Market Review 2018 - Petrol Retailers Association
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Market Review
2018
• Over 900 owned tankers delivering quality fuels and lubricants nationwide
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Market Review
2018
CONTENTS
HELP US TO HELP YOU, MARKET OVERVIEW 4
THE INDEPENDENT H&S NEW ZEALAND-STYLE 10
FORECOURT RETAILER, BY
INDUSTRY VIEW BY ARGUS MEDIA 14
SUPPORTING YOUR TRADE
EDGEPETROL ON GOING DIGITAL 16
ASSOCIATION NOW
SHELL DISCUSSES FUTURE FUELS 18
“Together we HYDROGEN Q&A WITH ITM 24
are stronger”
THE NEW ACOP L133 FORM 28
THE PRIMARY AUTHORITY PARTNERSHIP SCHEME 30
PRA LOBBYING UPDATE 32
ACCENTURE ON THE MOVE TO ELECTRIC 36
BRIAN MADDERSON
CHAIRMAN ACTION AGAINST ROGUE HAND CAR WASHES 38
TACKLING MODERN SLAVERY 40
T
he Market Review 2017 was extremely well received MARKET BY NUMBERS FROM EXPERIAN CATALIST 42
by members, product and service suppliers, BUSINESS RATES UPDATE BY MUA 46
industry advisers, consultants, media THE PROPERTY MARKET BY CHRISTIE & CO 48
moguls, Parliamentarians, Government officials – in PRA EVENTS 50
fact the whole panoply of people involved and
AIC ON THE FUTURE OF PAYMENTS 52
interested in our fascinating retail sector. We are
FORECOURT TRADER OF THE YEAR 54
very thankful to all the contributors providing
S&P GLOBAL PLATTS ON ELECTRIC VEHICLES 56
insightful content and to all advertisers giving
WHOLESALE CHANGE 58
such great financial support. Having set the bar so high last
ALLIED FOR SUCCESS 60
year, it will be no mean feat to raise the level yet again with
GDPR – THE NEW DATA REGS 62
this 2018 issue.
Constantly we review our communication and interaction
with members to improve the exchange of information and
ideas. Therefore this year, we are changing the format of Who’s who at the PRA
our Regional events to “Business Breakouts” with more PRA MANAGEMENT TEAM (London) Ltd
emphasis on networking as well as delivering great content. Brian Madderson, Chairman Joseph Richardson, Jos. Richardson &
07768 608332 Son Ltd
There are 10 such events plus five ever-popular Roadshows,
brian.madderson@rmif.co.uk John Ryeland, George Hammond plc
held in conjunction with Thames Communications, Gordon Balmer, Commercial Manager Hemant Tandon, Park Garage Group
planned during the spring and autumn across all four home 07771 834073 gordon.balmer@rmif.co.uk Shane Thakrar, HKS Retail Ltd
countries. Check the PRA website for dates and locations. Phil Monger, Technical Director
PRA continues to invest to make our website www.ukpra. 07831 327990 phil.psac@gmail.com PRA TECHNICAL COMMITTEE
Ray Blake, Technical Manager Mike Garner, Chairman, The Garner
co.uk a really valuable tool, especially with increasing content
07496 967269 ray.blake@rmif.co.uk Group
to the members-only section. Steve Coombe, Membership Manager Nick Brocklehurst, Westbridge Motors
Our fortnightly e-newsletter, PETROL HEADS-UP, is now 07831 373205 steve.coombe@rmif. (Northampton) Ltd
distributed to over 2,000 email addresses with an “opening” co.uk Jon Brownsey, Fordingbridge Garage
rate of close to 30% – well above the norm for such trade David Garside, Blakemores
publications. Do send photos/press releases/updates about PRA EXECUTIVE COMMITTEE Jill Howkins, F. Howkins & Son
Brian Madderson, Chairman Graham Lambert, St Michaels Garage
your own company to our Editor: Anne Bruce anne.bruce@ Joe Brough, Manor Service Stations Ltd
rocketmail.co.uk David Charman, Parkfoot Garage Ltd Andrew Lawrence and Ben Lawrence,
Finally, we are planning to hold another annual Forecourt Mike Garner, The Garner Group Lawrence Garages (London) Ltd
Conference in conjunction with ACS on Tuesday 3 July. Do Sue Kembrey, Stanishawe Services John Oliver, Central Convenience Stores
Graham Lambert, St Michaels Garage Emma McVie, Southern Co-operative
put this date into your diary as we already have a major
Ltd Andy Jagger, Welcome Break
sponsor to debate the “future of fossil fuel” – a subject vital Andrew Lawrence, Lawrence Garages
to all of us after this turbulent year for our industry.
The Retail Motor Industry
Federation (RMI) is a leading
automotive trade body in the
Publisher: John Lewis
UK, representing franchised
PRA MARKET REVIEW is published by Editor: Tracy West
Lewis Business Media Ltd, Art Editor: Sarah Crowhurst car and commercial vehicle dealers; independent garages;
Suite A, Arun House, Office Village, Sales: Rachel Hallett bodyshops; motorcycle dealers; petrol retailers; auction houses
River Way, Uckfield, TN22 1SL Printed by: Stephens & George Print Group, and cherished number plate dealers; who provide sales and
Tel: 01825 983105 Goat Mill Road, Dowlais, Merthyr Tydfil, CF48 3TD
Fax: 01825 983108 ©Lewis Business Media Ltd 2018 services to motorists and businesses across the UK.
Email: kay@lewisbusinessmedia.co.uk All rights reserved. 201 Great Portland Street, London W1W 5AB
Tel: 020 7307 3598 • Fax: 020 7307 3406 • www.ukpra.co.uk
www.ukpra.co.uk 03
Market Review
2018
Developments in
the sector include
new-to-industry sites
and alliances with the
grocery multiples
2017: A YEAR OF
as it gets” for independent retailers?
