June 10, 2008
OIL JUMPS 8% TO A RECORD $139 PER BARREL
With the sudden spike in oil and the overall record prices for diesel, it's no surprise that we're getting calls asking about the price of fuel, fuel surcharges and strategies for managing costs in this environment. These calls attest to a very simple, yet powerful fact: Most corporate supply chains are not designed to run on diesel that costs $4.70 per gallon.
The purpose of this On the Record session is twofold. First, I'd like to invite you to listen to a brief discussion between myself and Chuck Taylor, President of Awake Consulting. He is an industry veteran who has done a considerable amount of research about oil and has spoken throughout the country and written articles about the cost of diesel and its impact on supply chains.
Chuck stopped by my office when he was in town recently. When we started talking about what is going on in the industry, it dawned on me to ask Chuck if we could record some of his thoughts about oil and the price of diesel. As you listen to Chuck talk about the price of diesel, or potential diesel shortages, you may be thinking: "This will never happen." If so, be forewarned: Many of Chuck's predictions about the oil and energy situation in this country have proven to be pretty accurate. For example, a couple of years ago, Chuck predicted that oil prices would top $100 per barrel by 2008.
The second reason for this On the Record session is to let you know that we are putting together an Executive Briefing conference call to discuss the impact of high oil prices on supply chains. Chuck has agreed to be part of a panel of industry experts that will be sharing some very valuable information. We will let you know when we have the date scheduled.
Finally, let me end this on a personal note. We are very aware that the increase in the price of diesel has left carriers and shippers scrambling to control their costs. Since the beginning of the year, fuel surcharges on LTL shipments have increased freight costs by 11% - 15%; for truckload shipments surcharges have increased costs by thirty to forty-five cents per mile. We're very sensitive to the calls from customers who have stated the following: "We need your help in controlling our freight costs. We need to do something and we need to do it now."
We are committed to supporting our customers in achieving this goal to reduce costs. We will continue to send out Briefings and On the Record session to keep you apprised of what is happening and options you can consider to manage your transportation costs. As you know, we send out material on an "as needed" basis. When things were relatively calm, you didn't receive too many; however, with everything that is happening today, you have our promise that we will do our best to provide relevant, important information that gives a better understanding of what is happening and what you can do for your company.
Mike Regan
TranzAct Technologies
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