Shippers Make Changes To Counter Higher Fuel Prices

August 25, 2008

Increasing fuel prices have inspired - perhaps compelled - many companies to restructure their operations in order to diminish erosion of their profit margins, according to eyefortransport's "The Impact of High Fuel Prices on Logistics" Report 2008.

Email this story Print this post Add your comments

Increasing fuel prices have inspired – perhaps compelled – many companies to restructure their operations in order to diminish erosion of their profit margins, according to eyefortransport’s “The Impact of High Fuel Prices on Logistics” Report 2008.

Over 800 shippers, 3PLs and carriers were asked their views on how high fuel prices are realigning their transportation and logistics strategies and networks and how are they tackling the challenges of higher fuel bills.

More than half of the respondents said that inventory costs are being pushed closer to the final destination. For years, logistics executives have focussed on minimizing inventory costs by moving goods through the supply chain as quickly as possible.

Now rising fuel costs are making some companies think about keeping more inventory on hand, but not all are ready to take that step. Over 40% said that larger loads are being shipped and buffer stocks increased. Load integration and multi-modality are key issues for that 40% of respondents.

Companies are using more fuel efficient modes such as rail and water which allows them to ship larger loads and reduce congestion. Short sea shipping and moving freight along coasts and inland waterways is proving to be a very strong alternative for the logistics industry.

More than one-third of the respondents said that companies have developed more flexible manufacturing strategies to help alleviate the impact of higher fuel costs.

Near shoring is helping logistics executives to reduce inventory, optimize inventory and avoid congestion. Companies are looking for the next low-cost countries which close in distance will allow them to boost their profits by avoiding the fuel price dilemma. Of course, the geographic, cultural, labour, economic and political variables have become key for making supply chains more flexible.

There is a difference of opinion on whether to centralize warehousing and distribution activities (27%) – which reduces capital costs, or to increase the number of regional facilities in order to reduce warehouse-to-market transportation costs.

A number of respondents said that they evaluate alternative transport options when lead-time is not an issue, i.e. road / rail / sea / multi-modal transportation instead of airfreight, while others have expanded their use of 3PLs / 4PLs, particularly those with shared-user facilities and vehicle fleets.

Other actions taken include route optimization and improved fleet utilisation; reduced delivery frequencies; continuous redesign of logistics / supply chain / distribution networks; reduction of production capacities; delaying of projects; and increased local sourcing.

Email this story Print this post Add your comments

Advertisers

Stay competitive through sustainability.

Find out how at the SAP Sustainability Resource Center. >>

Unclear about the EPA's new GHG Rule?

Learn how it could affect your business. >>

EPA mandatory emissions reporting starts Jan 1st

CSA Standards can help your organization get ready for compliance. Find out how. >>

Survey Results: Product Environmental Compliance Best Practices

How to achieve compliance at a significantly lower cost. Download the full report. >>

Join the Discussion

Recent Daily News [ see all ]

11/24/2009
11/23/2009
11/20/2009

Charts [ see all ]

Government Intervention Required to Drive “Green” Technology

62% of Firms Assign Environmental Team for Green Goals

European Paper Industry Cuts CO2 Emissions by 42% since 1990

S. America Takes Most Urgent View of Copenhagen Talks

Jobs

View All Jobs >> Post a Job >>

Comments and Discussions

Jetset1 on Energy-Savings Claims Don’t Add Up for Microsoft’s Windows 7
"This article is wrong. If your PC is less than a few years old,..."

Iain on McD’s in Germany Trades Red for Green In Logo
"Now if only their food was healthy and nutritious."

Phil on Climate Scientists Alleged to Have Manipulated Data
"After reading all the comments it seems obvious, to me, that the individuals populating..."

Marc Hudson on McD’s in Germany Trades Red for Green In Logo
"where will the stone be mined from- under what labor rights conditions? Will the..."

Clyde on Climate Scientists Alleged to Have Manipulated Data
"This just shows all the Global Warming freaks out there are a bunch of criminals cut from..."

Car Rental Singapore on News Corp. Taps Hara for Energy Efficiency, Environmental Management
"Energy reduction is a good thing. We need to save the..."

Meme Mine on WWF, WRI Make Last-Minute Pitches on Climate Change
"To the voting public, what the scientists say is irrelevant anymore for if you read..."

Environmental Leader