Some of the favourable conditions, in
no particular order, included:
CONSOLIDATION
Continuing fuel duty freeze
Benign weather meant no travel
disruption due to floods or snow
Post-Brexit economic growth with
PRA Chairman Brian Madderson reviews industry ultra-low inflation and borrowing costs
No supply disruption from strikes
consolidation through 2017 or major plant outages
Continuing above-trend demand
I
n the last Market Review, I referred Just as we thought politics was for both diesel and petrol
to ‘A Year of Surprises for 2016’ and settling, we had enforced ministerial No new fuel grades to
this could have been the heading changes including the resignation of accommodate
for 2017 provided the focus was on Defence Secretary Fallon occasioned Slow climb back of crude oil prices
UK politics. Back in April, after Prime by inappropriate personal behaviour No exchange rate shocks between
Minister May had called a snap and Overseas Secretary Priti Patel’s USD and GBP.
election, the most generous price on misadventure in Israel. As we go to These factors enabled retailers
a Conservative majority was then 1/14 press, news of First Secretary of State to make improved and stable fuel
and many considered this a decent Damian Green’s resignation will force margins with strong cash flow which
investment. As it turned out anyone yet further Ministerial shuffles ensuring further confirmed to banks, private
making this bet would have lost their that PRA lobbying has to remain on full equity funds and others that this was
shirts. However, the great British alert for 2018. a financially sound sector. As a result,
Electorate proved as fickle as with The issues and outcomes of an business consolidation in the forecourt
the Brexit Referendum by once again extremely busy year are covered in sector accelerated:
confounding the pollsters and very more detail on pages 32 and 34. Exceptional offers up 12 x EBITDA
nearly seeing Corbyn and his Labour Meanwhile, a new punchier headline made by acquirers with over 10
party into No.10. Only the unexpected had crept across my mind … “Fuel companies buying (or leasing) some
comeback of the Conservatives in retailing in 2017 – As good as it gets?” 150 dealer sites
Scotland under their charismatic Some 20 years after the screening Market confidence encouraged
new leader Ruth Davidson, plus the of Jack Nicholson’s romantic comedy investment in 48 New-to-Industry
last-minute deal with the Democratic with Helen Hunt, we may look back on (NTIs) and 33 Return-to-Industry (RTIs)
Unionist Party in Northern Ireland saw 2017 (at least the first half) and pose forecourts and shops
a chastened May continue as PM. the question was this year “As good Fuel suppliers such as Harvest ▹
04 www.ukpra.co.uk
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INDEPENDENT DEALERSHIPS
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EARNING CUSTOMER LOYALTY FOR 25 YEARS
Distinctive branding, security of supply from a UK refiner and a compelling, award-winning dealer proposition. All you need to drive your business forward. To discover more about becoming a part of the expanding network of Essar branded forecourts, call our sales support team on +44 (0) 151 350 4003 or email: uksales@essaroil.co.uk www.essaroil.co.uk
Market Review
2018
▹ Energy, BP Retail, Essar and Certas petrol and 30.0bn/l for all diesel still now enables fuel distributors to access
also buying (leasing) sites provide nearly £27bn/year in fuel excise E5 petrol at all terminals in Northern
The establishment of Intervias as duty to the Treasury. Add a further Ireland.
the holding company for EG Group £7bn/year for VAT, and the gradual tax For some time, forecourt
(360 sites) and European Fuels loss as EVs take an increasing share operators have seen the potential for
Retailing Group (over 1,200 sites) of the fuels’ market will be exercising convenience retailing and this year
majority owned by TDR Capital proved the most able minds in Whitehall for a have stepped up with exciting brand
to be a temporary measure. A new suitable replacement. developments led by the “Super”
company EG Group was formed, which On the fuel supply side, there have dealer groups including:
has acquired the 2,000 plus sites from been no changes to refinery numbers Rontec: trialled 10 sites with
ExxonMobil in both Italy and Germany or ownership this year. With the Morrisons Daily (formerly trialling with
to take their total forecourt number to prospect of retail demand for petrol MFG) in late 2016/early 2017 which
over 3,500. A new head office is now increasing to outstrip diesel again, quickly moved to a roll-out programme
under construction in Blackburn, which the gasoline heavy UK production involving a total of 40 shops by the
will provide 150 jobs. units may soon be realising better year end. It is understood that a further
It is disappointing to note that profitability. Likewise, there have been tranche of up to 50 conversions is
the Statistics Dept at BEIS no relatively few changes to ownership or programmed for 2018.
longer calculates the split between capacity at the UK pipeline network or MRH: has entered into a new
commercial and retail diesel volumes at fuel terminals located at UK ports supply arrangement with Booker Retail
when publishing their quarterly data, and inland since the formation of Partners following successful trading
quarterly in arrears. Twelve month Navigator Terminals in 2016. at the Budgens convenience stores on
rolling comparisons for the period This was the joint venture between the Peregrine Retail forecourts acquired
ending September 30, 2017 Macquarie Capital and Greenergy, earlier this year. This new deal will involve
indicate that fuel volumes may have which acquired the UK’s largest MRH rolling out a number of Budgens
started to reflect weaker demand from terminal located on the north Thames format shops across their portfolio during
reducing economic activity. from Royal Vopak. Others in the group 2018 and withdrawing from the Co-op
Overall consumption of petrol and include Seal Sands, North Tees and trials at the end of January.
diesel was only 0.5% above the same Windmill. BP are in negotiations to sell EG Group: undertook trials
period in 2016, whereas previous data their interests in the Kingsbury and on 10 sites with Sainsbury’s Local
had shown ongoing growth above Northampton terminals but Hamble and provided it is operationally and
2%. The trend rate of reduction in will not now be sold. financially successful for both parties,
retail petrol was only down (1.5%), the The most notable recent change is the concept could be rolled out to
lowest level for some years. Diesel for the acquisition of BP’s Belfast terminal further sites in 2018.
