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Soaring fuel prices pushes logistics industry in the red
23
Aug '11
A World Bank report forecasts that soaring prices of fuel is one of the main reasons for hindering global economic recovery is 2011. This is causing spillover effects on other industries as well.

Logistics industry is currently going through difficult times. Managers face the pressure of delivering goods with speed and flexibility, while cutting operating costs. Sky rocketing fuel prices, reductions in economic activity, supply chain changes, and fluctuations in currency values are affecting the operations of industries.

Fuel costs account for almost 50–60% of the total logistics costs. Fuel prices are impacted by excise rates. Average impact of fuel on road transportation is around 30% of the total costs. A 10% increase in the price of crude oil would cause a 1% increase in the transportation costs.

Redesigning the logistics network with emphasis on minimizing transportation costs has the probability to giving either positive or negative results. Adopting companies must evaluate the trade-offs between the distribution points, and assess the benefits of doing business with smaller distribution centers.

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Fibre2fashion News Desk - India

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