Onwards and upwards

By all accounts Jet retailers in the south west have had nothing but praise for the service they have received from ConocoPhillips.

 

That was until June, when they received notice that the company would no longer be able to supply and distribute transport fuels competitively to its customers served from the Plymouth Mayflower Terminal, and that those deliveries would cease by the end of the year. Six months’ notice.

 

Not the kind of news any fuel retailer wants to receive, but particularly not in the current era of rising prices and intense competition, with declining supplier choice; and especially if you are based in an area of the country not renowned for its accessibility.

 

But more to the point, Jet is one of the few fuel suppliers still offering a margin-share deal as opposed to the Platts-based deals that have become the norm in the industry. No wonder these retailers feel suddenly abandoned and exposed. There is also concern about the wider impact on the community there is little or no public transport infrastructure if any of these sites have to close because of the withdrawal of a major fuel supplier.

 

Barrie Richards, owner of Jet-branded St Blazey Service Station in St Blazey, Cornwall, and RMI Petrol’s representative in the southwest, as well as former Jet dealer council chairman, said: "We are clearly very disappointed, if not stunned. It came as a complete surprise.

 

"The length of notice is considered to be completely inadequate in order to execute a change of supply, particularly considering the time of year winter time when everyone in the southwest is pretty much closed up."

 

ConocoPhillips invited all its dealers in the south west to a meeting in Plymouth on June 23, during which Patrick Hudson, the company’s marketing manager for retail, said the operation was loss making, with declining volumes in the south west and limited possibilities for growth within a competitive landscape, and a low number of prospects.

 

"There was a vigorous debate and a great deal of consternation from the floor and disbelief at what was being said," explains Barrie.

 

However, while there is a great temptation to moan and grown, Barrie has wasted no time in bringing concerned Jet dealers together to make the best decision about their futures, as well as providing each other with some moral support.

 

"We are involved in a loose collective of ’under notice’ Jet dealers," explains Barrie, as I visited his impressive forecourt in St Blazey, and met with many of the group. "There are more than 30 sites involved, according to ConocoPhillips.

 

"We have written to everyone we could think of about the possibility of supplying us. I have provided information about individual sites and have had a good response so far. Everybody has been looking around. Some suppliers have said how many sites they’re interested in. It’s then up to the individual retailers to negotiate with that particular company."

 

Collectively the group sells upwards of 50 million litres a year with annual fuel volumes ranging from 5.5mlpa to less than 2mlpa. "We are also thinking outside the box," said Barrie.

 

"We’re looking at self-branding options to take away the marketing cost of the brand. We are looking at companies who could supply us in a non-branded way.

 

"We want to make sure we get good deals with a company that is open, fair and honest and treats us with respect as Jet did. We had some good years with Jet. But we are probably now reconciled to Jet’s decision and want to move on and embrace new suitors and seek new opportunities with them.

 

"We are extremely heartened by the strength of interest shown from various oil companies, and hopefully there will be something for everyone. Our major priority at the moment is re-supply. Having a collective means we have achieved something that’s virtually impossible had we been doing it individually.

 

"A lot of what we have achieved so far couldn’t have been done without this arrangement. But while the group has had a co-ordinating role, it is not a negotiating role."

 

Chevron wasted no time in responding to the plight of the retailers and visited them within a week or so of the news. Brian Worrall, the company’s general manager, sales and marketing Europe, said: "We’re delighted to have had the opportunity to talk to Jet retailers. We have our own equity terminal in Plymouth. The south west is a strategic area for us. We have engaged with retailers individually and collectively so that they understand about the Texaco brand and what we have to offer; and what is envisaged with the imminent change in ownership from Chevron to Valero."

 

Harvest Energy, which has recently signed 16 sites from the Cornwall Garage Group to the brand, has also visited the retailers. Simon Davis, head of sales and logistics, said the company is definitely interested in doing something: "We have the flexibility on the deal that other companies don’t have."