both commercial and retail showed by Puma Energy. This prompted a Others: dealers across the UK Below left to right:
Puma Energy’s new
significantly reduced growth at 1.6%. £2m investment by the new owner continued to invest in shop extensions ethanol plant; Moto
Total annual volumes of 16.5bn/l for into an ethanol blending plant which and development of convenience ▹ has joined the PRA
A notable recent change was
the acquisition of BP’s Belfast
terminal by Puma Energy
www.ukpra.co.uk 07
Market Review
2018
Symbol market share format. However, this is seen as a the leading UK tobacco wholesaler
relatively limited development and the for JTI and Imperial with a turnover
Spar – 1,200 sites
convenience symbol brand Budgens exceeding £4bn/year and nearly
Booker – Londis 950, Premier 95,
is being rolled out more extensively in 3,500 employees as well as a major
Budgens 100, Family
Shopper 15 = 1,160 sites 2018 after successful trials. supplier of convenience foods to
There has been unexpected the fuel retail sector. Under financial
Costcutter Supermarkets consolidation in the specialist stress, PWC was advising the Board,
Group (CSG) –
Motorway Service Area (MSA) sector with Tony Read arriving as new CEO
Costcutter 325, Mace 355
= 680 sites as Roadchef took a policy decision in the summer, on a sale to private
to exit fuels retailing. This was equity fund The Carlyle Group. This
Nisa (Co-op) – 167 sites
accomplished by the end of November, deal appeared to be gaining ground
Others – Bestway, Co-op etc
with BP and EG Group picking up the when news broke overnight on 28
= 260 sites
majority of the forecourts. November that the company had
TOTAL 3,467 (Number of indie
The two retailing behemoths gone into administration. Supplies
sites is approx 5,400 – so 64%
have symbol brand stores) remaining are Welcome Break and ceased immediately and 2,500 staff
Moto Hospitality, each with around lost their jobs without compensation.
▹ brands which means that over 64% 45 sites (including straddles). With The remaining staff are assisting the
now offer well-known symbol brand Welcome Break already onboard, PRA administrator.
expertise and product ranges. are delighted to have Moto joining as The Co-op, after 14 quarters of
Conventional views held in the members from 1 January 2018. Other consecutive like-for-like growth,
City about the aspiration of private independent MSA operators include brought forward plans to become
equity investors is that they optimise EG Group, Westmorland, Rontec, the exclusive wholesaler in spring
cash flow returns whilst maximising MRH and Applegreen, so PRA now 2018 to the Costcutter Supermarket
asset values before disposing their represents nearly 80% of this sector. Group (CSG) embracing supplies
investment within a three- to-five to Costcutter, Mace, Simply Fresh,
year timescale. Bloomberg was the COLOSSAL DEVELOPMENTS Kwiksave and Superstore brands.
first city analyst to report that Lone There have been some colossal Nisa, founded 40 years ago, was
Star, the US private equity firm which developments across the wholesale subject to an agreed bid of £137.5m
had purchased MRH for a rumoured and convenience sectors as by the Co-op. The Nisa members
£800m in early 2016, had appointed consolidation became the driver for were balloted and a minimum 75% of
change. Tesco bid £3.7bn for Booker shareholder operators were required
Retail Partners in an agreed merger to support the bid. Many considered
Oil companies also that was referred to the Competition
& Markets Authority (CMA) with
this outcome unlikely but the final vote
reached 75.9% and, subject to CMA
focused on convenience unconditional approval confirmed
in late December. Tesco has 3,200
investigation due for completion by
March 31 next year, will proceed.
UK stores, whereas Booker supplies Morrisons announced on August
Lazard Ltd to review an Initial 117,000 independent retailers, a 1 that it had won a contract to supply
Placement Offer (IPO) option in the headline figure that includes the 5,500 McColl’s portfolio of 1,300 convenience
early part of 2018 for an estimated retail stores under its symbol group stores (including seven forecourts) and
price tag of £1.5bn. This report has brands Premier, Londis, Budgens and 350 newsagents from January 1, 2018
neither been confirmed or denied. Family Shopper. with national brands and exclusive
Likewise, EG Group also attracts Palmer & Harvey, established access to the Safeway brand. This deal
rumours of an impending IPO but again some 90 years ago, had become would eventually phase out all other
the company has not commented. suppliers to McColl’s.
Rumours circulating earlier this year Motorway services No of These developments potentially
that Clayton Dubilier & Rice, the US operator sites leave the market heading to a very
private equity majority owner of MFG, WELCOME BREAK 45 different place.
was seeking bids was vehemently MOTO 44 With Tesco, Sainsbury’s and
denied by key directors/shareholders. BP 27 Morrisons, there are now three
Oil companies also focused on their EURO GROUP 15 multiple retailers engaged in different
convenience offer: SHELL 13 ways in wholesaling. This will provide
BP Retail: a heady and expensive WESTMORLAND 6
stiff competition for the 600 indie
APPLEGREEN 3
cocktail of acquisition, leasing, KDRBs wholesalers supplying across mainly
MRH 3
and NTIs moved their M&S Simply regional territories and one can
RONTEC 2
Food format to around 280 out of their assume further consolidation and
TOTAL 158
320 sites. closures ahead.
Shell: has quietly upped the *Total includes: all UK countries; certain major Independent forecourt retailers will
number of sites, especially around A-road services eg A1(M) so is therefore higher need to be alert and ready for change
than some data provided by Experian Catalist and
the M25, based on the Little Waitrose Highways England at short notice.
08 www.ukpra.co.uk
Market Review
2018
A MUCH DIFFERENT
APPROACH TO H&S
On a trip to New Zealand, amongst other things, the PRA’s Ray Blake
compared our Health & Safety (H&S) on PFSs to theirs
E
arly in 2017 my wife and I were than there being a law stating that equivalent to the south of France,
fortunate in being able to tick one the employer is responsible for the the top of the Alps, the highlands of
of the wishes off our bucket list, H&S of their employees and anybody Scotland, the fjords of Norway and
by touring around New Zealand (NZ). else on their premises, in the main, everything in between. We baulked at
While planning our trip we had everybody in NZ is responsible for bungee jumping, but did every other
an amazing piece of luck in that we their own H&S. To complement this exciting pastime NZ has to offer: jet
managed to catch up with an old arrangement, NZ has what amounts boats, zip wires, gushing geysers to
friend – Andy – who was over from to a state insurance system to cover name just a few.
