Are Reduced Fuel Prices Helping Your Delivery Work?

The price of fuel has usually been a millstone around the neck of hauliers involved in delivery work. In fact, you would probably need to time travel back to before 1973 or 1974 to find people involved in delivery work who weren’t worried about fuel prices.

Any one much over the age of about 55 or 60 may be able to remember those dark days of wars in the Middle East, fuel rationing and industrial unrest, the culmination of which were huge hikes, in real terms, in the cost of diesel and petrol, as well as the infamous three-day week. Although there have been ups and downs since then, by and large, the story has been one of inevitable rising prices and ever-growing headaches for people involved in the haulage industry.

Yet over recent months, that story seems to have changed. What’s going on?

Lack of demand

Fuel prices have fallen to some of their lowest levels for years. In fact, at the start of the year they plunged to their lowest price at the pumps for almost three years. As is traditional, the experts have disagreed over what is causing this almost as much as they do over the causes of increases, but it is clear that an on-going lack of demand in the wholesale market place is driving prices down – although not always at the rate government believes is appropriate.

That lack of demand is coming about for a number of reasons, not the least of which is to do with the on-going sluggishness of the global economy. With the Eurozone teetering on the brink of recession year after year, Japan in recession, China’s growth rate slowing down (by its standards) and huge international uncertainty over one crisis or another, it’s not too surprising to see a reduction in demand for wholesale fuel supplies.

What does this mean for Hauliers?

It is, of course, good news. It’s very difficult to make a case for arguing anything to the contrary, along the lines that paying more for diesel at the pumps is somehow going to help your business. Inevitably, though, there is a natural market expectation that these reductions will be passed on in some way to the end customer, thereby feeding back into the economy. Yet it is that economy that continues to be an ongoing concern.

While the United Kingdom and the United States appear to be amongst the relatively small number of economies that are healthily growing, most people agree that there still continues to be widespread corporate unease and a lack of confidence in both the company and consumer spending sectors.

Whilst that continues to be the case, the economy is likely to remain rather less than buoyant overall and that will increase competition to secure the best delivery work and transportation jobs. Add that to the market perception that falling fuel prices must equate to lower job prices and the pressures on hauliers will continue to keep their prices keen.

So, the fuel cost reductions are good news for all but they are still only offsetting in part some of the other major financial pressures on delivery work.