Logistic operations work behind transporting goods and maintaining an efficient supply chain. Higher fuel prices can affect this overall, and it can ultimately affect both businesses and consumers. This article explores the factors and aftermaths across the construction industry.
Fuel Costs Surge in the UK
In recent months, the UK has faced a surge in fuel prices, with petrol and diesel rising at the pumps. Petrol increased by 3.2p to 143.4p a litre, while diesel rose by 4p to 152p, per The Guardian. The higher the prices at the pump, the more expense for the everyday drivers — delivery and logistic operators within the construction sector included.
Increased Operational Costs
The spike in fuel prices translates to a heavier financial burden for businesses, not just in the construction sector but across other trades. Fuel expenses are a big part of their fuel budgets, and the increase in operation costs could impact their distribution chain. Thus, they may have to reevaluate their financial plans and come up with strategies to either 1.) adjust pricing or 2.) absorb extra costs to deal with these concerns.
Adjusting pricing could involve raising prices for shipping, delivery, or logistics services to cover the associated expenses. Alternatively, companies may choose to absorb these themselves without passing them on to their customers. They might earn less money per sale or find ways to spend less to minimise the effects.
Supply Chain Setbacks
It becomes more expensive for businesses to operate their vehicles when fuel prices go up. This can affect their supply chain in several ways, starting with higher transport costs. It would cost more to move goods from one place to another. This can lead to higher expenses and affect their budgets and profit margins.
Next is the operational challenges in managing the logistics of shipping items efficiently. Say, you work in logistics; you may need to find ways to look for alternative routes, use fuel-efficient vehicles, or adjust delivery schedules.
Unable to adapt quickly could also lead to delays. Such instances can disrupt the flow of products within the supply chain. This can affect inventory levels, production plans, and customer satisfaction.
Potential Pricing Adjustment
The extra expense on fuel can eat into profits and may lead to potential changes in pricing. This could mean charging clients more for their services, such as adding an extra fee for freight to offset the costs.
For instance, you’re renovating your home and need of temporary floor protection. The store where you buy these supplies gets them from different places using trucks. Now, if the supplier running those trucks must pay more for fuel, they might charge more for delivering those materials to the store. This can make the items more expensive as stores and companies pass on this ‘impact’ to you as a customer.
What SP Group Is Doing for You
While this pricing change is beyond our control, we understand the inconvenience it may pose for you as a customer or supplier — and so for your own customers. Rest assured that our team at SP Group will strive to minimise the impact on you.
Keep an eye on your email, and you’ll be the first to know if any changes happen with our pricing and in the market. Please don’t hesitate to contact us at +44 28 9442 8611 if you have any questions.