NZ, where he’d emigrated to some everything that could be the outcome On our travels, we found out how
10 years earlier. It was during the few of an accident, from emergency many earthquakes NZ has and that, in
hours that we spent talking about our treatment through to rehabilitation and total, in the last 90 years 565 people
planned trip, that I began to realise aids to living if you’re disabled due to have been killed by earthquakes. I then
many fundamental things that are, to an accident. Employers and employees surmised that had NZ adopted our
UK H&S legislation and associated
guidance to the letter, the whole
The next revelation was that the basis of country would be uninhabited.
my whole career doesn’t exist in NZ As a direct comparison between
the two approaches, I looked at the
requirements for me bungee jumping
me, mind-bogglingly different about pay into a government fund called the in the UK and in NZ. I had thought
life in NZ. ‘Accident Compensation Corporation’, that it was banned in the UK but there
It started when Andy said: “Oh, you and this also deals with accidents is a company touring the UK with a
don’t have to have car insurance”. His involving visitors to NZ. It was then crane that lifts you in a metal cage
17-year-old son has a Subaru Impreza that I decided to investigate how petrol up to 160ft, from which you are then
as his first car! I then discovered that stations were operated under this pushed out of on a length of strong
the NZ approach to Health and Safety alternative safety regime. elastic. Unfortunately (or fortunately),
(H&S) comes from a completely Our expedition around NZ was because I am over 50, I would require
different direction than in the UK. The amazing, we travelled almost the a doctor’s certificate that states I am fit
next mind-blowing revelation was that whole length of the two islands during enough to participate, (there is a long
the basis of my whole career doesn’t four weeks of their summer and list of medical conditions that would
exist in NZ. This is because rather encountered climates and scenery preclude the doctor providing me with ▹
10 www.ukpra.co.ukMORE PROFIT WITH
“ I’ve recently changed
my stores to the
Budgens brand. Their
availability is excellent,
and with a great rebate
scheme my profits are
already growing.
Oli Lodge
”
Joi n u s n ow!
call 0808 178 8644 or visit joinbudgens.co.ukMarket Review
2018
▹ a certificate). I would also have to sign and remote monitoring/controls. Plus,
an insurance waiver. Whereas, in NZ, I a response to incidents by the site
could turn up, pay my money, tell them operator. The exception being where a
I am okay, be strapped up, take off my petrol station is provided as a service
glasses and launch myself off a bridge to a community, where the locals have
nearly three times the height of the an interest in ensuring that the site is
crane at 435ft. safe and available.
According to the latest figures
NZ VS THE UK available (2008), there are 1,265 petrol
For well over a decade, I have been at stations in NZ. While in NZ, I observed
the forefront of the drafting of guidance that in the cities and towns, most
in the UK for operating unmanned of the sites looked very similar to a
petrol forecourts. All the guidance typical forecourt with a convenience
stems from the requirements of Section store in the UK. However, I did see
3, of the Health and Safety at Work etc. what were obviously newly developed
Act 1974. This reads: “It shall be the ‘GULL’ branded unmanned sites in
duty of every employer to conduct his
undertaking in such a way as to ensure,
some towns selling fuel at significantly
lower prices than other sites in the It is the interpretation
so far as is reasonably practicable,
that persons not in his employment
area. Although the dispensers and
payment equipment were as you would
of the words ‘so far as is
who may be affected thereby are not
thereby exposed to risks to their health
find in the UK, I could see no evidence
of remote monitoring. I certainly
reasonably practicable’
or safety”. Thus, making the operator
of a petrol forecourt responsible for the
observed many unmanned sites in
rural areas. In fact, I was pleased to
that is the quandary
health and safety of the public that visit find these sites, which were obviously
their premises, the very opposite of the located where they would serve tourists unable to trade for some months. To
situation in NZ. desperate for fuel, as well as the local overcome this issue, he abandoned
The reality is that the operation of community. Many of these sites were the GRP installation and installed
petrol forecourts has evolved over a very basic, but with a card acceptor. above-ground fuel tanks and double-
century in response to both demand I had an interesting conversation skinned monitored plastic pipework.
and the available technology. The big with the owner of one site. He This removes the requirement for
step forward during the late 1960s or informed me that he had recently recertification, and allowed him
early 1970s was from a man in a brown acquired the site as part of a swap deal to remain in business following
coat and a satchel dispensing the with a major oil company that wanted the November 2016 earthquake.
fuel into the vehicle, to the customer another site that he owned. When he Remarkably, the site came with around
serving themselves. However, I took over the site, it had newly installed 10 acres of land, on which he intends to
remember unmanned sites when I had below-ground tanks and pipework, build a museum where he will display
just passed my driving test in 1974, however, as is typical in NZ the tanks his collection of American muscle cars
when you posted a £1 note into a slot and pipework were GRP. Where a site and British motorcycles. I said I would
on the pump. with this type of installation is affected call in when I was passing next!
Since my involvement, we have by an earthquake, it must be recertified The Health and Safety culture in the
aimed to achieve the same level of before it can open. There are very few UK evolved from the strength of the
control at an unmanned site as we have people carrying out the certifying of unions when workers were deemed
on a self-service site, using CCTV and petrol installations, and because of expendable by the employers.
all manner of clever intuitive systems this, a perfectly sound site may be On balance, I believe that what we
have is fair. It is the interpretation
of the words ‘so far as is reasonably
practicable’ in our legislation that
is the quandary. Should 4.4 million
people leave NZ because, on average,
six people per year are killed by
earthquakes? Of course not.
Should the operators of unmanned
sites in the UK have to spend tens of
thousands of pounds on monitoring
their forecourts, when they don’t in
NZ? What is ‘reasonably practicable’
to prevent harm to their customers?
Top: some of the sites
Ray visited on his trip I wonder if it will ever be tested in a
to NZ court in the UK?
