PRESS RELEASE: Courier Boss Calls For Revamp of Fuel Duty as Fluctuations Wreak Havoc
CONSTANT fluctuations in fuel prices are making it increasingly difficult for transport businesses to operate, with public sector contracts most at risk, an industry veteran has warned.
Jerry Stewart, boss of Scotland’s biggest independent courier company says unpredictability at the pumps causes havoc for haulage and logistics firms, leaving them in constant flux and unable to perform normal business planning.
With rumours circulating that George Osborne is set to increase fuel duty in the emergency July budget, Jerry has instead called for the Government to step in to help steady prices, warning that the lack of fairness on the forecourts is making it challenging to deliver on public sector contracts, which typically run for two years or more.
As well as being a co-director of Eagle Couriers, which operates a 100-strong fleet between Edinburgh and Glasgow, Jerry is a decorated 30 year veteran of the sector who earlier this year was invited to the House of Lords to be made a Fellow of the Institute of Couriers.
He said: “The situation is simply becoming intolerable. We’ve already heard the AA and RAC complaining bitterly on behalf of motorists that fuel prices have risen at the same time that the price for a barrel of crude is dropping.
“However it hits the transport, haulage and logistic industries even harder. Frankly it is becoming impossible to plan ahead. It’s been great that prices dropped at the start of the year, but while the oil price has slumped, fuel prices have started to creep back up again.
“What’s most concerning for us is that many of our contracts are with the public sector. To submit tender for those we operate using fixed contracts over a two to three year period.
“It becomes extremely difficult – verging on impossible – to plan for such contracts when fuel prices are fluctuating so greatly and there is no stability regarding the price.”
With a 100-strong fleet, Eagle Couriers acutely feels every change. Even a 1p rise in fuel costs adds 60p to the cost of every fill up for the firm’s vehicles, which cover thousands of miles across Scotland every week
“While we have to operate within profitable margins, we’ve got contracts which are fixed over several years and have agreed service levels. That means we simply can’t take vehicles off the road or reduce in size.
“We have to find a way of maintaining our costs at a low level, it’s a vicious circle and it does put pressure on all quarters. We can just about maintain that but it is becoming increasingly difficult. The worry is when other operators start quietly cutting corners.”
The “stabiliser” was intended to help smooth out the effects oil price rises by pegging associated fuel duty (the tax the Government collects) increases to the rate of inflation.
Jerry added: “I sincerely hope Mr Osborne does not go back on one of the main pre-election promises so early in the term of office, by announcing this increase in fuel duty.
“There must be a better way to do this. Everyone appreciates that fuel prices will rise as the cost of oil rises. However, there is no way the public would accept weekly changes in their gas and electricity bills. Why should we accept it for petrol prices?
“We have seen how much the prices have increased since January, and this is only a short period of time, so it is difficult to legislate and control over a three year period. There should be an agreed mechanism in place, which ensures that when the price of oil rises, the tax we pay either decreases or at the very least remains the same.
“This may not solve rising fuel costs outright, but will go a little way in relieving some of the pressure felt by cash strapped businesses and families.”
In February the average price of unleaded petrol was around £1.08 but by April this had increased to around £1.13 with prices continuing to rise throughout May. Duty on unleaded petrol and diesel has been frozen at 57.95 pence per litre since 2011. The next planned rise in duty is September 2015, the Office for Budget Responsibility (OBR) has said, however rumours have begun to circulate that this will be brought forward to July 2015.
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