High-Tech Moves Cut Transport Fuel Costs
RENEE MONTAGNE, host:
Time now for business news. Today, using software to find cheaper fuel.
Some major airlines have managed to eke out profits in recent months despite soaring fuel costs. The high cost of fuel is forcing airlines and other companies to become smarter shoppers, as NPR's Scott Horsley reports.
SCOTT HORSLEY reporting:
Suppose you're about to drive across town and your gas tank is nearly empty. You could fill up close to home but the station across town sells gas for a nickel a gallon less. Does it make sense to buy just a few gallons now then wait till you're at the cheaper station to fill the tank? That's the kind of question Paul Tate and his staff ask all the time but on a larger scale. Tate is chief financial officer of Frontier Airlines and the commercial jets he's thinking about burn more than 700 gallons an hour.
Mr. PAUL TATE (Chief Financial Officer, Frontier Airlines): Instead of a 20-gallon tank, you're filling up a much larger tank. So it makes even more sense to price shop.
HORSLEY: Frontier flies to nearly 50 US cities and the price of jet fuel varies widely. Last November, the airline began using new software to track its purchases. With that data, Frontier can now decide where it's most economical to gas up. Sometimes jets fill up with more fuel than they need for one leg of a flight in order to save money later on.
Mr. TATE: The least expensive fuel in our system is from the East Coast to the Midwest. The most expensive fuel is Denver and the West Coast. So we want to uplift as much fuel as we can coming out of the East Coast cities so we don't have to fuel when we get to those expensive places.
HORSLEY: Carrying the extra fuel, or tankering, as it's called, weighs down a plane, which has its own cost. So the price savings has to be big enough to offset that if tankering is to be worthwhile. Tankering is just one of the steps Frontier has taken to limit its fuel cost. It's also replaced older jets with more efficient models and it typically runs just one engine while planes are on the ground. Tate says that kind of cost-cutting, along with higher ticket prices, help keep Frontier aloft, even when oil prices climbed into the low $50-a-barrel range.
Mr. TATE: That was our challenge six months ago. Now we have a new challenge, which is mid to upper 50s. So now let's go look for some more savings.
HORSLEY: Airlines aren't the only industry using software to find better fuel prices. Truck driver Ystasio Ayolas(ph), idling, along with his dog, Maxie(ph), outside the So-Cal Truck Stop in San Diego, where number 2 diesel now sells for 2.60 a gallon, about 50 cents more than a year ago. Ayolas just delivered a load of tile in San Diego and plans to fill up with oranges and avocados for the trip home to Texas. He's waiting to buy fuel until he gets outside of California where he hopes the price will be a few cents cheaper.
Mr. YSTASIO AYOLAS (Truck Driver): You've still got to buy that fuel either way, you know? But it is expensive and I don't know how high they're going to keep on going.
HORSLEY: The big trucking company Dart Transit uses computer software to find the cheapest fuel. Executive Vice President Dave Oren says the company tracks fuel prices on a daily basis and beams the optimal route straight to a trucker's cab via satellite.
Mr. DAVE OREN (Executive Vice President, Dart Transit): It's like taking a road trip. Just as soon as you fill up your tank and you drive down, you find out, `Boy, I should have waited two more miles. The price is a nickel cheaper.' This system sees all that station pricing.
HORSLEY: The software was developed by Manhattan Associates. Senior director Ron Lazo(ph) says it considers a variety of factors besides fuel prices, including distance, tolls and even which truck stops have the most comfortable showers.
Mr. RON LAZO (Senior Director, Manhattan Associates): Drivers typically prefer some truck stops over others. If we don't consider things such as that, drivers don't appear to be happy with the solution. Compliance is low. Hence, the savings would be low.
HORSLEY: Manhattan Associates says its software cuts diesel bills by 4 to 10 cents a gallon. Dart's trucks burn 40 million gallons every year. Lazo says the software would save money, even if prices fall, but it's especially popular now when trucking companies, like everyone else, are focused on the high cost of fuel.
Scott Horsley, NPR News, San Diego.