As all owner operators will know, fuel costs are a constant concern – whether you’re just starting out or whether you’re an old hand at haulage. Jobs both big and small need fuel, and that costs money. However, owner operators don’t have the same options as big companies when it comes to fuel. When you’re buying for huge fleets, you are more likely to secure deals and offers. Today, I am going to give some advice on the different methods of buying diesel that are available to the smaller operators and explain the pros and cons of using these methods to get your vehicles out on the roads on haulage jobs.
To Bulk Buy or Not to Bulk Buy
Most big businesses bulk buy. This is the cheapest way of getting a product, as the more you purchase, the less it costs. Therefore, it can be tempting to install a bulk fuel tank in your operating centre to provide cheaper diesel for your trucks. However, for an owner operator, tying your money up in a tank could be a risky move for many reasons.
•Keeping it Green: If you do decide to store fuel in a tank, you must purchase one which protects the surrounding environment from leaks. If you don’t stick to the rules, the Environment Agency can impose thousands of pounds worth of fines. Buying a specialist tank can be very expensive and might not be worth it.
•You Need Cash: Most owner operators do not have a large amount of cash to hand – that is normal. However, to get a good price you’d want to buy around 30,000 litres of diesel, costing tens of thousands of pounds. After securing your vehicle, as well as insurance and other costs, you’re unlikely to have much cash around. What’s more, as a new business it is often hard to get credit.
•Security: Having thousands of litres of diesel in a tank is just like having thousands of pounds of cash left out. The fuel must be properly secured, or it will be vulnerable to thieves. The cost of installing extra security is unlikely to be cost-effective for smaller operators.
Other Options: Fuel Cards and Retail Fuel Cards
The alternative to a tank is that you top up your vehicles when they are out on haulage jobs. It’s possible to do this with an ordinary credit card, but this means that you will be paying retail cost and will be unable to predict the cost of your diesel from one day to the next. If you do choose this option, make sure that you keep hold of all receipts, so that you can reclaim the VAT later on.
Alternatively, use a fuel card. These cards can only purchase diesel or petrol (you can specify this yourself), and are consequently much safer than a credit card. They also help with administration, as you receive just one invoice per week with all your spending collated. This saves a lot of time and energy that’s usually spent fussing with receipts. Of course, no method is perfect: these cards often tie you to one specific provider, who will ask for a fee for each card.
Still concerned about purchasing methods? In my next article, I will offer even more suggestions, helping you choose the option that is best for your business.
Norman Dulwich is a Correspondent for Haulage Exchange, the leading online trade network for the road transport industry. Connecting logistics professionals across the UK and Europe through their website, Haulage Exchange provides services for matching haulage jobs with available drivers. Over 5,000 member companies are networked together through the Exchange to fill empty capacity, get new clients and form long-lasting business relationships.
This article is copyright free.