Lerwick-based freight and haulage company Northwards says diesel costs soaring by £5,000 a week are forcing it to maintain an 8% fuel surcharge to customers at least for the time being.
Northwards, owned by SeaCargo and with bases in Shetland, Orkney, Aberdeen, Inverness, Scrabster and central Scotland, insists it wants to “get rid of” the additional charge to customers as soon as possible but intense cost pressure from steep diesel prices is hampering any imminent reduction.
Northwards’ fuel bill has leaped by £5,000 per week as war in Ukraine and rampant inflation continue to see pump prices shoot up, with the company imposing a surcharge of 8%-9% on customers.
‘Just everything’ hit by spiralling price rises
The bulk of Northwards’ business is Highlands and Islands based with the company confirming sectors affected by the surcharge in the region include agriculture, oil and gas, retail, construction and distribution.
The haulage operator also works closely with the aquaculture sector noting “it is just everything” which is seeing pump pressure translate into extra costs.
The surcharge, introduced last month, reflects the weekly road fuel price for ultra low sulphur diesel published by the UK Department for Business, Energy & Industrial Strategy (Beis).
The Shetland-headquartered company has been forced to pass on fuel price increases, but notes a raft of other economic pressures apart from energy are also starting to bite.
Labour and ferry costs are on the rise, as are those for vehicle parts and electricity, but it is the huge spike in fuel costs which is exercising the minds of Northwards accountants the most.
The haulage company operates 55 HGVs as well as 15 vans and with a total usage of 20,000 litres of diesel per week, the squeeze at filling stations is feeding through to customers.
“Our fuel costs have gone up 20% to 30% in total since the end of last year to now,” Northwards commercial director Neil Leslie told the Press and Journal.
“We want to get rid of the surcharge as soon as we possibly can [and] customers on the whole have been pretty understanding. Customers are getting the same thing coming through from every provider, whether it is transport or whatever service it is.
“We review the fuel surcharge every week – it is a week-by-week escalator or de-escalator.
“The cost of crude oil is being affected by what is going on in Ukraine; it is all having a knock-on effect.”
‘No alternative’ to fuel surcharge
Northwards managing director, Mike Porter, emphasised there was “no alternative” to imposing the fuel surcharge due to “huge volatility” in the oil market.
“This will run for an initial period of three months and will be reset every week to reflect the prevailing fuel price at that time, so when global prices rise and fall so too will the surcharge,” said Mr Porter.
“We appreciate the knock-on effect this will have for our customers and wish to reassure them we are doing everything we can to continue to deliver the best service at the best possible price during these difficult times.”
Despite simmering pressure on costs Northwards – which transports chilled product from Orkney and Shetland to central Scotland, the rest of the UK and Europe – it has not had to lay off staff – quite the opposite.
Driver wages raised to attract staff
“We are busy – there is a lack of labour within the road transport industry,” added Mr Leslie. “Certainly in the north and Shetland there is so much going on in the economy there is hardly anybody available for jobs.
“We raised drivers’ wages last year and we are trying to look at what we can do to attract folk. It is a kind of chicken and egg situation – you put your rates up – suddenly everybody else is doing the same. It is something we are always conscious of.”
Northwards will be exhibiting at the upcoming Aquaculture UK show in Aviemore from May 3 to 5, where it will highlight the company’s access to the vessels and European terminals of parent company SeaCargo.
The haulage operator also points to its partnership with UPN facilitating pallet distribution services across the UK, Ireland and Europe.
“Aquaculture is a sector that is very important to us,” noted Mr Leslie. “As well as fresh product we transport goods, equipment, significant volumes of salmon feed and we carry aquaculture waste via tanker away from the islands for safe disposal.
New ways of stowing feed onboard ships
“We understand the highly perishable nature of fresh fish and how important timely deliveries are. The introduction of Insuliner trailers has made it possible to transport fresh fish south in chilled trailers, then bring fish feed north to Aberdeen on the return journey.
“Onboard the ship, we have created new ways of stowing feed, which again resulted in greater efficiencies for us, the ferry operator and our customers.”
Last summer Northwards announced a £1.5 million investment in new vehicles to service Northern Isles ferry connections in Aberdeen.
The company said its latest lorries would “predominantly” link ferry arrivals and departures in the Granite City with delivery points across central Scotland.