With the cost of petrol and diesel rising every day for the last two months we are all feeling the squeeze.
The average cost for a litre of unleaded from one of the ‘big four’ supermarkets was 119.35p on March 26th, diesel was 119.35p. Over the last eight weeks, this has risen to 124.74p and 127.69p, respectively. Despite the rise being less than 10p, it is still a cause for alarm, especially if driving is your business. The increase have been blamed on the rising cost of oil, the price of diesel has seen an overall rise of 7½% since January, the implications have been significant for frequent road users.
However, we may have the solution.
A van or other large vehicle doing 25,000 miles a year paying this level of increase might see operating costs rise by perhaps as much as £300 per year for a single vehicle. Vehicle types and mileages per litre may vary but for an HGV averaging 9 miles per gallon and covering 75,000 miles a year this increase could mean a cost rise of in the region of £3,000 per annum for each vehicle operated. Serious numbers which will be relative to your size of business and fleet profile but clearly there is an impact. Add several vehicles in to the mix and the maths can become quite alarming.
As the price of fuel rises operators face a squeeze on margins and eventually may have to look to their customers to fund these extra costs. As these customers take on the increase in costs for transport logistics they too may need to pass on these rises to their customers and eventually to consumers. It's a domino effect but it is never an easy ride; price increases may face resistance and be difficult to pass on, especially in the short term and particularly during a time of weak consumer demand that we is so clearly evident now.
The price of oil, like virtually everything else, is driven by market forces, notably supply and demand.
Commodity prices are often affected by political forces and it is concerns over future supplies that is leading to uncertainty, the suspected culprit of the most recent rise is thought to be the hostility between America and Iran, the world's third largest producer according to the Organization of the Petroleum Exporting Countries.
If the situation worsens and production from Iran is cut then further fuel cost increases will become inevitable.
Intelligent logistics may well provide all or at least part of the solution, meaning road users need to always keep on top of their game and plan both their load and their route in advance -– whilst this can be difficult, it is crucial.
Such planning includes making the most of the load capacity in your vehicle, checking mileages to and from ports and planning the most cost effective routing for your journey, both too and from ports - if you can save 6% of running mileage you'll be home and dry!
By maximising load factors or reducing empty running, per our examples above, you'll need to reduce your mileage by around 6% - that's 30 miles and 95 miles per week for your van or HGV respectively.
Freightlink with its multiple ferry partners can help you make these choices whilst at the same time providing guidance to recommend ferry options that can save you money.
Even if you are unable to use alternative crossing points there often different sailing options and timings across the same stretch of water can make the that extra fuel cost difference back and perhaps even more.