Fuel supply resilience becomes a priority for fleet operators
As geopolitical disruption continues to affect global trade routes, much discussion across the transportation industry has focused on what this means for fuel prices. However, for many fleet operators, the bigger concern is increasingly whether they can get the fuel they need, when they need it. Without reliable access to fuel, businesses cannot meet customer commitments, maintain service levels or protect their reputation. As such, there is now a much greater focus on securing supply assurance and reducing the risk of disruption.
In this article, Craig Hallam, Commercial Director at Watson Fuels, argues that fleet managers and operators must pay close attention not only the price of fuel but to the strength of relationships with their suppliers.
Achieving this security starts with choosing the right supplier. Access to a broad supply network, multiple sourcing options and experienced account management is critical in maintaining continuity of supply when traditional routes become constrained. The strongest supplier relationships are built on trust, expertise and open communication, giving operators the information they need to plan ahead, rather than react when challenges arise.
This is particularly important because today’s market conditions are not a new phenomenon. Fleet operators and fuel suppliers have spent years navigating disruption, from the Beast from the East and the operational challenges of Covid-19 to the Russia-Ukraine conflict to more recently, instability in the Middle East. Events capable of disrupting fuel markets are becoming more frequent. Volatility is no longer an exception that businesses encounter occasionally – it is increasingly a feature of the operating environment, making risk reduction an essential part of fuel procurement.
Alongside a trusted relationship, supply continuity depends on understanding fuel demand. Businesses that have visibility of their consumption patterns are far better placed to forecast requirements, anticipate periods of increased demand and make informed procurement decisions. Suppliers can support this process by helping customers make better use of fuel consumption data, improving forecasting accuracy and identifying opportunities to strengthen resilience.
For some sectors, fuel demand can be relatively predictable, driven by established delivery schedules and customer commitments. However, demand can still shift quickly in response to wider supply chain activity. A spell of warm weather, for example, may increase demand for products such as soft drinks, creating additional transport requirements at short notice. Large infrastructure projects can experience equally significant fluctuations depending on project phases, site activity and weather conditions. Understanding these patterns is important when planning future fuel requirements and deciding how much volume should be committed under longer-term arrangements.
Pricing strategies also have an important role to play in reducing exposure to risk. Fixed-price contracts can provide certainty by allowing businesses to lock in a price for an agreed volume over a set period, helping them forecast fuel expenditure more accurately and align costs with customer contracts. Their value should not be measured solely on whether they deliver the lowest possible price, but on the certainty they provide in an uncertain market.
The challenge is that fixed arrangements do require volume commitments, meaning, for some businesses, the concern is not necessarily fixing a price but committing to a specific volume when demand can fluctuate. As a result, many organisations are choosing a mixed-use approach, fixing a proportion of anticipated demand while leaving the remainder linked to market pricing. This can provide a balance between certainty and flexibility, reducing exposure to volatility while allowing businesses to adapt to changing operational requirements.
What is clear is that fuel market uncertainty is unlikely to disappear. The businesses best positioned to navigate future disruption will be those that look beyond price alone and take a broader view of fuel procurement. Understanding fuel consumption, building trusted supplier relationships and using pricing strategies to manage risk are all part of the same objective: maintaining supply continuity in an increasingly volatile market
