Analysis
A seismic shift in the way we do business
“IF WE’RE TO KEEP OUR INDUSTRY RELEVANT AND WORKING, IT’S TIME TO THINK DIFFERENTLY,” SAYS MARK WADDINGTON,
ASSOCIATE DIRECTOR AT CHANNOIL CONSULTING
The UK fuel distribution industry has weathered many changes over the
past four decades and is used to adapting to new rules and regulations
but, there’s no doubt that we’re now in the midst of a seismic shift
affecting how we’ll do business in the future. Technology, consumer
behaviour and regulation are changing the way goods are moved
around, and the question is no longer if or why we should be making
changes but when and how we embrace them. And this calls for a long,
hard and maybe painful look at the way some of our suppliers and
distributors maintain a customer base, grow their business and survive
the advancing change.
New horizons
Currently, deliveries to the domestic energy market account for 30-
40% of fuel distribution journeys with the remaining 60-70% servicing
agricultural and commercial needs. But with new directives coming
from government and global organisations alike, and the fossil fuels
we’ve been supplying for decades being phased out over time, this could
change drastically in the coming years.
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Let’s remind ourselves of a few facts:
Gas boilers will be banned in new homes from 2025. Chancellor
Philip Hammond has said that a ‘future homes standard’ would be
introduced “mandating the end of fossil fuel heating systems”.
Over time, gasoil, kerosene and LPG are likely to be replaced by new
fuels including biokerosene, biogas, biomass, heat pumps, solar
panels and wind energy.
In May, the Committee on Climate Change (CCC) recommended
net zero greenhouse gas emissions in the UK by 2050 and the
Energy and Climate Intelligence Unit (ECIU) added that it should
be affordable.
Through recent global action, environmental groups such as
Extinction Rebellion have demonstrated that they’re demanding
more ambitious targets.
“NOW IS THE TIME FOR FUEL OIL
DISTRIBUTORS TO IDENTIFY NEW
REVENUE STREAMS AND FIND
ALTERNATIVE WAYS OF KEEPING THEIR
MARGINS AND THEIR CUSTOMERS”
We need more than just good customer service and robust
logistics
Many firms have come to realise that good customer service and sound
logistics are helpful, but much more needs to be done. They are looking
to open-up their thinking and focus on ways to improve performance.
Some have transformed the product offer and repackaged services.
Some have already supplemented traditional fuels with alternatives to
keep customers who’ve switched to decarbonisation initiatives. It’s less
expensive to keep an existing customer than to acquire a new one.
But these new initiatives take time and investment. Expanding
and developing product ranges means extra tanks, extra space and
extra storage costs. Making fundamental change to the way we work
brings unwelcome expense but whilst change is costly, the cost of doing
nothing is deadly.
At Channoil we believe now is the time for fuel oil distributors to
identify new revenue streams and find alternative ways of keeping
their margins and their customers. We work successfully with firms
who are making decisions and choices about what they do in the
fuel supply chain. As the current situation goes into decline, we’re here
to help teams plan the role their businesses need to play in this new
energy supply chain. www.channoil.com
(See also page 27)
Fuel Oil News very much welcomes reader’s views and opinions on the industry’s transition
to a low carbon future – email [email protected]
Fuel Oil News | July 2019 11