Coming soon to the UK: Fuel prices to rise at peak times

Recent press reports (including a news item published in The Telegraph) indicate that major supermarkets look set to introduce variable fuel pricing at the pumps in the UK – something that has apparently been commonplace across Europe and the USA for some time.

Danish company a2i is reportedly in talks to introduce the software – which allows petrol stations to flex their pricing up to ten times each day – to supermarket forecourts across the country.  The new technology could be in place within just a few months.

Currently, petrol pricing seems to be ‘competitor led’, with prices changing in accordance with other petrol stations in the area.  However, the new system will change this to a more ‘behaviour led’ model, analysing activity from large databases of customer information to predict how those customers (and the petrol station’s competitors) will behave.

This means that prices could be changed several times each day.  For example, prices could be dropped outside of peak hours in supermarkets to encourage more footfall in the shops, but at busy times such as school runs and Bank Holidays, prices could rise to reflect the higher numbers of people at the pumps.

How is this likely to affect couriers?

Critics are already arguing that introducing real-time fuel pricing could further inflate the price of fuel, with the ability to move prices up at peak times more likely than lowering current prices at quieter times.

The AA’s Luke Bosdet said: “This represents a huge change which would be most unfair on consumers and families.  It will wind them up no end as they become wise to the fact that retailers can exploit price movements.”

For those who rely on their vehicle for a living, though, the latest news could be an even bigger kick in the teeth.  With delivery costs already being squeezed, any potential increase in the cost of fuel – even if it is just 2p a litre – could have a significant impact on profit margins.

When out making deliveries, you can’t always anticipate when your next tank of fuel might be needed, so you are more likely to have a need for fuel during peak hours (and with legitimate business reasons) than others who might be able to plan their journey in advance.

While it might be argued that getting people to change their behaviour and refuel at different times could lead to better throughflow and quicker times at the filling station in rush hours, it could also be argued that ‘peak times’ might also change as consumers try to avoid higher prices – which might actually mean higher prices during currently quieter times!

On the back of all this, there could be a knock-on effect in the longer-term for consumers, who may find themselves having to cover the increased costs of fuel used by the transport industry generally.

Of course, this may all be much ado about nothing, with prices generally evening themselves out if the new technology enters the mainstream, or arguably becoming cheaper for those who fill up at quiet times.  Perhaps any change may also be masked by a lower price in oil that is likely following Donald Trump’s disputed decision to pull out of the Paris Climate Change agreement.

How can costs be kept down?

We can’t see into the future, but we can control what is happening now.  It seems more essential than ever to choose the right vehicle to deliver your goods, with the right mix of carrying capacity, power and fuel efficiency to ensure timely deliveries are possible – without the need to refuel too often.

There is also the looming threat of a potential £20 a day ‘toxin tax’ for diesel vehicles threatened for drivers entering city centres – another thing to consider when choosing your next vehicle.

Like fuel, insurance is a necessity, but again has seen pressure on prices following the government’s decision to increase the rate of Insurance Premium Tax (IPT) from the start of this month, and the ‘Ogden rate’ change also putting pressure on insurers to meet rising costs of their own.

To counteract this, Bollington Insurance works with leading providers of courier insurance to help ensure costs are kept at reasonable levels and allows you to spread the cost of payments with several insurers, subject to acceptance.  Bollington is always looking to the future to make sure couriers are fully protected at a reasonable price.

This is one area where cutting corners can prove costly, but if budgeted for properly can save you money in the long run.  Visit www.bollington.com/courier to find out more about good value, good quality insurance for your work, or call 01625 348 779 to speak to a courier insurance adviser.