Do you find watching the news depressing these days? The negative effects of the global Covid 19 pandemic, the cruelties of the unjust war on Ukraine, and rising prices due to the far-reaching ramifications of Brexit, all combined can certainly make us feel down. So much doom and gloom! Is there any light at the end of the tunnel?
In this 3-part series we’ll be addressing rising fuel costs, cost-of-living increases, and how employers can cope with the rise in salaries.
Part 1, The ‘doom’ of rising fuel costs
The UK economy is heavily dependent on fuel, so it is inevitable that increases in fuel prices are detrimental to almost every UK business. These effects can vary from sector to sector. Fuel prices have a direct effect on transportation and distribution costs, which then drive-up production costs and lead to lower profits. Transport firms are likely to suffer the most due to the nature of the industry which is heavily fuel dependent.
Many organisations rely on commercial vehicles for their operations, and with many budgets already very stretched due to inflation, rising fuel costs puts financial strain on many firms across the UK. Often businesses are hesitant to pass these increases on to their customers and are seeing a significant decline in profit instead.
Crucially, the fuel cost price hike is also affecting employees. Unable to afford fuel, many employees are seeking new job opportunities with less commuting required. Employers have tough questions to consider, can you afford to pay more employees more to offset rising fuel costs? Are you willing to lose good talent, and face the cost of recruiting?
It’s not just fuel; if your company uses, or manufactures petroleum-based products, such as plastic, you will also see your costs going up. Freight costs will also increase. Many carriers add a fuel surcharge.
What opportunities does this create?
Some industries are likely to see the silver-lining of rising fuel costs. People are nothing if not inventive, finding ways to get around situations. As the prices remain overly high, people are likely to drive far less. If you just happen to be in the bicycle industry you can expect higher demand for your products. People are also likely to take their holidays much closer to home, so local tourism will probably benefit in some ways.
Futureproof your business against the rise in fuel costs
Can your business adapt by becoming more fuel efficient? For some types of organisations, it’s possible to considerably reduce fuel dependency. Ideas include:
Many organisations have already made the switch to electric vehicles and are reaping the benefits. The fuel price increases may encourage many more firms to consider following suit. Is it time for your business to consider ‘going green’ in this way?
Can you encourage your employees to work from home all or part of the time? The savings they can make from reducing commuting costs will likely be appreciated. You may save yourself money in the long run if employees feel financially supported, as they’re more likely to stay in their roles.
If having your staff working at home doesn’t work for you, how about setting up a carpool programme? Encouraging employees to share fuel and parking costs by travelling together with someone they live locally to, can have the same effect, saving money, which can increase morale. Potentially this could also have an added benefit of improving employee relationships and creating friendships. Carpooling can be a good way to introduce staff that ordinarily may not interact at work. This can create an increased sense of community in the workplace.
Why not extend this even further, pairing up with other businesses in your area. If two or more businesses get together, implementing a carpooling scheme that could make better use of existing resources and may mean employees will find it easier to locate parking.
Are you involved in the transportation industry? If so, could you consider streamlining routing? It sounds obvious that shorter routes will result in company vehicles using less fuel, but there are some great real-time journey apps that could be considered. Waze, for example, monitors traffic continuously, suggesting different routes to avoid busy areas, and reducing the fuel lost sitting in traffic jams or taking lengthy detours.
And finally, planning; now is the time to proactively manage rising fuel costs, by taking into consideration the increases at the budgeting stage. When developing budgets, allow for rising costs, to avoid nasty surprises further down the road. It’s an unhappy fact that there are likely further increases coming, so it’s now time to take practical steps to be prepared for them.
Next time we revisit futureproofing your business, we’ll be continuing by examining cost-of-living increases, and how employers can cope with the rise in salaries.