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ow fuel stocks, Middle East ension and green demands room Europe have led to ramatic fuel rises. Duty is et to rise again in the udget, and few customers re likely to welcome fuel urcharges. No wonder many auliers are wondering how hey can survive without overnment help.
Members of the Road Haulage Association were planning to lobby their MPs at the House of Commons on Tuesday this week in an attempt to put pressure on the Government to help hauliers cope with the repeated increases in fuel prices.
The Budget at the end of this month is expected to increase fuel duty from the present level of 34.3p/lit by at least 2.7p/lit as the Government attempts to drive pollution levels clown towards targets it has set for the end of the century. -But the RHA fears that many operators could be out of business by the middle of next year because of a combination of this and other market forces which are all driving diesel prices higher.
Simon Chapman, the Freight Transport Association's energy consultant, says that prices have risen by about 9% since August: 'You expect an increase at this time of year because of the weather,' he says. "But add . this to the E.0 change with regard to sulphur content in diesel and the factors on the world market and it's Something the hauliers are having difficulty coping with."
According to Shell UK's Sara James, there are three main factors behind the rise: "The tension in the Middle East has led to an international rise in crude prices, while the EU diesel specification on sulphur content went from 0.2-0.05% from 1 October and increased-production costs, while demand is particularly strong. At the same time, stocks of gas oil and diesel are at a five-year low, due largely to a cold winter last year and a shortfall in the amount of crude produced."
So hauliers are not sending up the distress Hares without good reason, and their fears arc based on prices in ihe tank. "The price ohitepot market began a sharp rise in the last k of August," says administration manager Neil Bourne at Staffordshirebased Shirley Transport. "At that time the price we were paying was 45.50p/lit—they peaked outon 10 October when we paid 49-55P/lit. jokickon it's costing an extra £8,000 a month more to buy fuel than it was three months ago." Bouthe's boss, director Arthur Shirley, has been forced into what for a haulier in the 19914 is drastic action: "We've got one or two customers where margins were already tight," he says. 'This week we've actually told them we can no longer continue to do business, but that's only because we are fortunate enough to be particularly busy at the moment."
All operators know that passing on an increase of any description is not easy. With fuel prices it's particularly tough, particularly when the customer has been used to seeing the price of petrol falling at the supermarket pumps. "We haven't even thought about passing on fuel price increases yet," says Eric Vick at Gloucester-based Eric Vick Transport. "We don't think it has gone up to the extent that we could at the moment. But when it does, we will ask. The trouble is, you might ask, but you don't always receive." Sheffield-based heavy engineering component distribution specialist Shepherd Distribution, has been able to pass on some of the price rises: "The last three years' worth of fuel duty increases, were passed on in the form of a fuel surcharge," he explains. "On average the increase has equated to about 1% of our annual turnover (around £5m). But you can only show a fuel surcharge by a percentage on the invoice for so long. Sooner or later you have to include it in your rate." Understandably, many customers are asking what the hauliers are doing to reduce their fuel costs. So what can they do? "I've just fixed the 12-month price on our derv, which is something we've never done before," says Tilley. "I've agreed to buy about a million and a half litres over the next 12 months. If the fuel stays up where it is I'm winning. We also do driver training and can get a rebate through Eagle Star insurance by doing it." • At the Manchester depot of Wincanton Transport, Jeff Parr has experience of the fuel savings that driver training can produce. He has more than 100 drivers and introduced an on-the-job training programme which, he calculated, would pay for itself if fuel costs fell by 1%. In the event, it has exceeded expectations and savings are currently running at over 9%. However, he admits that unless the programme continues the law of diminishing returns becomes a factor.
Gary Wild, a director of Dewsburybased Inter link Express franchise HN Wild Parcels, installed Black Box equipment and has experienced real benefits: "I'm able to say to the drivers 'while you're sitting there for 20 minutes with ticking over, will you switch off the flippin ignition!'" While fuel savings of this kind can be dif ficult to quantify, savings elsewhere ca make up for it. simply installing the equip ment cut around £9,000 from Wild's flee premium with Provincial Insurance. A low-level unit costs about 2500, rang ing up to just over £1,000 for a top-of-the range model. Back at Shepherd Distribution, Paul Tille is trying another form of technology, thi time using lubricants. "We've started usin synthetic oils in gearboxes, transmission and back axles to try and get fuel savings," he says. He could really be on to a winner, according to Mobil Oil Company fleet sales engineer Eric Edwards For example, Mobil markets Delvac 1 SHC (synchronised hydrocarbon) for engines and Mobilube 1 SHC for transmissions.
"By putting SHC in the transmission, between 1-2% savings in fuel consumption can be expected," says Edwards. "If you put it just in the engine, you will get a 2-3% improvement, but if you use it throughout the truck, in some instances you can more than double that."
The reason for this saving is that full synthetic lubricants have greater fluidity than conventional oils. They don't create friction within themselves because the molecular structure doesn't cause drag. This reduces the frictional losses in the engine, absorbing less energy and increasing the available drive power. Another advantage of synthetics is their extended service life, which can extend oil change intervals to as much as 100,000km. The same principles apply with transmission and axle lubricants. In trials, this combination has produced significant savings, says Edwards: "We did a trial using two vehicles from United Biscuits. They saved 9.2% on fuel costs and as a result, they now use this kind of lubricant technology successfully across the fleet."
The success, or otherwise, of the RHA's mass lobby will not be apparent for some time. In the meantime, operators must take whatever measures they can to survive the present crisis, without really knowing ho long it might last It would be wise to explore all potential methods of at least offsetting those spiralling fuel costs