OPEC, Inflation, and the Unpredictable Cost of Fuel

Spend Matters welcomes another guest post from NPI (www.npifinancial.com), a spend management consultancy, focused on delivering savings in the areas of IT, telecom, transportation and energy.

Earlier this month, OPEC surprised virtually everyone when they failed to gain consensus to increase oil production. However, oil prices are still far lower than they were two months ago. If you're a shipper keeping an eye on transportation costs, these are interesting times to say the least.

The good news is that the panic that happened when oil hit $115 a barrel is gone. This is a great time to avoid complacency, and:

  1. Optimize every carrier contract. What terms and conditions can be improved today?
  2. Benchmark pricing. Have you confirmed -- rather than assumed -- that you're paying the lowest price? Have you reviewed and justified every surcharge and accessorial?
  3. Re-evaluate shipping method selection. Are you choosing higher-cost shipping methods when you could achieve the same delivery time for less?

The first half of the year has been very volatile, and you can't control the price of fuel or economic conditions, but you can optimize your position going into the second half of 2011.

-- John Haber, EVP of Transportation, NPI

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