Speaking from the Chair

C. M. VIGNOLES, CBE Managing Director„5hell-Mex and BP Ltd.

EFORE the internal combustion engine revolu- D lionised road travel, petrol was a tiresome and dangerous refinery by-product quickly burned to waste in a quiet corner before it could do any harm.

The commercial use of oil began with paraffin —or kerosene, as the industry itself calls it. The first depots set up by the oil companies in Britain were for storing burning oil. They stood in rail- way goods yards because they were supplied by rail from bigger importing installations at or near the main ports. They were the bases from which horses and wagons set off each day to make deliveries to paraffin customers within a radius of about ten to fifteen miles, which was about as much as could be accomplished in a working day with a horse and cart.

Soon came the horseless carriage, and by 1900 there were already 2,000 motor-cars on the roads. From then on motorists expected supplies of petrol to be available all over the country. The little burning-oil depots already in existence began to stock two-gallon cans of motor spirit. The motorist bought them from ironmongers' or cycle repair shops just as he did his paraffin.

The 1914-18 War gave a tremendous impetus to the development of motor transport and its fuel, and soon afterwards the first 'garages' began to appear. Many of them were quite primitive repair shops, started by mechanically minded young men with the proceeds of their war gratuities, and, to begin with, selling petrol in cans.

The introduction of the kerbside petrol pump was the first significant advance. Originally, it was a tall, cylindrical pillar surmounted by a rather surprised-looking globe, the whole ensemble look- ing rather like Lot's Wife immediately after her translation into a pillar of salt. A brochure pro- duced by my own company at the time showed the pump's entrails exposed, and a long serpentine hose firmly grasped by a moustached attendant in a peaked cap, stiff collar and shiny black boots.

Petrol buyers of the 1920s were not immediately

convinced by the inscribed assurance that each of the two one-gallon measures inside the pump had

been 'certified and sealed by an Inspector of Weights and Measures, so that the motorist can- not at any time question their accuracy.' Question them they did, at least to begin with.

The introduction of the kerbside pump, how- ever, marked the end of the era of two-gallon cans and the beginning of bulk delivery, bulk storage and the immense throughputs of today. But the garages continued to have extremely limited storage capacity, and for this reason demanded from the oil companies a 'fire engine' delivery service. A dealer would telephone a depot and order 200 gallons to be delivered immediately. Fear of losing his business ensured him immediate attention.

I can think of no other trade which has ever provided its customers with such a service. To maintain it a network of small depots was kept in being covering the whole of Britain. This was still the pattern of distribution when the Second World War began, and thereafter no further development was possible for well over a decade.

The perpetuation of such a system at a time of rising costs and scarce manpower was quite con- trary to the whole logic of oil distribution, the first principle of which is to move your products in the largest possible quantities as far as possible along the distribution line. Every time you break down your prime load into smaller lots, up go your costs.

When at last it became possible to remodel the whole network and apply these principles, several new factors had to be taken into account. The total demand for oil products had grown by 70 per cent. between 1938 and 1950. Not only the quantity but the variety of the oil industry's wares had increased. The depots which began with paraffin as their only stock-in-trade had gradually come to resemble the cocktail cabinet of a par- ticularly adventurous hostess.

In 1939 Shell-Mex and BP were handling nine grades, in 1950 fifteen—and now no fewer than twenty-nine. It is not difficult to visualise the com- plexity of the task of storing, segregating and delivering such an array of products, particularly since some need special treatment. Fuel oil, for instance, used in steel-making, boiler-firing and for many other industrial purposes, has to be kept warm during storage and delivery, otherwise it coagulates.

The third factor was the creation of a major industry which has raised Britain's refining capacity ten times in the last decade at a cost of more than £200 million, and is now about to raise it by yet another third.

In my own Company we sat down seven years ago to plan where ideally our distribution points should be, without reference to the old patchwork of little depots which was the legacy of half a century of piecemeal development.

The fact that Britain is an island is an advan- tage in distributing a liquid such as petroleum, since a bigger lank' can be moved on water than on land. Not only has Britain an extensive coast- line, but navigable rivers, such as the Thames, Severn and Trent, leading to industrial areas where oil consumption is heavy. London, for example, gets its oil by water from the refineries in the Thames estuary, much of the West Mid- lands is supplied via the Severn, and the East and North Midlands via the Humber and Trent.

The refineries have been made the focal points of our new distribution pattern, and as far as possible deliveries are now made direct to customers within a radius of sixty miles. To serve parts of the country beyond the economic radius of direct delivery from the refineries, water-fed points have been established, either on the coast or on rivers. To meet the needs of areas outside

the range of both methods of delivery, new inland centres have been provided, capable of being fed either by road or rail according to need.

An indication of the growing importance of oi as an energy producer is the fact that the biggest installation we have built for more than twenty years has recently been opened at Teesport (Middlesbrough), largely to fuel the steel and chemical industries in the north-east. In 1956, fo the first time, Britain consumed more fuel oil than petrol.

We have now reduced the 400 distribution centres we had seven years ago to just over 100, each fully equipped to do the job formerly done by a whole cluster of smaller depots.

The principle of 'bigger and fewer' has been extended to our transport fleet. We have reduced the number of vehicles in service by a fifth but nearly doubled their carrying capacity. Moreover, we have been helping petrol stations to put in bigger storage tanks so that they need fewer and less frequent deliveries. In this way we hopo gradually to eliminate the need for a 'fire engine service' altogether, and be able to plan our de- livery runs more methodically.

To deal with another part of our trade mainly handled in small lots—that in agricultural fuels and domestic paraffin—we have created a country-wide system of agents each acting on our behalf in the areas assigned to them.

In physical resources, we have invested about £12} million over the last seven years in the streamlining of our distribution system, and in doing so have raised our productivity per man ( two and a half times. That, we think, is an achieve- ment of importance not only to Shell-Mex and BP but to all its customers, since distribution costs obviously play their part in the ultimate price of the product.