reportsIndependent forecourt groups are changing the world. Well, to be more precise, they’re changing the world of distribution and logistics company Hoyer Petrolog, according to its operations director Allan Davison (pictured above).
The recent major sell-off of oil company sites and the consequent growth of independent groups has led to a restructure in the marketplace, because Top 50 groups, as part of the Esso deal, Euro Garages, Rontec and MRH are now responsible for collecting their fuel, rather than having it delivered.
"Our role has changed," says Davison. "We thought the Total and Esso sell-offs would be a threat to us, but we’ve actually turned them into an opportunity. Instead of being contracted by the oil companies to deliver fuel to forecourts, we are now contracted by Euro Garages, Rontec and MRH for deliveries."
But the big difference is in the service they want: "In the past the oil companies were very independent as regards their truck operations. An oil company would say ’can we have 100 trucks and 300 drivers?’, and that’s what you’d give them. The focus was on the oil company to make the service work tell the drivers where to go first, second and so on," explains Davison.
"But the independents don’t care about trucks or drivers they don’t care how the delivery is achieved they just want the fuel in the ground so they can serve their motoring customers and sell them whatever is on their shelves in-store. They’ve changed how the whole industry including oil companies have looked at service and retail. Companies like Euro Garages, Rontec and MRH have really put the focus on customer service on us making sure they have fuel in the ground. They don’t really have other KPIs for us apart from cost.
"Fuel in the ground is important for their customers, and more importantly will get those customers onto the forecourt and into the Starbucks and everything else that goes with it.
"I think that has changed the way their competitors, the oil companies, look at their operations, and has really focused the oil companies on customer service improvement as well, so it’s been quite transformational."
Hoyer is an independent family enterprise dating back to 1946 which has become one of the world’s leading bulk logistics providers, offering comprehensive national and international transport services and complex logistics solutions to the chemical, food, gas and petroleum industries. It has more than 5,000 employees in 80-plus countries and a turnover of 1.2bn. The petroleum part of that Hoyer Petrolog accounts for 300m, of which roughly half is in the UK and Ireland.
Hoyer in the UK is split into two, with the chemical, food and gases part accounting for about £20-30m of business. Petrolog accounts for about £100m in the UK. It has 260 trucks and 800 drivers, and about 75% of the business is in retail fuels. Davison says the company is market leader in retail distribution with about 22-23% of the market, handling about 10 billion litres of fuel a year.
The company has had to change with the times. Thirty years ago the major oil companies had their own trucks and drivers. Then in the mid-to-late ’90s, they started to sub-contract them out to transport companies like Hoyer who was the first contractor for Esso.
"First they went to sub-contracting and that changed the marketplace for sure. But without a doubt the sell-offs of the past three years have changed the marketplace for us all," says Davison.
"We still have Esso, Shell and BP as clients; and newer companies like Greenergy. But for the first time three years ago, as a result of the Total sale, we were having contractual relationships with the end customer, ie the dealer/independent. The independents just want to focus on their businesses selling the fuel and whatever is in their shops. They say ’come whenever you want, deliver what you want’ sometimes within different parameters of stock levels of course but you plan it, you look at the stocks in the tanks, you generate the order, you send the driver and once you’ve delivered it, you do the reconciliation ie what you’ve delivered versus what you’ve loaded at the terminal. We just want the bill at the end of the month.
"We’re in charge of the whole process, and the less we hear from our end client, the better. If we don’t get a call from Euro Garages, fantastic! They want to focus on their business, and we want to focus on ours. Now they have two commercial relationships one with Esso for the fuel, and one with us for the distribution. But it’s very clear where the responsibilities lie. If there’s a distribution issue, it’s generally our issue to deal with.
"For example, if there’s an allocation issue and there’s no diesel at West London, Euro Garages would be very well aware of that. But whereas in the past the message might have been ’there’s no fuel here tough!’, our job is to find a solution, which could mean picking up from other locations."
Davison is keen to explain that there’s so much more flexibility that a company can provide when it has larger fleets.
"We’re increasing the amount we use our assets. Our trucks are working harder, our drivers are working longer shifts. All that reduces costs.
"For example, at a terminal like Plymouth, from where you might be servicing three sites for Malthurst and five sites for Rontec, 20 years ago, the supplying oil company would have had one truck for each of those contracts. But we’ll have one truck for both. Multiply that cost saving and put it on a bigger scale, and we can make good cost savings for ourselves and for the end customer, maybe as much as 5%. It’s a win, win situation.
"We’re still interested in doing contracts direct with oil companies for driver and truck resource, but we’re also interested in doing deals with independent dealers on a more full- service basis.
"As cost becomes more important, independent dealers will be looking at what they do with their business and whether they want to look at alternative solutions for deliveries. But if other oil companies also go out to tender we’re interested in that business as well.
"We believe we have an attractive solution we have the biggest retail fleet in the UK; and we believe we have the most flexible fleet, and do more planning than any of our competitors.
"We provide significant potential for efficiencies that result in cost savings, through the scale of our fleet and an improvement on customer service whether for one dealer site or 100."