Fuelling the Economy

Andy Allen, UK Fuel Card Sales Manager for BP, speaks to UK Construction Online about the emergence of the fuel card, its impact on the ground fuels industry, and the outlook ahead for fleet management nationwide.

 

Could you first of all provide our readers with a bit of an introduction? What is your professional history and how did you come to work at BP?

I joined BP in September 1998, on a commercial training scheme actually. BP run a variety of entry level training initiatives and I worked a number of different rotations as part of that; from finance initially to credit collection, customer facing roles and so on. Mine was a three year programme and I’ve been with BP ever since.

Historically, most of my time has been spent in Air BP; the aviation fuel division. As mentioned, I worked in a number of different roles but once I got a taste for the customer facing piece I ended up in a junior sales position as part of a team marketing to commercial airlines. Selling jet fuel basically; very large quantities at relatively low prices all over the world. It took me to some quite interesting places over the years; some of which I’d love to go back to and others I’m not too sure I’d want to visit again. Aviation is a very interesting and dynamic industry.

I worked for around ten years in a number of different sales and marketing roles at Air BP and looked after about ten different countries across Europe; both the airlines based in those countries and the Air BP marketing footprint at specific airports. I was responsible for deciding which airlines we would supply to at which airports and setting the prices for those customers as well.

From there I moved into a more global marketing strategy role looking at the footprint for Air BP worldwide. We rewrote customer and location segmentation, deciding which airports we would market to and how we would market our fuel in those locations, and I worked on sales capability and supply best practice in those markets as well. I did this for three years before moving into my current role in the ground fuels business in April of last year.

For the uninitiated, could you explain the rationale behind BP Fuel Cards? What benefits do they afford fleet managers?

For businesses, a fuel card can be summed up in a few key points. It gives you greater control, allowing you to lock down spend to specific sites or products. Historically, businesses would implement either a company credit card or a ‘pay and reclaim’ type operation. What a fuel card allows you to do is manage that spend more easily. If you want a driver to be able to wash their car you need only authorise it, and if you want them to be able to buy shop goods you can do that as well. It essentially gives you complete control over what your employees are spending.

One of the biggest benefits is consolidated invoicing. In order to reclaim VAT a company has to hold its receipts. If you’re offering a pay and reclaim service or a company credit card however, you don’t necessarily have all of the Level 3 data on your invoice. When you use a fuel card the receipt that you receive at the till is not actually the VAT receipt. We consolidate all of those transactions and the invoice we produce at the end of the week, fortnight or month actually becomes the VAT receipt. You don’t have to ask every driver to hand in their receipts, tot up their expenses, and submit them as part of your VAT reclaim submission. Now, you can enter your fuel card invoice and that will summarise all of the VAT your drivers have spent across your entire fleet, reclaiming it in one fell swoop.

Security is another benefit; the ability to ensure that only those authorised can buy items. Each driver must have a PIN code to use their card. These PINs can be authorised or de-authorised through a web portal, which gives you greater control. You’re able to manage fraud as well, and ensure people are not buying more than they should be. We capture the odometer reading whenever a fuel card is used, which gives people the ability to record miles per gallon figures based on the amount of fuel going into a vehicle.

Also, price discounts are another big benefit. When you buy fuel on a credit card or with cash you will always pay the pump price. What a fuel card allows you to do is negotiate a price with your fuel card provider. We will have customers who pay significantly below the pump price because they’re getting a benefit of scale in terms of bringing all that product to a single brand.

What differentiates BP’s fuel card brand from its competitors?

The quality of our network, in terms of the infrastructure that we have on-site and the size and breadth of the entire network. We have the largest single-branded network in the UK with over 1,300 sites; the largest number of motorway service areas in the UK – about 70 overall; and over 500 locations on strategic A roads across the UK. We’ve got a fantastically positioned network and there are very few white spots where you can’t find a BP.

We also have a reciprocity agreement with other oil companies, meaning you can use the BP PLUS Fuel Card not just at BP-branded sites but also at Esso, Golf and Texaco petrol stations. In total, you have access to almost 3,500 locations across the UK, roughly 40% of all petrol stations in the UK, which is pretty considerable.

How are fuel cards impacting the ground fuels business?

