In the same article, we discussed how this evolution is affecting the on-road refuelling market, describing how fuel buyers from the “new breed” in Eastern Europe are aggressively selective when it comes to refuelling locations, often requiring no more than twenty or thirty locations across the whole of Europe, and demanding that everything else is “switched off”.
A headache for today’s market leaders?
If one of the principles of sound marketing strategy is to adapt your offer to meet evolving customer needs, then this trend is going to land today’s market leaders in something of a predicament – and may well open up opportunities to new entrants and “challengers”.
Let’s start with the pan-European majors. The emergence and growth of low-price, unmanned providers like AS24 and IDS has seemingly forced the majors to adopt differentiated pricing approaches – offering heavily discounted diesel at a selection of primary commercial transport “nodes”, and much less attractive prices across the remainder of their networks. You don’t need to be Einstein to figure out that, in all probability, the economics of that approach may rely on a significant percentage of refuelling happening outside the “high discount” site group. So what happens when irritating customers start to demand that only the heavily discounted sites are available to drivers? You may have to go back to the drawing board……..
Furthermore, the previous decades have seen the majors engage in high level, strategic cross-acceptance schemes to enable truly international offers. Do these allow for cherry-picking? Can they be “switched off”? How flexible are they country by country? Time will tell…..
A threat to the “unmanned” schemes?
To continue with the two examples we mentioned above, how will the growing demands for restriction play out with fuel card schemes like AS24 and IDS? On the surface, these are low-cost, low-price networks – with a European presence ideally matched to the network preferences of international commercial transport. Look a little more closely, though, and you realise that restriction may – also – throw up some problems for these providers.
Why? This may be a guess, but as a Total-owned business, AS24 cards are accepted at Total sites in France, Benelux and Germany. Similarly, as a Q8-owned business, IDS cards are accepted at Q8 sites in Benelux and beyond. It isn’t a huge leap of logic to suggest that the profitability of these schemes may, to an extent, depend on a percentage of volume being drawn on the higher-priced sites under the mother brand. Switch these off – which is what the Eastern European customer increasingly wants – and do the economics still work? Who knows….
A challenge for the pan-European independents?
DKV and UTA have both built the closest things to “universal acceptance” for commercial transport on the market today. Yet their relatively low presence in Eastern Europe hints at a poor match between the benefits of huge network range and density, and the different demands of our new breed of haulage customer.
To what extent will DKV and UTA be able to offer subsets of their networks at more competitive prices? To what extent does the technical capability, or indeed the commercial will exist to complement such an innovation with a restricted network offer? To what extent will their network acceptance partners “play ball” with such critical offer development initiatives? We will see…
“Blowing in the wind…”
While we are certain that the international competitive landscape in CRT is going to change, and soon, what isn’t certain is how.
We may see today’s market leaders fundamentally overhaul their propositions to bring flexible restriction into play. We could see them retrench, and focus on segments where restriction plays a less critical role. We might see new entrants build offers “from the bottom up”. We are already seeing new technologies emerge which piggy-back on existing networks and offer site selection, transaction restriction and discreet processing.
It’s all to play for.