Diesel price rise is worry for businesses
Many businesses in the logistics sector are struggling to cope with the latest trend of rising prices for diesel.
Businesses and drivers were hit by an 8p per litre surge in the price of diesel last month, new figures from the RAC show.
The RAC said the average price of the fuel at UK forecourts rose from 154.8p at the start of September to 163.1p by the end of the month. It was the fifth largest monthly rise since 2000.
Petrol prices rose by nearly 5p per litre from 152.5p to 157.0p
The RAC attributed the price rises to oil producer group OPEC+ restricting global supply, combined with a fall in the value of sterling compared with the US dollar, which is used for fuel trading.
John Donovan, managing director of JJX Logistics in Kingswinford, said: “We currently operate a fuel surcharge on deliveries so the rising price is being felt more and more by our customers at the same time as the cost of living crisis puts pressure on everything else for them.
"We are trying as much as possible to absorb the rising fuel costs ourselves but it really isn’t easy with the speed it is going up. At the moment we are using roughly 60,000 litres a month and that is only going to increase with demand.”
Mr Donovan added: “We introduced our first all-electric vehicle in August as the industry strides towards a greener future but the costs of running a diesel fleet is likely to speed up that transition. Now that’s all good and well but the technology and infrastructure just still isn’t there. On a full charge, the eSprinter will do maybe 100 miles and we not only deliver to every corner of the UK but also into Europe. We are going to need as many electric charging stations as there are petrol stations.”
Christopher Greenough, chief commercial officer at West Midlands-based SDE Technology said: "Our Salop Haulage company runs 26 vehicles from our site in Shrewsbury, and supports our metal pressing business and also runs sub contract haulage for other businesses around the Midlands.
"The mix of higher fuel prices combined with higher energy costs, is putting a strain on companies, and although we are in a strong position because of continued investment, others may not be so fortunate.
"It is high time we heard more talk around what the government will do to support and encourage business growth, with lower energy and fuel costs."
A new study from Barclays and BDO has found that confidence in the logisitics sector has fallen to the second lowest level on record – just above COVID-19 levels
Three-quarters of operators feel business conditions are more difficult now than a year ago.
The Barclays-BDO UK Logistics Confidence Index is at 47.3 – down from 50.4 in 2022. In 2020, the confidence index stood at 47.1. Any index figure below 50 indicates overall pessimism in the logistics sector.
The study found there is a willingness to consider alternative fuel types, with electric solutions a top priority for investment, albeit jointly with diesel, suggesting the alternatives are not yet viable in many cases.
Derek Penlington, of Shrewsbury’s Dells Taxis, said he seen a ‘massive impact’ from the increase in fuel prices.
“Pricing wise, it’s really hard for us in terms of jobs because we have to constantly monitor the pricing,” he said.
“You can almost price yourself out of the market for jobs based on the fuel prices.
“I shop around for diesel and flit between Shrewsbury and Whitchurch. There are some garages who offer us a small discount, as taxi drivers, which helps us a little but it’s still high.
“It’s difficult for us. We are just trying to earn and it’s getting harder as time goes on."
RAC fuel spokesman Simon Williams said: "Drivers are sadly really starting to suffer again at the pumps. There's little respite whichever fuel drivers use.
"Our analysis of RAC Fuel Watch wholesale and retail data shows that petrol is currently overpriced by around 7p a litre, although the price of diesel is likely to go up further still in the coming weeks.
"It's worrying that retailer margin across the UK is higher for petrol than it should be considering the big four supermarkets were told off by the Competition and Markets Authority for overcharging drivers by £900 million in 2022.
"While many have voluntarily started to publish their prices ahead of being mandated to in law, we still have a situation where wholesale price changes aren't being fairly reflected on the forecourt."