12 www.ukpra.co.ukMarket Review
2018
DEMAND violent US hurricane season. Hurricane
Harvey, which struck the US Gulf coast
on August 25 2017, caused wide-spread
During 2017, diesel in UK and other
European countries was increasingly
vilified and targeted by new clean-air
IS CRUCIAL
flooding and refinery shutdowns, some zones and extra charges, and it is
of which took months to start up again. clearly now falling out of favour with car
US Gulf refiners lost 5mn b/d of their buyers. Diesel’s share of new UK car
usual throughput at the height of the registrations has fallen by 5 percentage
Argus Media’s analysis editor crisis in early September, equivalent to points in the last year to just over
Charlotte Blum says Opec’s three-and-a-half times the UK’s entire 42%. But reports of diesel’s death are
production cut heaved oil prices refining capacity. exaggerated. Trucks drive further than
As a consequence, gasoline refinery ever before, and this has pushed diesel
higher during 2017, but will it last? margins jumped to almost $22/bl consumption up to the largest ever in
in early September when it looked the first nine months of 2017. Diesel
G
lobal oil prices are on an like drivers in the US might run out remains by far the most important road
upward path thanks to a rare of petrol. Margins soon fell back fuel in the UK, making up more than
co-operation between Opec below $10/bl though when the supply two-thirds of it. Still, petrol demand is
and Russia. In addition, growing global problem turned out not to be as bad as growing faster, and diesel’s share has
demand has boosted refinery margins, it had first looked. shrunk by a couple of percentage points
giving UK and other European refiners When it came to diesel, UK and from its peak in February 2017.
another lease of life. other European markets notoriously For 2018 and the outlook of crude oil,
From the start of 2017, Opec short of diesel had to scramble for some oil producers are now using the
and non-Opec partners have been alternative supplies. Diesel cargoes recovery in prices to finance an increase
surprisingly unified and managed to were even moving in the opposite in output, especially shale oil producers
stick to their pledges of 1.7mn b/d of direction across the Atlantic to normal, in the US. A series of big fields, whose
production cuts. The cuts managed when Latin American markets usually development began when prices were
to turn round the oversupply that had supplied from the US Gulf had to high, are starting up in 2018.
swelled stocks to record levels and import diesel from Europe. Opec and its partners have decided
plunged Brent crude futures prices For UK diesel importers a stronger to continue with their production
to an average $45/bl in 2016. Brent pound softened the rise in prices. The restraint until the end of 2018, but they
has climbed back up to around $63/ referendum in favour of Brexit in June cannot stop the tide of new oil coming
bl, some $8/bl higher than before the 2016 initially sent the pound tumbling to the market, especially if their efforts
production cuts started. by almost 12% against the US dollar help boost prices further. Demand will
Also, luckily for the refiners, during that year, but sterling has recouped be crucial. If it flags, the market could
2017 strong demand growth kept some of its losses. While dollar prices well tip back into oversupply in 2018,
refining margins at $10-15/bl for for diesel barges in northwest Europe with prices falling again impacting the
diesel, giving refiners another decent are 16% higher than a year ago, they wholesale price levels for fuels also for
year. They got help from a particularly are only 9% up for UK buyers. UK refiners.
ARGUS WHOLESALE CRUDE, GASOLINE & DIESEL PRICES 2016 – 2017
40 70
Argus Gasoline Eurobob Argus ULSD Argus North Sea Dated (crude)
60
35
50
30
40
USD/bl
ppl
30
25
20
20
10
15 0
Jan
Feb
Mar
Apr
May
Jun
Jul 2
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul 2
Aug
Sep
Oct
Nov
Dec
201
2017
201
2017
201
2017
201
2017
201
2017
201
2017
016
017
201
2017
201
2017
201
2017
201
2017
201
2017
6
6
6
6
6
6
6
6
6
6
6
©Copyright Argus Media Ltd
14 www.ukpra.co.ukArgus downstream
Argus provides UK companies with direct access to wholesale fuels market
information. This enables our clients to respond quickly to price developments
and compete more effectively. You can access Argus data and insight through the
web, PDF reports, direct data feeds or your mobile device.
To find out more, email info@argusmedia.com
Market Reporting
Petroleum Consulting
illuminating the markets EventsMarket Review
2018
PETROL
EdgePetrol’s Andrew
Horton and
Tony Head of
Highway Stops
RETAIL
GOES
DIGITAL
How forward-thinking retailers
are embracing technology
I
t is the question that every automated. We needed a way to make drive margins and volumes. In the not-
independent retailer asks sure we were on track in real-time in so-distant future, you will be able to
themselves: “How can I maximise terms of sales and actual blended fuel receive accurate and intelligent optimal
my fuel margins whilst maintaining or margin, so we could act.” order form recommendations.
increasing my volumes?” By securely integrating with both The EdgePetrol data science team
Many retailers feel that their options your fuel supplier and your epos, is also working on building a model
are limited. Fuel margins are typically EdgePetrol captures the price and to recommend optimal pricing, not
thin and your replacement cost may volumes of the grades you are selling only based on fuel sales data, but
vary depending on your fuel supply and calculates the weighted and considering site-specific characteristics
contract. The pole price you decide blended cost of the fuel remaining and dry-stock offering.
on is not only influenced by your cost in your tanks. This means you can Gideon Carroll, Founder of
price, but can be squeezed by nearby access your volumes and your EdgePetrol, says: “We have been
competition. margins from anywhere in the world, careful with our recommendations
Since the start of 2017, EdgePetrol in real-time, from one source of truth. to clients at the early stages of their
have been talking to UK independents Independents like Highway Stops are MyEdge subscription. Retailers know
about these challenges and how you already seeing the benefits. their sites better than anyone and
can overcome them. There are two “We received an alert at the end there are so many variables that can
consistent problems that retailers face: of August from the MyEdge product influence the volumes of a specific site
1. Low data visibility in real-time stating our volumes spiked up at any time.
hinders important decisions such as considerably at two of our 11 sites. It “You have internal and external
pricing and stock ordering turns out these sites were in areas of factors. Everyone knows they impact
2. Business reporting and management low affluence and that pay day was volumes, but it is important to be able to
information is unreliable and driving demand. This gave us the understand them on a site-specific level
involves time-consuming manual knowledge to either lower the price before offering an optimal pole price.
calculations. to drive volumes or increase the Getting it wrong is not an option.”
One of the retailers facing these price to drive margins, depending on Another common problem amongst
issues was Highway Stops Retail Ltd, a market needs. This also allowed our retailers is the need for a reliable
Top 50 independent with 11 sites. Tony commission operator to adjust his source of competitor prices. EdgePetrol
Head, Development Director, explains: dry-stock offering around the increased have solved this by providing the live
“Immediate data visibility was a little demand,” says Tony. prices of platform subscribers.
behind the times, particularly in terms It doesn’t stop there. EdgePetrol’s Toby Butterworth, Product Manager
of live blended fuel margin achieved by intelligent model constantly learns at EdgePetrol, explains: “If you share
both Platts and margin share supply about your sites, meaning that if they your live price, you will receive the live
deals across our network. are influenced by anomalies such price of other users, meaning you no
“Historically, to find out our actual as pay day, local events, traffic and longer have to rely on outdated pricing
blended gross margin involved a lot of weather, they can accurately forecast information when making decisions
manual labour across various different your stock cover days and ullages by around your marker sites.
supply terms with different fuel grade. This means you aren’t relying “We will continue to work with petrol
suppliers, which involved physically on sales data and cost price to make retailers in 2018 to build a relevant and
pulling out the cost prices across 11 purchasing decisions. Cheaper fuel specific product for the needs of the
sites with four grades. This is now fully means further flexibility on pricing to market.”
