Annual Review & Outlook 2013: Procurian

Ed SandsThe most important logistics factor for 2013 isn’t what has changed, but what hasn’t: the high cost of fuel. Diesel fuel prices are $3.50 to $4.00 a gallon and are expected to remain high. Although corporate sustainability initiatives focus on reducing consumption, shippers also face new pressures from socially savvy environmental organizations and their targeted campaigns. And, uncertainty remains about whether federal mandates on renewables will result in stubbornly high diesel prices despite a recent big drop in oil prices.

Fuel represents 30 to 40 percent of costs and must be dealt with aggressively to avoid margin erosion. Pending regulatory changes on truck driver hours of service will pressure capacity and increase costs.

To combat these challenges, progressive shippers are increasingly relying on more dynamic fulfillment networks to keep costs low and service high while leveraging alternative modes such as intermodal rail and dedicated natural gas-based trucking assets.

Along with increasing fuel costs, public interest in fuel is creating another set of challenges. Data on carbon footprints, load shifts and alternative fuel analysis will become sustainability “table stakes.” New demands are emerging that require tracking specific sources of fuel such as those derived from Canada’s Tar Sands mines.

To optimize fuel strategies, protect their company’s brand image and be able to respond quickly to disruptive supply chain events, shippers will need to have a comprehensive and readily accessible source of logistics intelligence.

Ever-changing regulations, supply chain disruptions, consumer pressures and market volatility will require companies to establish an increasingly sophisticated level of market intelligence and analytical capabilities. Companies with access to the right information and the right capabilities will be able to optimize their plans against a dynamic market landscape and position themselves to meet the challenges of the year ahead.

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