The increase in the cost of a litre of diesel has reached in excess of 50% for some operators since late-February. For an industry that almost always lists fuel as its second-highest expenditure line, this rise represents a heart-stopping moment when trying to balance the books.
It gives rise to a number of questions, all of them with associated pitfalls.
One: Should you apply a fuel surcharge to your private hires, if you have such a clause in your terms and conditions? It may offset some of the sudden costs, but it will upset your clients and someone will do it cheaper – and may secure your clients’ work going forward.
Two: Should you ask your local authority customers to immediately review your rates? Some will respond with a blanket ‘no’, while others may be more willing to have a discussion.
Three: Should you put your bus fares up? Arguably, this may be the perfect time to point to the fact that the bus is cheaper than the private car, and may generate increased usage.
Some operators found that it was suddenly – and unexpectedly – cheaper to use fuel cards than order their usual bulk delivery of diesel, while others reviewed the pence per litre figures on their fuel cards on a daily basis, instructing their drivers which filling stations to use to achieve the lowest price, often by a couple of ppl.
What difference does 1ppl really make? Well… if you run one school coach, five days per week, 39 weeks per year, operating an average of 40 miles per day, that means you are covering 7,800 miles per year. If your coach does 8.5mpg, you are using 918 gallons per year, or around 4,173 litres.
A 1ppl increase means about £42 difference to that operator over a year. Not the end of the world. However, if fuel goes up by 50ppl, as it has done recently, that figure suddenly becomes £2,087. If you are running 10 coaches rather than one, the annualised increase is £20,870.
Now assume you are a larger operator running 25 coaches that do 65,000 miles per year each. The annualised increase there for a 1ppl increase is more like £348 per coach, or £8,700 for all 25 vehicles.
However, if the increase is 50ppl, as it has been recently, the uplift per coach is £17,400 per year. For the whole fleet of 25 coaches, that total comes to £435,000, which is an eyewatering level of additional cost for any business to sustain.
In mid-April, news broke of planned fuel price protests at several major motorway junctions across the UK. It is for individuals to decide whether they think such protests are signs of solidarity and strength of feeling, or a futile way to make the lives of others miserable in the resulting traffic congestion and delays.
Not least of all, there are also the effects on employees to think about. While the cost of fuel is soaring for operators, it is doing the same for employees who have to fuel their cars to travel to and from work.
How many operators have been approached by colleagues who are genuinely concerned that they may not be able to afford to fuel their vehicles to get to work?
As ever, an opportunity presents itself from the depths of crisis. Home-to-work shuttles may suddenly prove popular in the coming weeks for employers that seek to do something to ensure that their workforce can get to work.
One thing is for sure. Diesel is currently liquid gold, so for those operators that have electric coaches, dust them off and make hay while the sun shines!
