Companies around the world are feeling the effects of rising fuel costs, especially retailers, distributors, carriers and logistics service providers. Diesel costs in May 2022 verses last year were up 65% in the U.S., 58% in Canada, 28% in Germany and 36% in the U.K.
Despite the challenges higher fuel costs bring to these industries, few companies have made significant efforts to address the issue. While fuel costs are normally cyclical, today’s prices are unlikely to resolve soon.
Fortunately, there are ways to mitigate the worst effects of the cost burden, and actions companies take now to reduce the impact of fuel costs can even reap benefits down the line when prices eventually relax.
Though demand is a large driver of oil prices, it’s far from the only contributing factor. Oil prices are set by the global market, and aren’t necessarily controlled by a single country. Additional factors include where the oil is sourced and refined and the fact that many grades require specific processing.
The Russian invasion of Ukraine and subsequent government sanctions have disrupted global supply chains beyond the point of easy repair. Even if there is a cessation of hostilities, it’s unlikely that sanctions will be removed in the near future. Oil prices — and fuel prices — will thus continue to rise.
In order to address high fuel costs, the entire company needs to be involved in the solution, not just the transportation department. Following are 11 things you can do to alleviate the effects of rising fuel costs.
Rising fuel costs can be a significant burden on companies struggling to keep pace with a tumultuous supply chain. With these tools, though, businesses can make the best of the situation now and set themselves up for ongoing success in the future.
Chris Jones is executive vice president of industry and service at Descartes.
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