As the fuel price steadily increases, the rise in fuel theft and fraud poses a serious threat to transporters’ operating profits. Simon Foulds speaks to key industry players to find out what is the state of play in combatting both fraud and the theft of fuel within the transport sector.
Regan Mackie, operations director at AfricaTrack says, “We have our clients come forward with some very interesting stories of what they have experienced; in general, the thefts are on the increase as the value of fuel increases. The small, opportunist criminals have set up mobile supplying and receiving points where they buy fuel from drivers at a reduced rate and sell the fuel to unscrupulous transporters, also at a reduced price.”
“The theft collusion between drivers and filling station attendants includes giving false slips and getting cash in return. They fill up a tank and a 25-litre container on the side, pay cash for the 25 litres and then drive away with a full tank of stolen fuel at the expense of the transport company.”
“The biggest fraudulent transactions we have come across are those of fuel-tanker drivers and fuel station transactions, where the driver offloads his consignment and submits his delivery note to the fuel attendant assisting him; the amount of fuel delivered is short-delivered and the attendant signs for a full delivery – a money split is arranged between the two.”
John Edmeston, CEO of CarTrack concurs, “Diesel-skimming operations are popping up at an alarming rate. The process is simple – drivers pull in for a short pit stop at these illegal stops to offload two or three 25-litre drums of diesel, and at any one time there can be up to 15 trucks being skimmed. It takes just a few minutes with the help of a hose pipe, a drum and a willing driver to raid a truck’s fuel tank, and the problem often goes undetected as fuel consumption is unpredictable. Truck drivers are cashing in on the illegal trade, selling the fuel at far less than it’s worth to illegal operators, pocketing the cash and leaving their employers none the wiser. The stolen fuel is resold via the black market, or headed for neighbouring countries where fuel prices are much higher.”
Murray Price, MD of Eqstra Fleet Management adds, “There are a number of current fuel theft and fraud trends affecting the industry.
“The driver of a vehicle using a fuel card once it has been cancelled, as the fuel card is still active until it expires and physically needs to be cut up; fuel cards being used more than once within a certain period of time: for example, the fuel card being used at 14h00 and again at 16h00 on the same day – this is usually due to someone using a stolen fuel card, the card being used to fill up another vehicle’s tank, or a forecourt attendant using a fuel card and swiping it for cash.
“Then there is exceeding the vehicle’s tank capacity (filling another vehicle’s tank or using a jerry can for extra fuel).
“The fuel card is reported as misplaced or stolen but the driver is still using it, and also the filling up of multiple vehicles in one day; the driver of the vehicle has an agreement with the forecourt attendant whereby multiple vehicles are filled up without payment and the final purchase is claimed on the fuel card as oil and fuel.”
Poor fuel management
Looking at the danger for transport companies in having poor fuel management practices, Mackie says, “The transport company’s return on investment is severely affected, his transport cost to client also increases and runs the risk of potential loss of business due to over-quoting, because his running cost is higher than a company that manages its fuel properly.”
Edmeston adds, “As South Africans and businesses feel the brunt of surging fuel prices, CarTrack has warned that theft of fuel from trucks is expected to see a significant increase in both frequency and quantities. With larger trucks holding anything from 300 litres of diesel at an average cost of R3 990 per tank, criminals will stop at nothing to get their hands on it.
“Given that diesel costs can account for up to 40% of the operating costs of a transport company, combating fuel theft and uncovering driver collusion is crucial to the sustainability of any transport outfit. If a business loses 75 litres per week per truck to theft, that’s 300 litres per month at a cost of R3 990 per month per truck. When extrapolated over multiple trucks, the losses are alarming. In a fleet of 100 trucks, it equates to R399 000 per month, and close to R5 million per year – and these estimates are conservative.”
States Price, “Our research indicates that fuel now equates to between 38% and 44% of overall fleet expenditure, and that fuel costs are increasing on average 13% year-on-year. Further case studies have proven that driver behaviour and fraud could equate to as much as 12% of overall fuel costs. Considering an average fleet car would use approximately R55 000 in fuel per year, the cost of theft can be enormous.”
When it comes to giving transport operators advice on curbing fuel theft, Mackie says, “My advice is to install a live monitoring system and take control of your fuel.”
Edmeston states, “As fuel costs continue to rise, illegal diesel skimming is going to take on new proportions. The reality is that rising transport and fuel costs, toll fees, vehicle maintenance costs, hijackings, fuel theft and the challenges around managing driver behaviour and collusion are all placing enormous pressure on fleet owners and companies to find effective and sustainable ways of managing fleets and drivers. Vehicle tracking, with full telematics features, is an essential requirement to achieve optimum fleet performance and drive down operational costs.”
Adds Price, “The popularity surrounding diesel derivatives in the passenger and LDV market, with the perceived saving in fuel consumption, has caused a big demand on diesel engines and has directly impacted the supply of diesel. The one diesel pump standing in the corner, in the open, now has a dedicated line and is in many forecourts the biggest source of revenue. The continuous growth in this market is feeding the demand for cheaper diesel and more theft thereof, and a problem once concentrated to the trucking industry has moved into the entire vehicle market.
“There are many products available to manage fuel and the use thereof, such as anti-siphoning devices from the fuel tank, a filler to the injector pump, including plumbing, fuel bowser and tank monitoring systems, fuel usage and cleaning programmes, and management software. It would definitely benefit any operator to invest in these systems as fuel theft is still growing daily and the market for this fuel is also on the incline. The more focus and fail-safes implemented, the closer one will be to eliminating all these risks, and minimising losses and decreasing operating costs, as every operator is a victim. The question is to what extent are you prepared to be exposed?”