Fleet News

Fleet services: The great vanishing act

IT is a sight reminiscent of a cowboy movie. A desolate landscape overgrown with weeds, deserted apart from the remains of disused buildings.

But this picture isn’t America at the turn of the century, it is Britain’s highway system today, which all too often passes forlorn patches of earth where filling stations once stood.

Roads are just as congested as ever and fleets still need to buy fuel, but research shows that the UK has lost more than 8,000 sites since 1992. There are now just over 10,000 sites compared with 19,000 in 1991. So what is happening to Britain’s network of petrol stations and why are they disappearing when record numbers of people are taking to their cars?

The growing number of supermarkets offering competitive fuel prices appears to have taken its toll on some of the smaller sites, alongside falling margins on fuel sales and consolidation of oil companies.

Nick Vandervell, communications director at the UK Petrol Industry Association (UKPIA), said: ‘The supermarkets’ growth in market share has coincided with a rapid expansion in their large out-of-town stores, with filling stations able to sell large volumes of fuel, particularly to people doing their weekly shop at the main store.

‘The overall effect of this has been to force the closure of smaller and less well located filling stations, a trend that has been compounded by the increasing costs of meeting stricter environmental standards. The result is that the number of filling stations in the UK has fallen from about 18,000 in 1992 to just over 10,350 in 2004.’

Some out-of-town filling stations have been trying to claw back drivers and profits by providing a service that is more than just fuel.

Fresh coffee, groceries, hot food and cut flowers are almost a pre-requisite at the smaller outlets as they try to combat falling fuel margins.

Vandervell said: ‘Increasingly, the slim margin on fuel retailing has prompted the re-development of many sites to boost volume throughput and provide a better standard of service and facilities, with particular emphasis on larger shops or convenience stores which are a vital element in overall site profitability.’

According to IGD, a company which provides research on the grocery industry, 89% of forecourt stores are now classed as convenience stores. There are 9,301 forecourt convenience stores in the UK and the market is worth £3.8 million. However, selling a few cups of coffee has not been enough so far to halt the decline of the local fuel station. The latest UK Retail Marketing Survey, conducted by the Energy Institute (EI), shows that in 2004 there were 184 closures, averaging 15 a month. However, this is less than the number that were closing two years ago.

The survey states: ‘This represents a considerable slowdown, being the lowest closure rate since 1999 and well below the 2003 total of 890 sites, or 74 sites per month.

Closures in 2004 were, however, effectively confined to the oil company operated sites.’

However, despite the number of total fuel stations slowly diminishing, the sale of fuel is increasing. The EI survey showed that in 2004 UK forecourt sales of motor fuels totalled 28.2 million tonnes – the largest volume ever sold.

The total amount of fuel sold also points to a steady switch from petrol to diesel. Petrol sales continue to decline while diesel sales continue their strong growth.

The survey states: ‘In the last 10 years, retail petrol sales have declined by 15%, while retail diesel sales have more than doubled in a decade. Taking into account the total road fuel market – both forecourt and commercial consumers – 2004 was the first year when almost equal volumes of diesel and petrol were sold in the UK.’

A high-volume filling station selling five million litres a year costs about £2 million to build, according to experts at the PIA.

‘About 60% of this goes into equipment that is not even seen but which is essential to the safe and more environmentally friendly operation of a modern site,’ Vandervell said.

Between 70% and 80% of the price at the pump goes on fuel duty and VAT, which means UK fuel prices are actually among the lowest in Europe, excluding levies.

As for the future of the UK’s service areas, the trend for fewer fuel forecourts is likely to continue as the major oil companies continue to consolidate their fuel networks, according to fuel card supplier Arval. It believes that the major oil companies have continued their policy of reducing their fuel networks to make cost efficiencies in distribution and to manage the costs of each forecourt site.

Six of the seven main oil company retailers have reduced their network, with only BP increasing its retail network size.

For fleets, the issue of which fuel card to supply to drivers will become more important if we are to see even further closures.

Mike Waters, head of market analysis for Arval, said: ‘Forecourt closures highlight the need for fuel card holders to have access to as wide a network as possible, not only ensuring fuel availability but also providing access to lower prices.’

Who owns the forecourts?

Retailer and Number of outlets

Esso 680
Shell 624
Total 548
BP 491
Tesco 372
Texaco 284
Sainsbury’s 241
Jet (Fuelforce) 165
Asda 152
Morrisons 111
Safeway (Morrisons) 97
Murco/EP 95
Q8 68
Gleaner 61
Snax 24 60
Petrol Express 55
Somerfield 41
Maxol 37
Brobot 20
Waitrose 11
Source: IGD

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