Fuel Price Volatility Continues to Pose Challenges for Supply Chain Managers

Prices have risen a cumulative 12.8 cents over the last three weeks.
By SCMR Staff
February 05, 2013 - SCMR Editorial

Diesel prices shot up nearly 10 cents to $4.022 this week, according to the Department of Energy’s Energy Information Administration (EIA).

The 9.5 cent gain represents the largest weekly increase since the price moved up 6 cents to $4.034 the week of November 11, and it is the first time weekly prices topped the $4 per gallon mark since reaching $4.027 the week of December 3.

Prices have risen a cumulative 12.8 cents over the last three weeks. Prior to that, prices had been down for seven straight weeks, falling a cumulative 14 cents during that span, and for 12 of the previous 13 weeks.

Since reaching a more than four-year weekly high of $4.15 per gallon the week of October 15, diesel prices have gone down a cumulative 13.2 cents. What’s more, prices have been below the $4 per gallon mark for eight consecutive weeks prior to this week.

The average price per gallon is up 16.6 cents compared to a year ago at this time and ahead of the 7.7 cent annual gap from a week ago.

In its recently updated short-term energy outlook, the EIA is calling for diesel prices to average $3.97 per gallon in 2012 and $3.84 in 2013, with WTI crude oil is expected to hit $94.26 per barrel in 2012 and $88.38 in 2013.

As previously reported, regardless of the fluctuation in diesel prices, shippers are cognizant of the impact diesel prices can have on their bottom line—for better or worse. And they continue to be proactive on that front, too, by taking steps to reduce mileage and transit lengths when possible as well as cut down on empty miles.

And even through shippers want to adjust budgets in order to offset the increased costs higher fuel prices bring, it is not always an easy thing to manage.

The focus from a supply chain management perspective, according to shippers, is more on utilization and efficiency by doing things like driving empty miles out of transportation networks.



Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Even though China’s costs have risen and the U.S. has now surpassed Mexico as the preferred locale for relocating offshored manufacturing, advantages can be fleeting and the challenges great

Memphis-based FedEx reported solid fiscal second quarter earnings results today. Quarterly net income of $616 million was up 23 percent annually, and revenue, at $11.9 billion, was up 5 percent. Operating income at $1.01 billion was up 22 percent.

UPS said this week that it has added significant space to some of its North America-based distribution facilities, which the company increases the total size of its supply chain solutions network size by roughly 1.2 million square-feet. The company’s total global supply chain solutions network is comprised of 596 facilities and about 32.8 million square-feet. UPS offers various services at these facilities, including: warehousing and fulfillment inventory, transportation and returns management; custom kitting and packaging; and store-ready displays.

A week ago, the average price per gallon of diesel gasoline saw its steepest decline in more than two years, when it fell 7 cents to $3.535. This week took that decline a step further, with the Department of Energy’s Energy Information Administration (EIA) reporting that the average price this week fell 11.6 cents to $3.419 per gallon.

With an eye on further expansion of its e-commerce business and related reverse logistics processes, transportation and logistics bellwether FedEx last night announced it has inked an agreement to acquire Pittsburgh-based GENCO, a third-party logistics (3PL) services provider specializing in product lifecycle and reverse logistics.

Article Topics

News · 3PL · Energy · Fuel · All topics

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.