Transport Companies Hit Hard By Rising Cost of Petrol
It wasnt that long ago that business in the UK and US found themselves under a large amount of pressure when their margins were slashed due to a increase in petrol prices. Transport-based companies were hit hardest for obvious reasons and lots had no choice but to cut pay and cut vehicle numbers.
Fleets may need to be reduced even further now and companies pushed even closer towards breaking point as the government announces predicted further cost increases in the coming months. What is frustrating many business owners about this situation is the lack of information it gives them to predict profit margins. “Each time we plan out our business for that quarter, petrol prices are put up and our costings go out of the window” says Barry Hemstone, MD of RDA Foods. Many business experts have predicted that 2009 will see similar levels of transport-based companies shut down as witnessed last year, which was around 15%.
For companies that rely so heavy on petrol prices to turn over a profit, the news of another rise has not been well received. “We are being crippled” argues Fiona Potter, who runs a small furniture chain in the UK. Our customers expect their furniture to be delivered to them, which is something that is becoming financially unviable for us now. A number of similar companies are turning to van leasing as a way of bringing down their overall costs. This is because van leasing enables businesses to not buy their vans outright and so this is a useful option if cash-flow is poor. Interestingly, Citroen van leasing has been the most popular choice as on average these vans offer the best MPG. Ford van leasing is also up their with the most popular choices as their reliability is well respected in many industries.
