Dery leads 1987 price rises
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• Just as the Road Haulage Association issued a fresh warning to operators on rising prices, oil companies raised the cost of diesel by between 1.9 pence and 2.1 pence per litre. They claim that the move is aimed at restoring prices in a highly competitive market.
The RHA's annual review of the movement of prices affecting hauliers' costs shows that last year increases in wages, repairs and maintenance, spare parts, insurance, vehicle depreciation and management and administration added 4.4% to operators' costs.
In the same period, the price of derv, which accounts for around 24% of the operators' costs, fell by about 20%, which helped to offset the 4.4% increase.
In 1987, however, the industry is faced with further, immediate increases.
The latest set of diesel price rises, on or around December 27, brought bulk dery prices up to around 26.4 pence per litre, roughly the same level at which they stood after the previous price rise on November 19.
All the oil companies blame competitive pressure in the market for price erosion, and for the need to raise prices again. Interestingly, none of the oil corn panies blame the recent OPEC decision to raise the price of crude oil.
Much of the competition in the diesel market has resulted from an overproduction of gas oil, which is used for domestic heating, and which can easily be converted into diesel. Demand for gas oil has been low this winter, so oil companies have been trying to sell quantities of the gas oil in diesel form to bulk purchasers.
Market sources suggest that a number of large hauliers have been able to demand low fuel prices in recent weeks.
It remains to be seen, however, whether the OPEC price increase will be passed on to hauliers. A lot will depend on the impending bad weather and the demand for gas oil in the coming months.
The RHA expects diesel prices to continue to rise with the pace of increases accelerating. It warns hauliers to take full account of their operating costs when discussing this year's haulage charges with customers.
Wage negotiations are still in progress at the moment though the Association fears that increases are inevitable. Increases in establishment costs will progressively affect more hauliers and there are indications from vehicle manufacturers that the prices of vehicles and accessories will also go up in 1987.
However, it is the escalating cost of insurance premiums that could prove to be the biggest shock for operators in 1987. RHA Insurance Services reports that truck premiums have gone up by about 15% on average over the past year. Market leader, General Accident, Britain's biggest motor insurance company, has put its truck premium up by 7%, twice the current rate of inflation, and experts predict that other companies will quickly follow suit.