The fuel duty delay is welcome but unless operators make changes to the way they run their fleets, their costs will continue to be hit by geopolitical events, warns fleet tech specialist Lightfoot.
The delay to the increase of 5p in fuel duty from September offers fleets some short-term breathing space, but operators who do nothing remain dangerously exposed to the wider economic and geopolitical pressures driving volatility in both fuel and energy markets, Lightfoot believes.
From global oil supply shocks to the way UK electricity prices are linked to gas generation costs, fleet operators are increasingly finding that the price they pay to keep vehicles moving is influenced by factors completely beyond their control, according to Lightfoot.
As a result, they need to shift their focus from fuel procurement to driving productivity, by ensuring employees are as efficient as possible behind the wheel, says David Savage, Lightfoot chief revenue officer.
“Delaying the planned September reinstatement of the 5p Fuel Duty cut is welcome, because anything that helps the cost of running a fleet when prices are so high is a positive move,” he said.
“But it is merely papering over the cracks of a much greater problem - that fleet operating costs are being constantly hit by what once might have been termed ‘extraordinary events’.
“Unfortunately these events have become the ordinary, rather than extraordinary, in the past decade, and so businesses need to have a long-term strategy to deal with them. Just hoping that every successive government - and there have been a few - will make the right choices to help out isn’t a sustainable policy anymore.”
The issue also appears in the charging sector, where electricity costs are calculated by a system based on a combination of gas prices and bidding by power stations, set by the price of the most expensive power station needed to meet demand at any given moment.
“The unit cost of the fuel and energy they buy is almost completely out of the hands of fleet operators. They can source petrol and diesel at marginally better rates with fuel cards and through strict policies on where to fill up, and can access off-peak and cheaper electricity at certain times, albeit mainly for domestic charging,” said Savage.
“But that fact remains that this is tinkering around the edges. The only way to significantly affect how much it costs to power a fleet is to use less fuel and less electricity. In the long-term strategic sense, this means better procurement of vehicles, but the time and work needed to realign your fleet mix is considerable.
“At a tactical level, ensuring drivers perform better is by far the biggest differentiator any business can apply.”
As an example, a 100-vehicle fleet travelling two million miles annually and averaging around 30 mpg would consume approximately 303,000 litres of fuel every year. At 150p per litre, excluding VAT (equivalent to 180p per litre including VAT), that equates to an annual fuel bill of more than £454,000.
Lightfoot has produced an eponymous in-cab driver coaching device which communicates directly with the vehicle’s engine and provides the driver with visual and verbal feedback to stay within the engine’s optimum efficiency.
It also includes a rewards platform enabling drivers to benefit personally from better driving through competitions, prizes, discounts and other incentives.
Improving driving efficiency by 15% - which Lightfoot claims is the average level achieved by fitting its in-cab driver coaching devices - would reduce consumption by more than 45,000 litres, cutting the business’s fuel costs by around £68,000 per year excluding VAT.
Fleets need to have a plan where at any given time, and with any economic scenario, they are maximising the opportunity, Lightfoot argues. When fuel and energy prices are low, that means running vehicles at the lowest possible cost. And when they are high, being more efficient and productive than your competitors, the company advises.
“That’s how Lightfoot works, because it creates a culture where competitive advantage among your drivers and vehicles is baked into everyday operation, no matter what the cost of fuel and energy,” said Savage.
“By reducing fuel consumption by 15% on average, and consequently improving productivity and downtime, even sudden leaps in the fuel price can be mitigated, and fleets are able to take back control.”
