Yorkshire Bank `Diesel-Hedging’ Prepares Transport Business For The Long Haul

20/2/2009

A HUMBER haulage business is fighting the credit squeeze after accessing a specialist `diesel hedging’ service from Yorkshire Bank.

AR Lunn Transport and Warehousing Ltd is combating the downturn by controlling diesel costs for its 100-vehicle fleet with support from Yorkshire Bank’s East Yorkshire and Lincolnshire Financial Solutions Centre (FSC), Hull.

A combination of last year’s rapid rise in diesel prices and the tougher economic climate, led AR Lunn Transport, Hull, which provides a containerised transport service to international shippers through all major UK ports,  to control its operating costs and remain competitive through `diesel hedging.’

Specialists who are part of Yorkshire Bank’s integrated financial solutions approach, delivered through its national network of financial solutions centres, are able to provide fixed medium-term prices for commodities, such as diesel, for up to 12 months so that their customers have greater control over their costs and competitiveness.

AR Lunn Transport founder and managing director, Andrew Lunn, says: “Last year’s sudden and rapid hikes in diesel costs sent shock waves through our industry and, although they have fallen since, this is an uncertain world and we want to do all we can to avoid a repetition.

Being able to secure better value in this way enables us to plan ahead and continue to provide the best possible service to our customers rather than being buffeted by circumstances beyond our control or having to absorb price hikes or risk becoming uncompetitive. 

“This is the toughest market we have operated in since we launched 25 years ago but Yorkshire Bank achieved a very good result for us providing a service which we accessed as part of forward-thinking management.”

In order to achieve maximum value in the diesel deal, involving a million litres a month, Yorkshire Bank business partner, Jon Tyson, had to link AR Lunn Transport with a consortium of other high-volume diesel users.

AR Lunn Transport and Warehousing was founded in 1983 and operates a 100-vehicle fleet including curtainsiders and a range of straight-frame chassis, sliding-skeletal chassis and sliding-tipper chassis trailers to transport containers ranging from 20ft to 45ft as well as ISO tanker containers.

Jon Tyson says: “Diesel hedging is an extremely useful service, especially to hauliers such as AR Lunn Transport, as the last thing they need is price volatility in the current climate. The service allows them to continue to purchase diesel from their usual suppliers, safe in the knowledge that Yorkshire Bank is providing a fixed-price for them. 

“We created a consortium of existing members who are high-volume diesel users and keen to take advantage of this service, in order to achieve the best deal available in the commodities market. None of the consortium previously knew one another.

“This is part of our approach of connecting businesses for their mutual benefit. We’re delighted to be able to add such value to our members and provide certainty around one of their key costs.”

Yorkshire Bank’s East Yorkshire and Lincolnshire FSC has 48 staff and covers from Bridlington to Lincoln taking in Goole, Scunthorpe, Immingham, Hull and Grimsby.