Domestic and international forces bringing no respite; NatRoad provides tips for operators

With diesel estimated to comprise 99 per cent of trucking and half of the commercial vehicle industry in Australia, according to the Australian Alliance for Energy Productivity (AAEP), the recent price trend at the pump has been an unwelcome sight for most operators.

And, with alternative fuels involving one or more economic or operational compromises, including “lower energy density, higher price, reduced driving range (or payload penalty), lower thermal efficiency, or limited availability (of trucks, fuel, or refuelling facilities)”, there may be no short-term magic bullet other than weathering the storm and eking out efficiencies within the supply chain.

That’s according to the National Road Transport Association (NatRoad), which sees no respite in sight due to domestic and international influences.

The Australian Competition and Consumer Commission (ACCC) cites a weaker Australian dollar (down from around 80 US cents in January to around 70 at present) and supply-side constraints, including the Organization of the Petroleum Exporting Countries (OPEC) cutting production by 1.2 million barrels a day since 2016, as placing upwards pressure on prices, which have risen by 15 per cent in that time.

 

That is combined with an upcoming initial public offering (IPO) of Aramco, the Saudi Arabian state-owned oil company, which is “reportedly targeting crude oil prices near $80 a barrel in preparation for the IPO”, NatRoad quotes Commonwealth Bank mining and energy commodities analyst Vivek Dhar.

By comparison, a barrel was as low as US$35 in February 2016, the lowest it had been this century since the early 2000s.

TIPS FOR TRANSPORT

NatRoad has provided an information sheet with cost-saving and efficiency-maximising suggestions for operators to consider. They include:

  • Automation and technology: Regulating, automating and optimising manual processes can reduce staff requirements, centralise production operations to provide scale and control costs. Real-time software can help businesses better understand where trucks are going, the routes they are taking, and where opportunities for improvement lie
  • Network optimisation: Opening or closing distribution centres or moving facilities to more optimal locations
  • Fuel management: Streamlining routes, making vehicles more aerodynamic, and considering perhaps more environmentally friendly fuel remixes or alternatives
  • Reducing idling time: Reducing the idling time of vehicles saves fuel while also reducing engine wear and associated maintenance costs, which will also help save costs. On average, service fleets idle somewhere between three to four hours a day. By simply reducing idle time, fleets can begin to see measurable cost savings
  • Shipping practices: Consolidating shipments between multiple brand owners can reduce costs and increase shipment density
  • Rightsizing: Identifying the right vehicle to the right driver is another way to rein in fuel costs. It’s about creating an alternative option to reduce fuel spend to have the right vehicle for the right application.

The ABC also notes fuel comparison apps like MotorMouth and GasBuddy can help find better deals, while independent chains tend to be cheaper.

While barrel prices reached a historical high of nearly US$150 in 2008 – albeit the Australian dollar was tracking at near parity with the American dollar then – Dhar doesn’t see prices quite reaching that level. He predicts prices won’t reach US$100 a barrel.

It proves little consolation for many transport industries, with additional factors such as the drought leaving many operators feeling the pinch in Australia.

“Fuel costs are a significant factor for all businesses operating in Australia’s freight logistics sector – across all modes of freight transport. Those costs end up feeding into all parts of the supply chain, and ultimately, into consumer prices,” Australian Logistics Council interim chief executive Lachlan Benson recently tells Fairfax

Extracted from ATN