1.8.10/3:32 am
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Crosshire
Fuelling Debate
Executive Hire News, July 2008 Go to main Crosshire page
Well, it makes a change to find that, in recent weeks, the subject of hire rates has been eclipsed by that of fuel charges. Several of our clients have issued written edicts saying they will only pay X for gas oil supplied in our machines. Needless to say, X represents our net buying price about three months ago! However, I do have a little sympathy with customers who report an incredibly big variation in the 'refill tank' price of gas oil charged across our industry.
At the time of writing, those of us buying in bulk are paying a tad under 60p/litre for gas oil. If we conform to the requirements of RDCO, trading standards, fire and environmental legislation, then add our fixed costs for storage and the like, we arrive at a net cost of around 63p. On top of this we have the labour cost of refuelling our plant or dispensing small quantities into cans for re-sale callers.
Based on the above, it does not appear unreasonable to expect customers to pay around 70p. This is a far greater margin than any retail forecourt would achieve, although they do not have the cost of giving 60 days' credit!
A quick phone round locally produced no consensus at all. Out of 12 hire companies I contacted, five must be selling fuel at a loss, unless they are running on very old stock; three were charging just over 70p; and the remainder were up in the 90p bracket, with one charging a whopping 1.14p (all prices plus Vat). No doubt, by the time you read this, the figures will have gone up, but the point is that some hirers are apparently seeking to exploit what is already a tense situation.
We have also had a couple of disputes with customers claiming we had sent out kit without a full tank, but investigations showed the fuel had been stolen - the cut fuel pipe on one machine was pretty conclusive. Any machine with a capacity of more than a few litres could be hit by this problem, which is not necessarily caused by out of hours visitors, but often by other 'users' on site who have run short of fuel. I will wager that the number of service calls caused by machines running out of fuel, or by being refuelled with second hand fuel dispensed via the plasterer's bucket, will increase. I now insist that all machines with provision to lock the fuel cap must be sent out with a lock and key. I would also urge you to follow my example and ask suppliers who do not provide a locking fuel cap option on equipment to do so. It is not just fuel, of course, but all lubricants and associated petrochemical products essential to daily business that are consuming a substantial portion of operating costs. Many years ago, one of our industry associations published useful figures giving typical operating and ownership costs for popular machine types. I believe they were discontinued as they were tied into suggested hire rates, which is, of course, illegal. On the basis that information on costs alone would be a useful tool, am I alone in thinking that our industry would benefit from well-researched machine
ownership data? The car and truck industry is awash with such figures, and manufacturers readily supply details on running and projected total ownership costs. This would be of particular benefit to small and medium hire companies running mixed fleets, without resources to collate and analyse all their costs.
Of course there will, unfortunately, be those who tarnish our general reputation by failing to service kit
properly. Does it surprise you that I discovered that those competitors charging the most for fuel were those
possessing older, and perhaps more unreliable equipment?
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1.8.10/3:32 am