Fuel prices and your fleet: what does the future hold?

The price of fuel can affect running costs, particularly across a fleet - but is it possible to predict rises?

For any motorist, the cost of running a vehicle is a constant consideration, and one that can vary significantly over time, but for businesses that run anything from one to a fleet of vehicles, it can be a major source of worry.

Unlike many other monthly outgoings such as building rent, tax and employee salaries, which generally remain the same, it is difficult to factor in the cost of filling up fuel tanks and keeping employees on the road, ensuring customer demands are met.

One key headache for fleet managers with vehicles and staff based across the country is that, unlike the cost of groceries in nationwide supermarket chains, diesel costs can vary significantly depending on where it is purchased from.

A vehicle being fuelled up at a branch of a well-known petrol station network in Cumbria is likely to cost far less than filling up a van using exactly the same fuel from a forecourt with the same pumps and branding on the edge of London.

The same applies when using motorway service stations, which notoriously charge much higher prices for fuel. It can be argued that the convenience of being able to leave the motorway to fuel up and then immediately re-enter without having to navigate a series of country roads is included in the cost, but that does not change the fact that drivers are paying much more for the privilege.

Uncertainty over costs

For organisations that operate nationwide and have a network of drivers and vehicles, it can understandably range from difficult to nigh-on impossible to determine exactly how much fleet running costs will be each month; uncertainty that can cause a fair amount of stress.

There are, however, steps that fleet managers can take that not only help to keep costs to a minimum, but also provide a large degree of visibility over how much needs to be allocated each month to fleet operations.

Northgate’s all-inclusive monthly package can remove the stress associated with worrying about servicing, maintenance, tyres, breakdown and recovery and replacement vehicles. 

The flexibility of the package also provides customers with the option to upgrade vehicles and expand their fleet size for a transparent cost, removing the uncertainty around expenditure.

It not only creates peace of mind for the business, but also reduces the chances of downtime; when a vehicle goes off the road, work is able to be carried out at a nationwide network of wholly owned and warranty approved workshops.

Thanks to Northgate’s partnership with breakdown partner AA, a back on-the-road target of 2.5 hours also means that vehicles are never off the road for long and the roadside fix rate is 84 per cent, providing further reassurance.

The average age of vans on UK roads is also eight years, meaning lower fuel efficiency and also a greater likelihood that the vehicle will break down, as detailed in our four-part series The Trouble with Old Vans.

With an average age of just three years, Northgate’s vehicles not only offer improved fuel efficiency over older vehicles, but are also likely to be on the road for longer, minimising both costs and downtime.

One of Northgate’s customers, steel and timber product manufacturer and installer Fabrifen, found that replaces its aging vehicles with new ones led to a 10 per cent improvement in fuel consumption, which equates to a saving of £356 per month, or £4,272 per year.

Hard to predict

Of course, one consideration that will remain is uncertainty around the price of fuel.

Whereas the price of oil has long been an accurate indicator of whether diesel and petrol prices would be imminently increasing or decreasing, production and refining of oil only accounts for a quarter of the cost at the pump, according to the RAC, while stockpiling of reserves means there is little way to predict imminent fluctuations.

Fuel duty and taxation actually account for the vast majority of the price; in the region of 70 per cent of the cost is taken away by the government, although the chancellor did please businesses and motorists with his announcement in the 2016 Budget that fuel duty would be frozen for the sixth consecutive year, despite predictions of an increase.

Ultimately, one of the best ways to control fuel consumption is by adopting certain driving habits, as outlined in our recent blog.

The introduction of new schemes to enable drivers to gauge fuel prices in motorway service stations before exiting could also help them to assess potential fuel costs before filling up and know whether to delay their pitstop until the next junction, if feasible.

Although some factors will always remain out of control, having visibility over as many aspects of the fleet as possible can help to form a clear idea over what monthly costs will be and help to provide much-needed peace of mind.

Contact us to find out about flexible and long-term van rental and leasing today.

 

Published: 13/06/2016 16:44:05

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