Spiralling fuel prices – enough is enough

Jakes de Kock
Marketing Director at The Fuelcard Company’s
http://www.thefuelcardcompany.co.uk

Post date: Wednesday, 23rd February 2011

Just when we thought things couldn’t get any worse for the beleaguered fleet industry, fuel prices hit a new record high following the combined 2.5% VAT rise and January fuel duty increases which have added a further 3.5p to the cost of a litre of petrol or diesel.

The freight industry reacted as expected to this announcement – it exploded.  Fleet managers cursed the injustice of these increases in a shrinking economy at a time when all businesses are fighting for survival. Here at The Fuelcard Company, we renewed our petition calling on the government to lower fuel tax for commercial drivers, as the fleet industry simply can’t sustain such massive increases to the day to day running of their businesses.

These latest fuel price increases have hit small and medium sized businesses particularly hard with many forced out of business. I would strongly urge the Government to listen to the needs of the industry before it’s too late.

David Cameron’s announcement that the Treasury was reconsidering a fair fuel stabiliser could be a lifeline for those businesses most affected and whose future is hanging in the balance. The fleet industry has already been let down by the government once after plans for a fair fuel stabiliser failed to materialise, so it is imperative it delivers on its promises this time, or there may well be strike action.

The September 2000 fuel protests saw fuel refineries and distribution depots blockaded and, within days, created a fuel crisis paralysing the UK’s critical infrastructure and bringing the country to a virtual halt. The financial impact of the week-long fuel drought was estimated at close to £1 billion.

The reaction to these latest fuel price increases from fleet businesses and the trade press has been particularly strong with predictions that strike action could well be on the cards, which, in the current climate could be extremely destructive to the UK economy. Not only does the price of fuel hit hauliers, it also hits UK competitiveness and raises the price of everything we buy in the shops. If UK hauliers decide to strike, the affects will be felt across every household in the country. The cost of everyday goods will rocket, fresh food will become scare and many jobs could be lost – the UK could come to a total standstill.

But perhaps empty supermarket shelves is what it will take to make the government sit up and listen to the needs of the haulage industry.

Whether or not the industry decides to protest, fleet businesses are facing an extremely tough year in 2011 and should be planning and preparing now for their future survival. Managers will need to review their entire operation, looking for areas where they can make cutbacks without affecting their output. It is imperative they take stock of assets, assess which are vital and look at ways in which outgoings can be streamlined.

For fleet managers, such streamlining can include the introduction of vehicle usage monitoring to identify any underutilisation, or the introduction of economy driver training.  With most occupational drivers having taken their driving test when there was no compulsory economy driving element, many simply won’t consider fuel efficiency when on the road.

During this difficult period fuel cards will become more necessary than ever as a way of helping fleets manage spiralling fuel costs.  As well as giving fleet managers access to discounted pump prices, fuel cards act as a barometer for fuel consumption, documenting the fuel usage of individual vehicles, against their expected MPG. This means managers can effectively monitor their employees driving style and identify whether there is any need for additional training.

Fuel cards also help to reduce admin time by streamlining the entire expense process. Most fuel card providers will supply you with consolidated HMRC approved VAT invoices, therefore avoiding the need to process hundreds of receipts at the end of each month.

With the International Energy Agency predicting demand for oil will rise over the next few months, partly due to the cold weather, City analysts believe the price will top $100 a barrel within months. The pressure on the fleet industry has been building over the last couple of years and 2011 could well be the year that hauliers say ‘enough is enough’.

Logistics Insight