16 www.ukpra.co.ukwww.edgepetrol.com – 020 3865 8689
BEYOND THE PUMP exciting time for those of us in the
Shell UK Retail Future Fuels transport fuels industry, with no one
Manager, Jane Lindsay-Green, knowing exactly what the route to a
discusses what ‘future fuels’ mean low carbon future will look like. I’ve
been fascinated – and encouraged
for the future of fuels retailers – by the many opportunities and
innovations that are emerging to take
O
ver the last year, stories with brands including Jaguar Land us there. If there is one thing we do
about air quality and the Rover, Volkswagen, BMW and Daimler seem to agree on, it is that there isn’t
future of transport have all announcing plans for hybrid and a single or simple path.
been headline news. In 2017, the UK battery-electric vehicles. A mosaic of transport fuels will
Government made headlines after be needed for a successful energy
announcing plans to halt the sale A HOT TOPIC transition, not only in the UK but
of petrol and diesel-only vehicles by In short, we’ve quickly seen the across the world. And we need to
2040. For Londoners, the Mayor laid future of transport shift from being remember this is a transition. For the
out ambitious plans to encourage the a conversation between fuel retailers
use of electric and hydrogen vehicles and energy industry analysts, to being
to tackle air pollution in the capital.
Vehicle manufacturers also made
a hot topic for business and policy-
makers, and of great interest to the
A mosaic of transport
clear commitments to electrification general public. People are increasingly fuels will be needed
– with Volvo being the first to tell us talking about what the transport
that every car it launches from 2019 system of tomorrow will look like, and for a successful
will have an electric motor. In the
months that followed, other major
what this could mean for them and
their vehicle choices today. energy transition
motor manufacturers followed suit, As such, this is a tremendously
18 www.ukpra.co.ukMarket Review
2018
foreseeable future, these ‘future fuels’ even over the next few years. Despite
will complement petrol and diesel, keen interest and direction from
with drivers using an increasing range governments and business, we must
of energy sources as new technologies remember that consumers still want
evolve to co-exist with traditional to know what the energy transition
transport fuels. means for them. I believe more
For Shell, that means that we will people will choose to drive EVs if they
need to offer a growing portfolio of can access a range of reliable and
fuels. This will include more electricity, convenient charging solutions.
natural gas and hydrogen, which
all have an important role to play ELECTRIC CHARGING SOLUTIONS
in meeting the varied needs of the Last October, we also announced
different types of customer, journey the acquisition of NewMotion, one
and vehicle. of Europe’s largest EV charging
As Shell’s UK Future Fuels Manager, providers. Investments like these
I am constantly working towards are vital to ensuring customers have
enabling the energy transition in this choice, so that EVs become a credible
country, and we are laying strong transport option for them, ensuring
foundations for the low-carbon future that EV drivers can travel ever longer
that we all want to see. In early 2017, distances with confidence. That’s why
Shell Recharge allows
our CEO unveiled Shell Retail’s global Shell is developing a full raft of electric and will open two more in the UK in
EV drivers to charge
ambition of achieving 20% of its fuel vehicle charging solutions to meet a early 2018. Although it takes time for their vehicles in
around 30 minutes
margins from low-emission fuels by variety of needs, whether at home, at any new energy technology to really
2025. It’s a challenge that inspires my work or on the road. take off, hydrogen vehicles could be
colleagues and me every day. Electric vehicle charging solutions an important part of the future fuel
So we are pushing ahead. In are just one of the ways that Shell is mix because they can help to reduce
October 2017, we announced the aiming to deliver more and cleaner carbon emissions and pollution, are
launch of Shell Recharge – our new energy to around 5 million fuel currently quicker to refuel than EVs,
on-forecourt electric vehicle (EV) customers who visit our UK stations and have a driving range of more
rapid charging service. The service every week. We are also working to than 200 miles.
is now available at 10 of our UK enhance petrol and diesel vehicle A fundamental shift in the UK
service stations, allowing EV drivers efficiency, including by providing transport fuel mix will take many
to charge their vehicles in around 30
minutes. Collaboration is vital too, as
developing the infrastructure alone
will require significant investments by Hydrogen vehicles could be an
companies across multiple sectors, all
sustained over many years.
important part of the future fuel mix
It is important during any transition
to retain perspective. EV sales are advanced lubricants that can improve years, if not decades. But it’s a shift
certainly gathering pace, however they fuel economy. that Shell is already starting to make
are doing so from a very low base. A In tackling emissions, cars are not because – in the simplest terms – it is
real step-change in transport clearly the only challenge. Older, larger trucks about offering our customers greater
isn’t going to happen overnight, or are typically the biggest emitters of choice. We want to ensure that no
sulphur, nitrogen oxides emissions matter what vehicles people drive,
and other particulates – which are we have the products and services to
causing pressing air quality problems meet their needs. That means listening
for many parts of the UK. Going back to what they need now, understanding
to the idea of a mosaic of solutions, what they will need tomorrow, and
here, liquefied natural gas (LNG) has preparing for their evolving needs over
an important role to play. There are the decades to come.
already around 1,500 trucks running For more than 100 years, Shell
on LNG in mainland Europe and we has been at the forefront of fuels
plan to offer this cleaner fuel in the and lubricants innovation. We pride
Shell UK Retail network this year. ourselves on our ability to evolve our
We are also laying early foundations business, and we are currently focused
for hydrogen to be a part of fuelling on becoming a full ‘mobility services’
the future of transport. We opened and convenience retailer.
our first hydrogen refuelling station We’re also thinking about what
Shell’s new on-forecourt rapid charging service in Cobham, Surrey in February 2017, this could mean for the design of our ▹
www.ukpra.co.uk 19Market Review
2018
▹
▹ forecourts. For example, in urban retail brands such as Costa Coffee, The forecourt retail with PayPal, Apple Pay and Android
experience needs
areas where the urgent need to tackle Waitrose and Budgens to expand our to offer covenience, Pay. Jaguar Land Rover and Shell
local air pollution is already driving high-quality food and drink offering. quality and choice also launched the world’s first in-car
growth in EV and hydrogen bus use, We are changing the way we serve payment system in early 2017, allowing
we are exploring prototype designs customers according to their changing drivers of certain models to pay for
which will look and feel quite different expectations around convenience, fuel at participating Shell service
to the service stations with which we service and digitalisation, and stations in the UK via their car’s
are all very familiar. delivering innovative services that touchscreen.
