April 27, 2022
If the past few years haven’t been enough of a rollercoaster, one global incident continues after another. And the shining star this month: rising fuel prices.
This year gasoline and diesel prices have soared to record highs in many countries across the world. Fuel prices affect every part of our lives, and we have to adjust to the unforeseen spikes and drops.
One area that is particularly affected by fuel price trends is logistics companies. Delivery is directly impacted, so logistics companies should be prepared for everything.
Let’s take a look at this global trend and how delivery companies can prepare to fight increasing fuel prices.
Oil prices are at their highest point since 2014, so what is going on?
Firstly, the COVID-19 pandemic suppressed fuel prices drastically. Companies slowed drilling, trying to not over-produce with such low demand. In addition, natural disasters and political unrest in resource countries have affected prices.
Of course, one main source of price increases is the unpredictable situation in Russia and Ukraine. Roughly one of every 10 barrels used around the world is produced by Russia. So it is safe to say that the oil market is heavily affected by the conflict in Ukraine.
The U.S. moves over $17 trillion in goods domestically each year! So we can bet that the trucking industry is here to stay, but will it be able to survive peaking gas prices? Let’s look at the most common impacts of this trend on logistics companies.
Rising fuel prices directly affect delivery companies, which rely on fuel daily for their operations. When prices are high, it can force carriers to either raise their prices or take a financial loss. And if one party raises their prices in the supply chain, it affects every other party involved like a domino effect. This makes budgets tight, as companies are forced to find ways to cut costs.
Another impact of high oil prices is the reduction in business. Firstly, if a company has to raise prices due to higher delivery costs, the increase in cost will be passed to the consumer. When services become more expensive, consumers are likely to stop buying as much. In addition, companies may be trying to cut expenses, which could also lead to a decrease in frequency and reduction in services.
Rising fuel prices force everyone to think about their own carbon footprint, as well as their dependence on the unpredictability of oil. Companies may start to look into alternative resources to make their supply chain less dependent on fuel. Also, customers may seek out greener companies that aren’t as affected by the spikes in prices.
Although it may seem as if we are all inevitable victims of rising fuel prices, there are solutions out there. Logistics companies would be wise to look into the benefits of route optimization, especially during record-high oil prices.
Route optimization is the most efficient solution when it comes to time and costs, because it automates route management and takes into account all variables affecting delivery. This can be extremely beneficial during times of such extreme prices, because every gallon counts, which means every mile counts.
With a manual route planner, companies not only lose time planning, but they lose money with missed deliveries, backtracking, and unnecessary route overlaps. However with dynamic fleet selection, order allocation, and correct multi-stop visit sequencing, optimal route planning results in 15-25% savings in mileage costs.
There’s no better reminder of how dependent we are on nonrenewable resources than seeing gas prices climb in real time. It gives companies, like delivery logistics services, the opportunity to reevaluate their supply chains.
With logistics optimization, last-mile delivery companies are able to reduce their carbon footprint with the most efficient and eco-friendly routes. More efficient routes translate to lower mileage, which means less carbon emission by trucks.
Who knew customer relations could help you fight against high gas prices!
In such an unstable time of our world, customer loyalty can be vital. Companies need to solidify customer relations that will outlast changes, such as increased prices due to fuel trends.
With supply chain optimization, companies can personalize their delivery service with real-time communication and options for last-minute changes. And with these features, customers are much more likely to stay loyal.
Logistics companies may feel helpless in a world of uncertainty and fuel prices that don’t seem to stop climbing. However, there are solutions to help fight these increasing fuel prices.
With automated route planning software and streamlined supply chain management, companies can reduce their independence on fuel and create the stability needed for these unsure times.
Optiyol cloud-based route planning software is here for you with its comprehensive data model designed to enable you to improve delivery management processes seamlessly.
Check out Optiyol and start optimizing your services now.
