PAYMENT IN ADVANCE
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Bunkering is undergoing a revolution. New technology is having its effect, and new players are entering the game — even the rules of that game are changing.
• In an era of computerised fuel purchasing and a growing use of charge cards, the concept of bunkering has been in danger of becoming unfashionable — but now it looks as though it is enjoying a revival. Some of the oil companies are promoting the concept; third-party management companies have won many converts to it, and now the National Freight Consortium has established its own bunkering scheme for outside users.
Unfortunately, bunkering seems to mean different things to different people. The common thread is that bunkered fuel is bought ahead of requirement, and is then stored for future use.
By this definition, any transport business stocking its own fuel is bunkering it, but the term has come to refer more specifically to arrangements where the operator has a deal with a third party to store the fuel. Some such deals are arranged directly between individual transport companies. Because they are by nature private agreements they are hard to quantify, but oil industry sources suggest that they account for only about 2% of sales. At the simplest level these should involve cashless transactions, otherwise VAT should be charged.
REGULAR RUN
Another kind of traditional bunkering deal is between operators and individual garages, usually either near the operator's base or at the far end of some regular run. In this case the price is likely to be negotiated with the fuel company, while the handling charge (typically 1-1.5p/litre) will be arranged direct with the garage.
The attraction of buying fuel in this way is that it is cheaper than from the forecourt pump. A typical yardstick for the level of bunkered prices is 2-2.5% below retail price, although this depends very much on the quantities bought. A further benefit is that the driver need not pay for withdrawals at the time; the company's credit is merely reduced appropriately.
Now, however, the oil industry is moving away from this system, which is seen as unsophisticated and in some cases not particularly cost-effective. Some oil corn panics are throwing their efforts into developing and promoting fuel charge-card schemes, but others have brought new finesse to traditional bunkering.
First in this field was BP, which introduced a card-based bunkering scheme about two years ago. More recently Esso has made a similar move with a scheme called, inevitably, Bunkercard. This is aimed at existing large-scale buyers with „an ongoing commercial arrangement for bulk purchases". It does not cover petrol or lubricants; only diesel
The attraction of these schemes is that they do not confine the user to a few selected outlets; Bunkercard, for instance, is valid at any of 300 commercial filling stations. In a way it works like a cross between a fuel card and a conventional bunkering arrangement. As with a fuel card, the user is sent regular computerproduced statements analysing withdrawals by date, vehicle and so on. Instead of being charged a flat rate in arrears, however, the user negotiates a price with the oil company, and agrees on a notional stock level, which is regularly topped up.
The prospect of buying in advance may sound like a disincentive, but in practice it may not always prove an obstacle. For example, the fuel supplier may well operate on the basis of payment by the 20th of the month following delivery. If he can fine-tune the quantities so that his orders are placed quite frequently (even monthly), then there will be relatively little loss of interest or strain on cash flow. It all depends on quantities — bulk buying earns better terms.
A significant new move in the world of bunkering arrived five years ago when a former West Midlands transport business, C H Jones (Walsall), established a bunkering business called Keyfuels. This operation has brought in elements of various other forms of supply. lt is not tied to any particular make of fuel, and its outlets are not restricted to the garage trade. They include service stations and transport depots, and the company says motorway service areas could follow.
This has opened up possibilities of bunkering arrangements to fuel suppliers with relatively limited service-station networks, giving users more choice, and probably contributing to keener pricing. Users negotiate their own rates with oil suppliers, and the fuel is delivered to a site nominated by Keyfuels. The user can draw fuel from any of the 200 bases in the network.
The Keyfuels system offers customers extensive computerised management reporting (data is supplied weekly). The company says there are now over 4,000 companies with 45,000 cards. It claims a 4.4p/litre saving compared with typical pump prices, but the handling charge could add up to 1.8p/litre.
Last month the National Freight Consortium launched a service called Fuelink. Once again, this involves the use of vehicle or driver cards; and again, the user negotiates quantities and prices direct with the fuel supplier. In this case, all 100 outlets in the initial network are NFC branches, although external bases may be added later.
Fuelink differs in several ways from the other bunkering schemes. For one thing, all stations issue fuel and debit the user automatically on insertion of the card into the appropriate slot. For another, the card will pay for more than just fuel. It covers minor repairs, secure parking and other on-site services offered by the NFC. There are some intriguing extras, too, such as a depot display unit to flash a message from base to driver.
HANDLING CHARGE
There is a handling charge that starts at 1.5p/litre and is payable by direct debit. For this you get full management and stock control reports and directories of participating bases.
Clearly traditional bunkering has come a long way in a short time, but there can still be drawbacks. In the schemes that are not specific to one supplier there is no real control over the quality of fuel supplied. Even if you buy just one make, there is no guarantee that your drivers will fill up with that make, and with the more traditional schemes, security and management control can be lacking.
Some oil companies believe users would prefer to pay higher fuel-card prices to achieve that security. A compromise exists with services such as Shell's Transdery system, which offers security but uses automation to hold down prices. Shell says there is little overall difference between Transderv prices and all-in diesel bunkering prices.
Then again, some suppliers argue that the new generation of bunkering cards can give the required service. Potential bunkering customers do at least have one asset in their favour; by their nature they will be big buyers, and there has never been so much choice in the way they can flex their muscle.
0 by Peter Rowlands