How And Why QPN Works
Having been involved in trucking for many years, I thought that I knew a little something about buying fuel. What I didn’t realize is exactly how little I did know. When NASTC began the developmental work on our Quality Plus Network (QPN) Fuel Program I got an education.
When you think about buying fuel, ask yourself these questions.
How do the oil companies and truck stops make their money?
How much money are they making on a gallon of fuel?
How can my company best save on our fuel costs?
Let’s explore each of these questions in an effort to understand how and why the NASTC Quality Plus Network is the best way for you to buy the fuel you need to operate your trucks.
First of all, oil companies and truck stops make money in a lot of different ways. Many are making more money selling your drivers hot dogs, cold drinks and coffee than they make on fuel. Fuel is a profit center for them though, and an important one. You may occasionally encounter a truck stop that is pumping fuel at or below cost for competitive reasons but these situations are very few and far between. Think about your own business for a minute. How much do you make a mile? If your cost per mile is $1.00 and your freight is paying you $1.25 then you are making 25 cents a mile. But if you have a 1000-mile run that pays you $1.50 one way and $1.00 the other, aren’t you still making 25 cents a mile? Of course you are. Our business would be easy if we could just charge a fair profit margin for every mile we run but it just doesn’t work that way. The oil companies are no different. They have to make a profit on the fuel they pump into your truck. After all the discounts and deals they cut, most truck stops are still making between 8 and 15 cents a gallon on each gallon of fuel they pump. If you were asked to haul freight into an area of the country where you knew you’d only be able to average 90 cents a mile coming back home, you’d probably raise your rate on the outbound traffic to make up for the shortcoming on the back haul. This doesn’t make you bad or dishonest; you must charge the higher rate to make a profit. You must consider the loss on the back haul a cost of doing business and compensate for it; truck stops are no different. So if they want to make 8 cents a gallon and they’re pumping fuel at a stop at cost they have to make up for it by getting a higher margin somewhere else. If they discount their fuel to a large carrier they will make up for it by charging more to their other customers. If they’re paying for your fuel card transaction, or incurring other costs to do business with you, they are going to get it back at the pump by adjusting their price of fuel. If they only make 5 cents in June they will make up for it later in the year, but you can bet on one thing. When the dust clears they are going to make the profit they want to make, or come real close.
The NASTC Quality Plus Network Fuel Program (QPN) saves our participating carriers money by effectively moving them from one side of the equation to the other. QPN is currently one of the largest purchasers of over the road diesel fuel in America. When we negotiate with the truck stops we are negotiating with over 16 million gallons of fuel a month. We negotiate all of our deals for the purchase of diesel on a cost plus, retail minus basis, or Marquee price, whichever is better for the trucking company at the point of sale. In other words we pay the truck stop a fair fee above the cost of the product to pump it into our trucks. All of our deals guarantee our participating member that their cost of fuel will be our negotiated fair price at that stop or the retail price, whichever is less. So in those cases when fuel margins are tight or a location is pumping at a small or zero margin, you will be charged the retail price for the fuel. But when the margin for fuel is greater than our negotiated price, you pay only the negotiated price and the difference shows up as a discount on your billing. The program allows you to take full advantage of any good deals that may be available in the retail market without allowing the oil company to get even with you down the road or later in the year. You are not guaranteed the best price each time you buy fuel but you are guaranteed a fair price on every single purchase.
Over the past year NASTC members on this program paid an average of cost plus 4 cents a gallon for their fuel. If you have confidence, as I do, in the oil companies ability to effectively reach their goal of making 8 to 15 cents a gallon on the fuel they sell, all of a sudden this program makes great sense.
Of course, there is no free lunch. There are costs associated with this program. You must be willing to require your drivers to buy most of their fuel in the discount network. Participating companies sign an agreement to focus their purchases. Our truck stop partners are giving our members a great deal and in return we must give them all the business we can. Because of this requirement to focus your purchases in the discount network this program might not be a good program for a company that is unable or unwilling to direct their driver’s purchases. In the past year we have removed over 50 trucking companies from this program because they were unable or unwilling to focus their purchases. In addition to the commitment to focus, participation in this program is limited to active NASTC members.
Pricing is just one part of the fuel buying equation that is addressed by QPN; the Q is for Quality. When your company participates in the Quality Plus Network, your drivers will have access to some of the finest truck stops in the country. Many of you would probably be upset with a driver that purchased fuel at one of the higher quality stops and paid a premium for the fuel. When your driver is buying at QPN stops he will have access to high quality stops with many of the amenities that drivers need to make their lives on the road a little more bearable, and the fuel they purchase at these stops will have the QPN guaranteed fair pricing. So your company not only realizes a saving on your fuel bill, you get a healthier and happier driver at the same time. With QPN the driver has options. He will be able to purchase fuel along his route and make his fuel purchasing decisions based on whether it’s time to rest, eat or just fuel and get back on the road. We monitor the price to ensure you always pay a fair price for fuel.
NASTC learned a long time ago that becoming an expert is a little harder than finding an expert. We didn’t wake up one morning smarter than the rest of the world in fuel or anything else. We did set out to find experts in fuel management to help us develop and manage QPN for our members. Bob Kelso and John Corvette, who are recognized experts in fuel management, administer the day-to-day operation of our fuel network. Fleet One, a leading provider of fuel card and cash advance services to trucking, administers our fuel card.
Please review our Fuel Directory to make sure you will be able to buy the vast majority of your fuel in the network. Make sure your drivers understand how important it is to buy from the network. If you have any questions about our Quality Plus Network Fuel Program or feel that I can be of service to you in any way, please give me a call at 1-800-264-8580.
Vice President, NASTC
For More Information Please Contact