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road transport in the fuels value chain – challenging times ahead?

Last week we wrote about the critical nature of digitisation for commercial road transport, and how service providers were racing to deliver integrated platforms to support road haulage efficiency. This week our Commercial Transport expert Michael Voet picks up some of the specific challenges facing transport operators in the fuels value chain.

How will fuel transport operators survive and grow as markets change?

While every transport segment has been hit by the coronavirus pandemic, fuels transporters in particular face a gathering storm of challenges and – whether specialist or generalist – will have to reposition, enhance and streamline their operations. That’s because the competitive landscape in fuel transportation is changing rapidly, driven by a number of intensifying trends we look at below.

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The changing face of fuel retail

A combination of global environmental legislation, acceleration in OEM’s production-line rescheduling and rapid changes in consumer demand and behaviours will quickly transform the look and purpose of service stations. As hubs for charging and local convenience services – driven by m-commerce – there’ll be an inevitable knock-on effect as “wet fuel” demand decreases and supply chain requirements alter.

In their excellent recent blog “Is There a Future for Service Stations?, our counterparts at Boston Consulting Group described three major disruptive factors shaping the future of fuel retail outlets: alternative fuels, advanced mobility and evolving consumer expectations – enabled through digital and technology. Fuel supply and value chains are inevitably affected by these very same factors and will be forced to change their business models accordingly. Those who respond quickest and most distinctively will gain first mover advantage.

The “Dealer Value Proposition”

Given the irreversible nature of this transformation, it goes without saying that the service station dealer of the future will expect something vastly different from his/her supply chain.

With the profile of energy demand changing – dealers will expect supply services which are multi-category, often “last mile”, integrated both with stock management and with m-commerce services, do not interfere with customer footfall and are often “immediate”.

Those dealer value proposition (DVP) elements are set to very much determine the competitiveness of a next generation “fuel supply” offer: the days of “we need 40 thousand litres of diesel as soon as you can” will be gone very soon.

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Net zero: clean fuels for truck and bus fleet operators

Everywhere, urban bus fleets are either electrifying or moving to liquefied/compressed gases as clean air zones proliferate. At the same time, the development of LNG networks for heavy goods transportation is accelerating and previously embryonic projects piloting hydrogen as a clean fuel for road freight are getting off the ground. As these major transformation efforts gather pace and become ever more cost-competitive, the need for road tanker operators to reposition themselves and their business models is intensifying and will continue to intensify. Transporting LNG or hydrogen is a vastly different game from transporting diesel.

Digital advantage

As we wrote last week, this rapidly changing competitive landscape is significantly shaped by digitisation. Fuel (or any other) transportation operations in command of powerful, integrated software platforms will gain an edge through their ability to:

  • Flex vehicle operations responsively
  • Schedule and balance loads more effectively
  • Match fleet capability to evolving market demands
  • Ensure “back-load efficiency” and avoid “empty” journeys
  • Trade vehicle and driver availability, and
  • Adapt driver and vehicle routing in real time

As markets transform, it will be critical for fuel transport operators to develop more adaptable and agile models; to benchmark the efficiency of their operations against best-in-class; to maximise their use of digital tools in increasing effectiveness and to develop new and relevant KPIs to measure and manage that efficiency and that effectiveness.

Michael Voet is our Senior Partner for Commercial Transport Markets. If you’d like to talk to Michael about how PHC can support your company in benchmarking its efficiency, repositioning its offer, digitising its operations and/or developing and embedding new KPIs, then email him at