How transformations in the fuel market affect trucking companies

The steady rise in the cost of fuel

Fuel prices at gas stations have been rising at an alarming rate all year long, and further increases will continue. In addition, the Russian fuel market is clearly experiencing a number of problems: the unprofitability of fuel retail and, as a consequence, a decrease in the margins of gas stations. This whole situation makes us follow the news closely and think ahead, because almost a third of the trucking industry's expenses fall on this very item. What to do if the familiar gas stations on the regular routes of the cost of fuel will rise, and how to look for new partners?

 

So do not stop looking for bargain offers from fuel services and switch to a more profitable partnership. Also, do not be afraid to switch to new automated services that will help digitize and detail this item of expenditure to make further strategic decisions.

 

Switching to alternative fuels and taking a "green course"

 

One of these solutions in the future could be the switch to alternative fuels, such as compressed natural gas (methane) or electricity. We have been talking about this for a long time, but we have seen some significant developments in recent years.

 

Firstly, natural gas is the most versatile and affordable fuel, capable of replacing gasoline and diesel. The main advantage of NGV fuel is its low price, which is half the price of diesel fuel per kilometer.

 

Secondly, NGV fuel increases the service life of vehicles. Since the gas mixture is completely burned, pistons, valves and spark plugs do not form soot, which, in turn, reduces the load on the piston group and crankshaft. It also increases the oil change interval, some consumables and, in general, the engine life.

 

Thirdly, it is more environmentally friendly fuel. Natural gas is recognized as the cleanest type of fuel. According to the classification of combustibles by degree of sensitivity of EMERCOM (Ministry of Emergency Situations of Russia order № 404 of July 10, 2009), it belongs to the safest fourth class of combustibles.

 

The market of gas motor fuel in Russia is steadily growing. According to the data of the Ministry of Energy, the consumption of NGV fuel at the end of last year amounted to 1.1 billion cubic meters, i.e. 10% more than the year before. As for NGV filling stations, according to Gazprom Gazomotornoye Toplivo, there were 530 of them in Russia by the end of 2020. This is still not enough for truckers to make a comfortable transition to gas. But the more CNG-powered trucks appear on the roads, the more investors will be willing to invest in the construction of CNG filling stations, and the density of the network will grow.

 

The re-equipping of trucks with the gas-motor equipment will require the expenditures of small and medium business as well as self-employed people. According to RBC, "Energy Minister Alexander Novak suggested Deputy Prime Minister Yuri Borisov as an anti-crisis measure to increase the share of subsidies from the budget to convert vehicles from gasoline to NGV fuel in half - from 30 to 60% of the cost of conversion. That is, in the near future, if the initiative of the Minister of Energy is implemented, small and medium-sized enterprises, as well as self-employed will be able to count on support from the state for the conversion of their vehicles. In addition, these investments will be recouped for every kilometer traveled on the route, because the lower cost of gas also reduces the cost of transportation.

 

The appearance of electric trucks on the market is yet another real alternative in response to the tightening of environmental regulations and demand for cheaper fuel. Of course, this immediately raises questions of decent range and the development of minimum infrastructure, to which there is no simple answer yet. But electric transport has some potential as part of intracity logistics. In addition, there are many large companies operating in Russia that report on sustainable development indicators, so the alternative in the form of electric trucks looks more and more attractive every year.

 

Digitalization and automation of business processes

Optimization and digitalization have long been talked about, but the rather conservative logistics industry has long been unable to approach a real change in approach. Because of the pandemic, a real IT revolution began in the sphere, which was picked up by gas station chains. For trucking companies modern technology allows to significantly optimize the budget and minimize possible risks from cooperation with unscrupulous customers, as well as to build routes more effectively, save on fuel, reducing costs.

 

In terms of the gas station market, modern technologies and digital services help to attract new customers, retain old ones and strengthen loyalty. Modern companies that understand the importance of development improve the quality of service for corporate clients. For example, they implement dynamic loyalty programs and automate fuel dispensing processes 

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