Diesel price rises pushed the cost of filling a large HGV to around £1,000 a tank earlier this year
Logistics operators are being offered new support to manage fuel price shocks after diesel volatility pushed the cost of filling a large HGV to around £1,000 a tank earlier this year.
Logistics UK has announced a partnership with Portland, a fuel hedging and risk management provider, to help members fix the price they pay for fuel.
The partnership was launched on 9 July at Logistics UK’s Finance Forum, held at the Hallam Conference Centre in London.
Logistics UK said operators have continued to face financial pressure since the start of the Middle East conflict.
Analysis by the business group showed the price of diesel at the pumps in May was 30% higher than in February.
It said the cost of filling a large HGV had risen to around £1,000 a tank during that period.
Although prices have since fallen, Logistics UK warned that fuel price volatility remains high.
The new Fuel Hedging Service will give members access to Portland’s fuel hedging expertise, allowing operators to secure a guaranteed fixed fuel price.
The service is designed to provide greater stability and predictability for businesses exposed to fluctuating fuel costs.
Logistics UK said the arrangement would not require members to change fuel supplier.
Jemma James, Logistics UK Director of Partnerships and Digital Services, said: “The Middle East conflict is a stark reminder that it is impossible to predict the future, which makes budgetary planning for logistics businesses particularly challenging.”
She said the new alliance with Portland would help members protect margins, operations and service levels by fixing the price they pay for fuel.
Ms James added: “During the conflict, the cost of filling an HGV rose to almost £1,000 a tank.
“Such a sharp increase in the cost base would be difficult for any business to absorb, let alone those that operate on margins in the range of 2% - 3%, as many logistics operators do.”
She said disruption to the fuel supply chain was expected to continue even after shipping resumed through the Straits of Hormuz.
According to Logistics UK, fixing fuel prices could give businesses greater budget certainty and help protect them from global fuel price volatility.
Mike Johnson, Group Marketing Director at Portland, said the company was pleased to expand its long-standing relationship with Logistics UK.
He said: “The freight and logistics sector continues to face significant challenges caused by fuel price volatility, making effective fuel risk management more important than ever.”
Mr Johnson said Portland’s fixed pricing products would help Logistics UK members manage their exposure to changing fuel prices.
He added that the service could help businesses improve cost and margin certainty and gain greater confidence when setting budgets.
Logistics UK said more information on the Fuel Hedging Service is available through its website or by contacting its team.