Savings on the cards

Want to soften the blow when it comes to the relentless rise in the fuel price? Derick de Vries, executive head of Standard Bank Vehicle Asset Finance, has some advice.

We have some good news: the diesel price could drop this month! Current unaudited data from the Central Energy Fund (CEF) is indicating a mixed bag of increasing and decreasing fuel prices for December, according to the Automobile Association (AA).

The Association says the data indicate significant increases in petrol prices of between R0.97 and R1.09/litre, but a decrease of up to R0.34/l for diesel during December. According to the data, the average upward movement in international product prices is the main driver behind the increase in petrol prices, while the slight downward trend in international diesel product prices is having the reverse impact on this fuel.

“With the expected increases to petrol, the price of a litre of 95ULP, for instance, will climb to just under R24/l, which will be way below the high of R26.74/l seen in July, but will still be higher than September, October, and November prices. The decrease to diesel is, of course, welcome and should, at least, not immediately negatively impact other prices reliant on diesel as an input cost,” says an AA spokesperson.

Of course, this momentary respite in the diesel price won’t make up for all the recent fuel price hikes. Increases have been relentless, resulting in higher operating expenses for businesses that are having to fork out more money for the same amount of fuel previously consumed.

De Vries says the price hikes are exacerbated by an increase in transport. “There has without doubt been an increase in road users and a rise in the quantity of fuel consumed for logistics purposes, especially since the arrival of Covid-19, with a resultant spike in online shopping and demand for home delivery of essentials like groceries. While the number of litres of fuel consumed for typical passenger vehicles is down by 30% due to the shift to remote working, operators of medium and large commercial vehicles – that move everything from inputs for production to goods and services – are up significantly.

“Following changes in consumer buying behaviour over the past two years, it has become critical for businesses to gear up to provide home delivery or beef up existing fleets. But the cost of fuel for transportation is placing serious pressure on businesses, particularly those that are unable to pass such increases on to their customers,” he notes.

In the current environment where fleet capabilities remain a business imperative but rising transport costs and expenses continue to weigh on cash flow, a focus on savings and efficient ways of managing fleets is critical to retaining key assets like people and vehicles. How does a company achieve this, though?

One way of keeping fuel expenses down, according to De Vries, is by participating in a diesel savings programme. “Through partnerships with leading oil companies, Standard Bank’s diesel savings programmes save its client base millions of rands by enabling them to procure diesel at preferential prices across the country,” he says. “A fleet of 10 vehicles using 20 000 litres a month typically saves about R15 000 per month (or R180 000 a year) on a Standard Bank diesel savings programme.”

Standard Bank also recently launched Visa Fleet Card, South Africa’s first chip and PIN fleet card. “Visa Fleet Card is secured by a PIN and is very difficult to clone. The cards are being issued to petrol-powered vehicles with a dedicated driver. In addition to the heightened security, they have the added benefit of reduced fees,” explains De Vries.

Another way in which businesses often miss savings opportunities is by not managing or controlling risk. “This comes down to having information available on day-to-day fuel consumption and driver behaviour,” notes De Vries. “When introducing a fleet card to a fleet, analytics reports made available in real time help to highlight whether a vehicle or driver is moving uneconomically, determine the causes, respond appropriately, and initiate savings to dampen the impact of increases in the costs of fuel, among others costs, on the business.”