Launched today (9 July), at the Logistics UK Finance Forum, held at Hallam Conference Centre in London, the new Fuel Hedging Service will enable the group’s members to secure a guaranteed fixed fuel price.
By giving members access to Portland’s financial fuel hedging expertise, the partnership will provide greater stability and predictability while helping to protect businesses from market fluctuations.
Since the onset of the Middle East conflict, Logistics operators have faced financial challenges, with analysis from Logistics UK showing the price of diesel at the pumps in May was 30% higher than it was in February, while the cost of filling a large HGV increased to around £1,000.
While prices have since fallen, fuel price volatility remains high.
Budgetary certainty
“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,” says Logistics UK Director of Partnerships & Digital Services Jemma James. “The new alliance with Portland will help our members protect their margins, operations and levels of service by fixing the price they pay for fuel.
“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. Disruption to the fuel supply chain is expected to persist even once shipping resumes through the Straits of Hormuz, so fixing fuel prices provides businesses with budgetary certainty that helps shield them from the impact of global fuel price volatility.”
Mike Johnson, Group Marketing Director at Portland, added: “We are delighted to continue our long-standing relationship with Logistics UK and to expand it through this exciting new partnership. The freight and logistics sector continues to face significant challenges caused by fuel price volatility, making effective fuel risk management more important than ever.
“By making our fixed pricing products available to Logistics UK members through the Fuel Hedging Service, we look forward to helping more businesses manage their exposure to fluctuating fuel prices, improve cost and margin certainty, and gain greater confidence when setting budgets.”
Image provided by Logistics UK