Most companies will agree that transportation is a necessary part of their business, whether it involves moving people or goods from one point to another. If that is the case, before Covid-19 related inflation rates, transportation was responsible for what percentage of your goods and services budget? Most companies would report about fifty percent. If that’s accurate, within the transport budget, fuel is responsible for what percentage?
If your company is data-driven and you have a system that tracks how much fuel you consume in a month to run your operations pre-Covid-19 inflation rates, now compare the data from early 2020 to February 2022. Were these the numbers you expected? Pardon me; let’s do the exercise one more time. Now compare the data from February 2022 to October 2022. Do the numbers reflect your projections?
The Table below shows the rising cost of fuel pre-pandemic until October 20, 2022
|Fuel Type||Date||Cost/Litre (GHC/Litre)|
It is evident from the Table that diesel costs increased by 38.1% from March 2020 – February 2022, 110.77% from February 2022 – October 2022, and 191% from March 2020 – October 2022. These numbers must be alarming for any decision-maker, whether you’re a CFO, COO, President, or CEO.
Fleet Managers know that the highest cost of fleet operations is fuel cost. A thirty-eight percent increase in diesel cost within two years is somewhat manageable. Still, a hundred and ten percent increase in diesel cost within eight months is unbearable for most organizations. Does this mean businesses have to halt their operations because of the rising fuel cost? Emphatically, No.
Most decision-makers should focus on running an efficient and effective transport system. The answer to running such a system is to have a reliable fleet safety management system with a significant focus on GPS tracking systems by monitoring journey management, idling, and aggressive driving.
Most Fleet Managers know that fuel cost is a significant portion of operational transport cost, and transport operations cost is about fifty percent of your goods and services budget. Therefore, a 191% increase in fuel cost must negatively affect your company’s bottom line.
The current economic crisis has made several leaders focus on cost-saving strategies and other management methods to run efficient systems within their businesses. Will you be the next in line, or will you continue to hemorrhage?
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