Fuel cost per job, before diesel rises on 2 September

Diesel is forecast to rise between R2.87 and R3.07 a litre on 2 September, depending on grade. On a 40 vehicle fleet burning 8 000 litres a month, that is roughly R23 000 to R25 000 gone. Fuel cost per job is the number that tells you where to put it back, and most South African operators cannot produce it.

That forecast is a forecast. Nothing has been gazetted, and the figures below can still move.

What the snapshot actually says

The Central Energy Fund publishes predictive fuel price snapshots through the month, and they move with every one. Stuff South Africa reported the 20 August snapshot, with diesel 0.05% up 287 cents a litre and diesel 0.005% up 307 cents.

Snapshots captured earlier in August were lower, at roughly 275 and 293 cents. Taken together, the diesel forecast has sat somewhere between about 275 and 310 cents a litre through the second half of the month, depending on grade and on the day it was captured.

Petrol has moved further. Across the same snapshots petrol 93 ranges from about 66 to 83 cents, petrol 95 from about 77 to 94 cents, and illuminating paraffin from about 215 to 224 cents. If you are budgeting on petrol, budget on a range.

Stuff's own opening line puts the diesel increase at R3 a litre or more, while its table gives 287c and 307c by grade. The two do not agree. Use the table and name your grade, because the 20 cent spread between the grades is real money across a year.

The Department of Mineral and Petroleum Resources adjusts fuel prices on the first Wednesday of the month, which in September falls on the 2nd. Brent has been trading in the high 80s to low 90s in US dollars a barrel across the period, above where it has been sitting.

There is a second variable pulling the other way. The rand strengthened below R16 to the dollar on 21 August, erasing its Iran war losses. A stronger rand reduces the landed cost of imported fuel, so the number that arrives on 2 September may not be the number in the snapshot.

Working it in public, with the assumptions stated

None of what follows is anyone's real fleet. The numbers are set out so you can substitute your own.

• 40 vehicles
• 2 000 km a month each
• 10 litres per 100 km
• so 200 litres a vehicle, 8 000 litres a month

At 287 cents a litre, that fleet pays about R22 960 more a month, or R275 000 over a year. At 307 cents it is about R24 560 a month. Take the wider range and it is somewhere between R22 000 and R24 800. Neither figure is catastrophic on its own, and neither is recoverable if you cannot say which work produced it.

Now divide by jobs rather than by vehicles. If the same fleet completes 1 200 jobs a month, it burns about 6.7 litres a job, and the increase costs R19 to R21 per job.

R20 a job is a number you can do something with. R23 000 a month is a number you can only absorb.

Why the arithmetic is the hard part

In a typical field service, distribution or private security business, the three numbers that make up a fuel cost per job sit in three places.

The litres are on a fleet card statement, issued monthly by the fuel provider, broken down by vehicle and card. Jobs sit in a scheduling sheet, a job card book or a WhatsApp group. The invoice sits in the accounting package, priced off a rate card that was set before any of this happened.

The joining key is usually the vehicle registration and the date, and it usually exists in all three places already. Nobody has ever been asked to line them up, because until a cost moves nobody needs to.

That is why the standard response to a fuel increase is a blanket surcharge, and a blanket surcharge is wrong twice. It overcharges the client eight kilometres away, who will notice and shop around. It undercharges the run to Rustenburg, which is where the money is actually leaking.

There is a quieter version of the same problem in your quote book. A quote priced on August fuel, issued with 60 or 90 days validity and accepted in October, is a loss you agreed to in writing.

What this is really about

The diesel price is not the problem. Diesel is arithmetic, and the arithmetic is public eleven days ahead of time.

The problem is that the litres are not attached to the job, so an increase that could be repriced in an afternoon becomes a margin question nobody can answer until the year-end accounts. Joining a fleet card feed, a job scheduler and an accounting package that a business already pays for is ordinary work, and it is the work Zorah does. A cost per job then falls out monthly without anyone rekeying anything.

This matters more in operations than anywhere else in the business, because operations is where the litres are spent and finance is where they are discovered.

What to do before 2 September

Open last month's fleet card statement and the job list for the same month. Pick one vehicle. Add up its litres, count the jobs it did, and divide.

If you can do that for one vehicle in twenty minutes, you can do it for the fleet, and you have your per job exposure before the price moves. If you cannot, the thing you are missing is not the diesel price.

Then pull every open quote with a validity period running past 2 September, and check what fuel assumption sits inside it.