formula you should be applying to your operations.
1. Determine the actual distance
This seems simple, but it is often done wrong. Do not just measure the straight line from depot to drop-off. You need the actual road distance. Even better, you need the historical data of the route taken, including any unplanned deviations.
2. Know your vehicle fuel consumption
A generic "miles per gallon" (MPG) figure from the manufacturer is not enough. A van fully loaded with heavy cargo consumes more fuel than an empty one returning to the depot.
You need to know the consumption of your specific fuel type, such as diesel, petrol, or an electric car, under working conditions.
3. Check current pump prices
Petrol and diesel prices fluctuate weekly. Using last year's average price of 140 pence per litre will skew your data if the current price is 155p. You must use the most up-to-date fuel price data available. Resources like petrolprices.com can help you stay current with local trends.
4. Factor in the "hidden" burn
This is where the calculation usually fails. You must account for the extra fuel burned during idling and heavy traffic.
If a vehicle idles for one hour, it can burn up to a gallon of fuel, depending on the engine size. If your drivers leave engines running during drop-offs, your theoretical calculations will always be lower than your actual spend.
The Fuel Calculation Formula:
(Distance x Fuel Consumption Rate) x Fuel Price = Base Fuel Cost
Then add your "hidden burn" margin (usually 10-15%) to get the true figure.
Point to remember: Most teams calculate this after the money is already spent. The goal is to calculate this before the truck leaves, or at least analyse it immediately after to fix future routes.
Why averages don't work for delivery routes
If you take your total annual mileage and divide it by your total fuel bill, you get an average cost per mile. This is dangerous for decision-making.
Imagine you have two routes. Route A is 100 miles on a motorway. Route B is 40 miles in a congested city centre.
Using an average, Route A looks more expensive. In reality, Route B involves constant braking, accelerating, and idling. The wear on the vehicle is higher, and the fuel efficiency is terrible.
If you charge customers based on the average, you might be undercharging for the expensive city deliveries and overcharging for the easy motorway runs.
Spreadsheets fail at scale
Trying to do this manually is impossible once you have more than a few vehicles. A fuel cost calculator in Excel works for a single trip, but it cannot handle live traffic data, varying load weights, or changing pump prices across fifty different routes.
Simple ways to reduce petrol costs
Once you know how to work out fuel cost accurately, you can start reducing it. Here are a few practical steps.
Check tyre pressure
Under-inflated tyres increase rolling resistance. This forces the engine to work harder and burn more fuel. Regular checks can improve fuel efficiency by up to 3%.
Remove unnecessary items
We often find delivery vans carrying equipment, tools, or rubbish that isn't needed for the route. Every extra kilogram requires energy to move. Clear out the back of the van to save fuel.
Monitor driving behaviour
Aggressive acceleration and harsh braking ruin fuel economy. Smooth driving saves money. Educating drivers on this, or using telematics to monitor it, is one of the fastest ways to save money on petrol and diesel.
Compare fuel prices
Don't just fill up at the nearest station. A difference of a few pence per litre adds up over thousands of litres.
Take control of your transport spend
Understanding your costs is the first step toward profitability. When you stop guessing and start calculating, you gain the visibility needed to make smarter decisions.
You can spot the inefficient routes, identify the vehicles that are costing too much to run, and price your deliveries with confidence.
Don't let fuel costs eat your profits. Start measuring today.
FREQUENTLY ASKED QUESTIONS
To calculate fuel cost per mile, divide the price of fuel per gallon (or litre) by your vehicle's miles per gallon (MPG). For example, if fuel is £6.00 per gallon and your vehicle gets 30 MPG, your cost is £0.20 per mile. Remember to use current pump prices for accuracy.
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