We are also looking beyond the can make their journeys better. As the world becomes increasingly
fuel pump to offer more efficient, connected by digital technology, we
sustainable and smarter services DIGITAL SERVICES will continue to think about the future
to help our customers get on with An initiative we’re particularly proud of of our forecourts in terms beyond
fast-paced modern life. We are is our collaboration with fuelService, the bricks and mortar of the stations
forming partnerships with other with whom we joined forces in 2017. themselves. Nobody can claim to
Together, we offer UK disabled drivers
assistance with their refuelling via an
app, so they have the confidence of
knowing someone will be available
Continued success
to assist them when they arrive at means listening to our
the service station. All our customers
also have the option to use their customers and adapting
smartphones to pay for their fuel at
the pump using our Fill Up & Go to their needs
service, developed in collaboration
know what the future of fuel retail will
look like 20, or even 10, years from
now. Indeed, nobody can even predict
what the transport-related news
headlines will be in 2018.
But we do know that continued
success means listening to our
customers and adapting to their
needs – providing an evolving range
of quality fuels, welcoming breaks on
their journeys and retail experiences
that offer convenience, quality and
choice.
20 www.ukpra.co.uk83% of dealers approached are
opting to replace existing Bank
*
Guarantees with our FuelBond
*30 out of 36 dealers approached during the pilot phase
**When replacing an existing bank guarantee and for security amounts up to £1mCBL FuelBonds are a simple, cost-effective,
and flexible way of honouring your fuel
payments without compromising your
assets, equity or working capital.
Fast, simple, secure
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financial freedom
Email fuelbonds@cblinsurance.com for more information.
“very straightforward, easy to do and exactly what
we have been looking for over the last few years”
Joe Brough – Manor Retail GroupMarket Review
2018
ITM’s hydrogen
station at Shell’s M25
Cobham Services in
Surrey
HYDROGEN Q&A
Dr Graham Cooley, CEO of ITM Power, answers questions on hydrogen power
Tell us a bit about hydrogen power As more FCEVs are rolled out there will
Hydrogen is the most abundant
element on earth, but it’s locked
be a stronger demand for hydrogen
refuelling stations in the UK. This will
Hydrogen circumvents
within water and hydrocarbons. It is
produced from these resources and
be driven both by a need to improve
the geographic spread of hydrogen
the difficulties
used in many applications, including
oil refining, ammonia production, float
refuelling stations across the country
and by the use of fleet vehicles by
associated with battery
glass production and as a transport commercial operators, including FC electric vehicles by
fuel for Fuel Cell Electric Vehicles vans, buses and, in due course, trucks.
(FCEV). In addition, there are energy In addition it is expected that the use offering longer range
storage applications for balancing of green hydrogen at refineries will
electricity grids and various renewable grow as a means of decarbonising
chemistry applications where green existing fuels and chemicals, while market development for hydrogen in
hydrogen can be used to reduce the the gas distribution networks admit the mobility sector, with funding for
carbon footprint. increasing concentrations of hydrogen stations and FCEVs. The funding levels
to assist their decarbonisation. are quite modest compared with the
How is the power made? Overall, green hydrogen will support for battery electric vehicles
Hydrogen can be made using an ITM contribute across the energy system and charge points, but hydrogen is
Power electrolyser. This uses a process (with applications in the transport, increasingly being seen as the next
called electrolysis where electricity heat and power sectors) and in the wave for decarbonising road transport.
is used to split water into hydrogen long-term hydrogen will be stored in Indeed in most market segments it
gas and oxygen. This approach underground salt caverns to provide will provide a superior solution than
allows the fuel to be made on-site, a buffer for managing high energy plug-in electric vehicles on the one
which eliminates fuel deliveries demand periods in winter. hand and petrol/diesel vehicles on the
and downtime at the forecourt. The other hand. Hydrogen circumvents
hydrogen is then used by FCEV, or in The Government seems very ‘pro’ the difficulties associated with battery
stationary applications to generate electric, are you in talks with the electric vehicles by offering longer
electrical power or chemicals. Government about hydrogen power? range, rapid refuelling, no waiting for a
There are a number of EU and UK charging space, and no need to invest
How do you see the hydrogen government schemes in place which in electricity networks to enable wide
market developing in the UK? are providing support to enable early adoption of home charging. ▹
24 www.ukpra.co.ukAdvertisement feature 2018
TLM LAUNCH NEW CLOUD-BASED
REPORTING & ALERTING APPLICATION
FOR CONVENIENCE & FUEL
TLM Technologies provides world-class
technology and support to convenience &
fuel retailers. Covering EPOS, back office and
head office the TLM team develop unique
technologies and integrate the systems
necessary to make smarter, more profitable
decisions.
TLM recently announced the launch of evo+,
the latest solution from the TLM ‘evolution’
product suite. Officially on sale from October
2017, evo+ promises to revolutionise business
decision making, giving convenience & fuel
retailers unparalleled access to their store’s
data from anywhere, enabling them to
maximise profit, increase sales and optimise
margins.
