According to Breakthrough Fuel, as companies start a New Year, they will increasingly explore how changes in both the domestic and global fuel marketplaces are impacting their supply chain. It estimates that, on average, nearly 40% of any product’s freight cost comes from fuel costs.
“In 2013, opportunities to manage energy costs will be a prime focus for supply chain professionals,” said Craig Dickman, CEO of Breakthrough Fuel.
He advised companies to improve understanding of how changes in the fuel marketplace affect business supply chains. Central to this was to ensure that fuel management programmes are up to date.
“Agree on how much volatility in fuel prices you can afford. How much can your product’s cost move before you are uncomfortable? Fuel costs are a leading reason behind missed margins and budgets,” Dickman said.
“The rules surrounding fuel are changing. Very specific changes are taking place in a variety of geographic areas. For instance, low carbon standards in California or required bio-blends of diesel in certain states. Know how much of your business is going into markets impacted by local or regional changes.
“Geopolitical risk throughout the world has greatly impacted the fuel market and it’s proven costly for companies,” added Dickman. “Plus, local and regional influences caused fluctuations in fuel prices.”
As for 2013, Dickman sees the upward fuel price trend continuing. There will be higher than normal volatility, with significant price swings, he predicted.
