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With no let up in the spiralling cost of diesel, operators are considering hedging fuel prices. Cath Sharp, business unit controller at 3PL Lloyd Fraser Group, tells MT: "We are currently looking to open dialogue with financial institutions with regards to hedging fuel prices for some of our bigger clients.

"Previously fuel has been something that wasn't worth hedging because the price didn't really move that much, but now it is continually rising it is something that businesses are considering,"  says Sharp. Andy Russ, director transportation Europe at Wolseley, adds: "We have been looking at hedging prices with our fuel supplier, BP, but the difficulty is where to pitch the price. Another option is to hedge just a proportion of our fuel, say 25%."

Hedging involves paying an upfront premium to a financial institution to lock in a rate for a set amount of time. If the price goes down during the set time, then the haulier can walk away from the contract but the financial institution keeps the premium. George O'Connor, research analyst at investment bank and stock broking firm Panmure Gordon, tells MT: "It makes perfect sense for your readers to look at creative ways of locking in the price of fuel and hedging is one such way. It is a very viable way of doing business and basically enables operators to buy tomorrow's fuel today."

However, he warns that operators need to "be a bit savvy" about how the market works. As MT went to press crude had gone back up  to $121 a barrel, while the bulk diesel price quoted on the FTA website was 98.66p/litre.