The data generated from the various
systems in a cstore, on a forecourt or from an
estate of sites is invaluable, but the time taken
to compile this can become a burden, and
knowing what it means and what to do with it
can be equally difficult.
evo+ brings all this data together in a
user-friendly cloud-based application that
provides customisable reports to help retailers
take control and improve visibility of their
businesses, no matter where they are. maximum freedom of choice and flexibility. Clare Halesworth, Office Manager at Budgens
Key features include snapshot dashboards Holt said, “having seen evo+ at the recent TLM
with drill-down capabilities, real-time reports evolution user group I was really impressed;
– available anywhere on any device, central I am definitely looking forward to trialling it
reporting for multi-site retailers, trend analysis instore – the reporting capabilities have so
– so retailers can make informed business much potential, and the notifications that you
decisions based on store data and intuitive key can set about events such as discounts will be
THE GATEWAY TO EVOLUTION line reporting, and configurable email alerts. invaluable for auditing purposes!”
Fuel retailers will be able to take advantage of The TLM team saw the opportunity for
evo+ is a cloud-based real-time reporting tool, functionality such as wet stock monitoring, retailers to use the data from their stores to
giving retailers trend analysis, dashboards, fuel specific alerts such as pump not used for improve their margins and make more profit
exception reporting and alerts anywhere, a defined time period, and fuel price changes – – they just needed the tools to be able to do
on any device. One affordable monthly fee all from their smartphone. so. evo+ solves the problem of data analysis
includes software support, licensing and Adrian Felton, CTO at TLM said, “we are for retailers; not only compiling their data
hosting so users of the solution can be safe in really excited to bring this solution to the and presenting it in a meaningful way to help
the knowledge that their subscription covers market; with critical real-time data and rich them make smarter business decisions, but
everything they need. reporting capabilities at their fingertips, also using the live data to alert them to instore
Seamless integration into the existing our customers can take control of their events enabling them to take action to avert
Oracle CFS EPOS solutions means that businesses, getting right to the heart of what potential issues, saving them time and money.
existing customers don’t need to wait until each transaction means for their stores.” For more information on how evo+ from
the launch of TLM’s evoPOS – they can start TLM can help your business grow, visit http://
“THE REPORTING CAPABILITIES HAVE
using evo+ straight away, acting as the gateway SO MUCH POTENTIAL” www.tlmtechnologies.co.uk/evo-plus-enquiry
to the evolution product suite whilst ensuring
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©2018. Fairbanks, the Fairbanks logo and combinations thereof are trademarks or registered trademarks of Fairbanks, in the United Kingdom and other countries. Dover Fueling Solutions, the Dover
Fueling Solutions logo, and combinations thereof are trademarks of Dover Corporation, in the United States and other countries. Other names are for informational purposes and may be trademarks of
their respective owners.Market Review
2018
▹ Can you outline the pros and cons
of hydrogen versus electric? ITM’s Dr Graham
Essentially a FCEV is a form of electric Cooley with Dr Johan
van Zyl, President
car. The electric powertrain provides and CEO Toyota
the highest efficiency means of Motor Europe
converting stored energy to motion –
about twice as efficient as a modern
diesel car. The FC vehicle stores energy
as hydrogen and utilises a fuel cell
to generate the required electricity;
the battery electric vehicle relies on
the electricity grid and stores the
energy in a large battery to provide
the electricity. The battery vehicle
cannot be refuelled as quickly as a
conventional diesel/petrol vehicle,
whereas the FC vehicle can. The
battery vehicle cannot achieve the
same range as a petrol car, whereas
a hydrogen car can. Battery vehicles
cannot provide the long range and
rapid refuel characteristics required by
commercial fleet operators of heavy be developed to provide basic national
vehicles (buses, vans and trucks), coverage. In addition we will see ITM Power has in place
but hydrogen vehicles can. Hydrogen hydrogen refuelling stations emerge
vehicles do not perturb the normal at bus depots in towns and cities to a siting agreement with
routine of private or commercial
vehicle operators, while battery
enable bus operators to transition
their fleets to the zero emission, rapid Shell so that hydrogen
vehicles do. Therefore, when the
overarching objectives are to achieve
refuel, long range solution that only
hydrogen can provide.
stations can be located
very large reductions in atmospheric
pollutants and CO2 per mile travelled,
ITM Power has also recently won a
tender to supply a 10MW electrolyser
in convenient locations
transitioning to hydrogen is the to Shell, which is to be used at a
relatively straightforward option for all refinery in Germany. and ignites and spreads.
types of vehicle and all types of user.
How is the industry communicating How often is maintenance required?
Are forecourt sites the best places to to drivers about hydrogen? Planned maintenance occurs at
offer hydrogen power to drivers? The number of FC vehicles in the UK regular intervals, with annual run time
Yes. Forecourts offer a familiar is growing and drivers are trained to availabilities of >98% or >8500h.
environment to locate hydrogen refuel upon receiving the vehicle. ITM
refuelling points. But in some Power has held station opening events Are there any figures re costings to
locations hydrogen refuelling stations at every station which has resulted drivers for hydrogen fuelled vehicles?
at new sites make sense, for example in press coverage. We also engage in The Toyota Mirai is available with
where electricity is to be taken from social media and are invited to present incentives to receive free fuel for two
an adjacent solar or wind farm, or in at events, where we can communicate years. The hydrogen gas is £12/kg
districts where the electricity network messages further afield. (including VAT), most vehicles would
operator is seeking new load to help hold 4-5kg (so £45-55 for 350 miles).
manage constraints and supply/ How safe is hydrogen on-site? In addition, an FCEV avoids any clean
demand variability due to rising On-site production, storage and air/emissions charges. A service
renewable power levels. dispensing enables the whole solution consists of a 20-minute check. The
to be carefully engineered as one replacement parts would only be tyres,
What is ITM’s deal with Shell? system. Hydrogen doesn’t leak from brakes, windscreen wipers (there is no
ITM Power has in place a siting the electrolysis, compression, storage gearbox, clutch, exhaust, starter motor,
agreement with Shell so that hydrogen or dispensing processes. alternator etc.).
stations can be located in convenient In an extreme emergency situation At the end of life, the vehicles will
locations for users, in order to enable where a leak occurs or the gas is not depreciate at the same rate as a
the growth of early markets for FC vented, it escapes rapidly upwards conventional vehicle. They have many
vehicles. In the UK, South East and disperses into the atmosphere, parts which do not move or degrade,
England is the initial geographic focus compared to diesel/petrol which and importantly the fuel cell catalyst
but in time a network of stations will pools around the base of a vehicle can be recycled.
www.ukpra.co.uk 27You can also read