From a BP perspective, fuel cards predominantly allow us to create stickiness with customers and drive more volume towards BP’s forecourts. We’ve been heavily investing in the quality of our infrastructure over the last few years – you’ll see that through our cooperation with Marks & Spencer (M&S) at our company-owned sites. There’s been some significant investment in the number of M&S ‘Simply Food’ sites, and we’ve been converting existing BP forecourts to add these. We’ve also brought in a lot of ‘new to industry’ sites or purchased property from other brands, razing them to the ground and rebuilding them with the Marks & Spencer offer.

The historic forecourt has changed dramatically over the past ten years or so. It’s almost become a convenience retail location for customers, which fits very nicely with our fuel card offer. When you look at our customers, many of whom have drivers out on the road on a daily basis, they don’t always have access to everything they need when they’re in their cab. The forecourts and facilities we have invested in provide somewhere to stop for a break with all the relevant conveniences you might need, in addition to a best-in-class ‘food on the move’ offer. We’ve been investing in our Wild Bean Café brand, but our partnership with Marks & Spencer means fantastic food on the go. It allows them to purchase a dinner that they can take home and cook later on.

This all fits very nicely with the needs of what we would call our higher value customer segments; the professional out on the road. Typically, those people who are in vehicles for a good chunk of the day are fuel card users. Of these professionals, over 90% will actually use a fuel card to buy their business fuel requirements.

What are your predictions for the future? What do you see as being the key issues facing fleet management going forward?

The first issue is around the volatility of the oil price, specifically the price that you will pay for fuel from the pump in the UK. For us, that volatility is caused by two things; the underlying oil price first of all. The Brent Crude and the West Texas Intermediate prices, which are published daily, are bouncing up and down and there are a lot of environmental factors impacting that. What OPEC (the Organization of the Petroleum Exporting Countries) decides, for instance; varying demand in China and India; drilling in the Gulf of Mexico or oil sands in North America. All of these things feel very far away in terms of geography but they directly impact what happens to us here and what we pay for our fuel.

The second thing is the exchange rate. Oil is a traded commodity in US dollars and, unfortunately for us, the pound versus the dollar exchange rate has been highly volatile since the Brexit vote last year. This has had a huge impact on the underlying price consumers pay at the pump, and that volatility is going to persist for the foreseeable future. With Theresa May invoking Article 50, we are now on the clock with a two year countdown until we exit the European Union. The volatility that will cause, for foreign exchange in particular, will create a lot uncertainty for fleet managers.

If I were a fleet manager I’d be looking at how I might protect myself from that. BP is having a lot of conversations with fleet managers about this, certainly in terms of fixed price and capped price offers, because we’re able to give people certainty over what their spend is going to be. Taking away some of that volatility is very important. Fuel, depending on the industry you’re in, can account for up to 30% of a fleets operating cost. If you end up with a 17 pence per litre increase in pump prices that will have a massive impact if you’re lifting a million litres a year. Managing that cost going forward will be key.

Another thing happening at the moment is the push for a reduction in emissions. We’re seeing this in a number of forms. There’s new legislation coming into effect throughout London around diesel – almost a dieselisation tax – which is bound to impact fleets. There’s also a push for company car drivers to take up petrol or electrical vehicles, which is being driven by the BIK tax.

Now, local authorities want to have certainty over the emissions that their own contractors are emitting. And, if we think about the construction space, I know there’s a number of large-scale projects – with TfL in London, for example – where bidders are being asked to comply with certain emissions or fleet management criteria. It’s a changing environment and a push towards greener business practices; something that should be at the forefront of every fleet manager’s mind. Over time, fuel card providers and oil companies are going to have to step up to the plate and assist fleets with this. BP has a not-for-profit organisation within its business – BP Target Neutral – which offers companies the ability to offset their CO2 emissions, either in-part or completely. This can be from their vehicle fleet or their operations as well.

You can reduce CO2 emissions from a vehicle fleet but unless you can replace those with completely emission free vehicles, which is very difficult for those operating HGVs, then you can only go so far. If you want to go further, the only option you have is offsetting. BP Target Neutral actually offset all of the emissions from the London 2012 Olympics, and we have similar agreements to offset emissions from every FedEx package globally. We work with a number of airlines and we’ve started working with fleets across Europe to offset their emissions. It’s an attractive proposition for companies who want and need to do something around their emissions but don’t have the ability, because of the kind of business they’re in, to go completely emissions free.

To learn more about the ‘BP Plus Fuel Card’ please visit: http://ift.tt/2s8KcBp

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