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Counter-balancing the rising fuel price

December 12, 2018

With no end to its rise in sight, the fuel price can be offset to some degree by a proactive attitude.

It is impossible to predict what the price of fuel will be in 2019, due to the many global political and economic uncertainties. In my opinion, the trend line will rise and we will be paying more for fuel during the year.

American sanctions against the major oil-producing country of Iran, if applied, would create a major global shortage of fuel and further raise its price.

The disruptive oil supply from Venezuela is another factor that could negatively affect the oil price. Any escalation in wars around the world could also have a negative effect.

The increase in the price of crude oil also indirectly affects the price of many of the other components and equipment used to keep the wheels turning. Therefore, the price of lubricating oils, tyres and batteries is sure to rise.

The weakening of the rand against other global currencies could also affect the price that we will be paying for our new vehicles and vehicle parts next year.

Faced with the likelihood of higher oil prices, bus and truck operators need to prepare, and have a strategy on how they are going to absorb these increased costs, yet still produce a fair profit.

Operators need to audit their operations carefully and take the necessary steps to become more efficient and find ways to counter-balance the rising cost of fuel, and other fixed and variable operating costs that are set to rise next year.

The skills and attitude of the drivers should be the first on the list. Driver audits should be conducted and drivers who do not understand how to drive a vehicle economically should be sent for training.

Route planning should be carefully examined to see if there is any better way to route the vehicle that will reduce the kilometres travelled as well as the trip time.

Vehicle productivity should also be carefully examined and all avenues available must be explored to ensure that, wherever possible, vehicles are transporting a paying load. This applies especially to the long hauls, where many vehicles return home empty.

Many transport logistics companies are in the business of finding loads or part loads for trucks. Using the service of these companies is a good way to maximise vehicle productivity and increase earnings.

Maximising vehicle operating efficiency and uptime are other key factors in reducing vehicle operating costs, which will help to counter-balance the increased cost of fuel. These cost-savings can only be realised if vehicles are serviced and maintained correctly.

The accurate measurement of all the variable and fixed operating costs of each vehicle in the fleet is the only way to establish, control and manage the fleet professionally. By measuring these costs and setting benchmark guidelines, it is very easy to pick up any variances and take immediate steps to rectify the problem.

It is also an ideal way to eliminate fuel theft as the increased fuel consumption will be seen immediately against the standard benchmark.

With the continual increase in fuel and other vehicle operating costs, any operator who does not measure and control costs will not remain in business for long.

Vic Oliver is one of this country’s most respected commercial vehicle industry authorities, and has been in this industry for over 50 years. Before joining the FOCUS team, he spent 15 years with Nissan Diesel (now UD Trucks), 11 years with Busaf and seven years with International.

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