Sustainable fuel gauge
All indicators point to a rise in fuel costs during 2011, especially with the ongoing political crises in the oil-rich Middle East and North Africa, and recent natural disasters that have ravaged Asian industrial bases like Japan, China and New Zealand.
The risk to American shippers' fragile bottom lines is potentially high because spending more money on fuel to move their goods domestically and abroad will likely zero-out any benefits from lower transportation rates and ultimately dampen consumer confidence.
By mid-March, the cost per barrel of oil climbed above $100. Carriers of all modes are feeling the pain and will press all shippers ' large and small ' to share in the cost burden. The shipper who doesn't pay its share of the fuel bill will likely get second-rate service from the carriers.
However, high fuel prices shouldn't be a distant memory for shippers. During the run up to the global financial meltdown in 2008, the price of oil reached a whopping $147 per barrel. And it shouldn't be a surprise that fuel prices could increase once again with the recovering economy still in a vulnerable state.
Some shippers, even before the crisis, wisely began to tame their fuel consumption by instituting so-called sustainability programs. The goal then was to get a grip on carbon emissions by primarily reducing fuel burn. Some of this effort was based on concerns that governments would impose strict antipollution measures if the industry did nothing to curb emissions. Pressure from shippers was, in turn, placed on transportation and terminal services providers to do the same. Many areas with energy reduction potential were explored, including warehouse management, cargo handling, route management, slow vessel steaming, and more efficient trucks.
Shippers that stuck with these programs through the recession will undoubtedly be better equipped to weather a rise in fuel costs, compared to those who have done nothing. While the competition plays catch up, shippers that already have sustainable fuel gauges in place within their supply chain management will focus on attracting and maintaining customers in a market that they're better prepared for.
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