Gasoline and diesel fuel prices both see double-digit increases

EIA & Logistics Management | February 5 2013

The U.S. average retail price of regular gasoline increased 18 cents to $3.54 per gallon, up six cents from last year at this time. This is the largest one-week increase in the U.S. average gasoline price since February 2011. Prices increased in all regions of the nation for the second consecutive week. The largest increase came in the Midwest, where the price increased 22 cents to $3.51 per gallon. The West Coast price increased 19 cents to $3.74 per gallon, and the Gulf Coast price is up 17 cents to $3.33 per gallon. The Rocky Mountain price is $3.14 per gallon, an increase of 16 cents. Rounding out the regions, the East Coast price increased 14 cents to $3.59 per gallon.

The national average diesel fuel price increased 10 cents to $4.02 per gallon, 17 cents higher than last year at this time. Prices increased in all regions of the nation for the second consecutive week. The largest increase came on the West Coast, where the price increased 12 cents to $4.17 per gallon. The Midwest and Rocky Mountain prices are now $3.98 per gallon and $3.84 per gallon, respectively, both 11 cents higher than last week. The Gulf Coast price is up 10 cents to $3.94 per gallon, while the East Coast price increased seven cents to $4.09 per gallon.

In its recently updated short-term energy outlook, the EIA is calling for diesel prices to average $3.97 per gallon in 2012 and $3.84 in 2013, with WTI crude oil expected to hit $88.38 in 2013. It is now $96.17.

As previously reported, regardless of the fluctuation in diesel prices, shippers are cognizant of the impact diesel prices can have on their bottom line—for better or worse. And they continue to be proactive on that front, too, by taking steps to reduce mileage and transit lengths when possible as well as cut down on empty miles. And even through shippers want to adjust budgets in order to offset the increased costs higher fuel prices bring, it is not always an easy thing to manage. The focus from a supply chain management perspective, according to shippers, is more on utilization and efficiency by doing things like driving empty miles out of transportation networks.

Texas A&M: Congestion costs truckers $27 billion

American Shipper | February 05, 2013

In its recently released 2012 Urban Mobility Report, researchers at the Texas A&M Transportation Institute found traffic congestion cost truck drivers $27 billion in 2011. The total cost of congestion for all transport totaled $121 billion, a $1 billion rise over the previous year. The small increase from 2010 belies a more alarming trend. In 2000, traffic congestion cost $94 billion, and 31 years ago, the total only reached $24 billion. Researchers predict that the total cost of congestion will grow to $199 billion in 2020.

The total amount of wasted fuel due to congestion in 2011 remained unchanged from 2010 at 2.9 billion gallons. Carbon dioxide emissions attributed to traffic congestion reached 56 billion pounds in 2011.

Trucking issues aren’t limited to the nation’s highways. Trucks, the report found, only account for 7 percent of the miles traveled in urban areas, but account for 23 percent of urban congestion.

A mix of more efficient traffic management, new construction and better public transportation would help reduce the money lost due to congestion, the report found. New roads, additional lanes on existing roads and developing truck-only lanes would help alleviate some trucking issues. The effectiveness of these measures will, of course, vary from location to location. Regulatory changes could also help reduce truck congestion, researchers found.

U.S. Postal Service ends Saturday mail delivery

American Shipper | February 06, 2013

Starting Aug. 5, the U.S. Postal Service will discontinue Saturday mail delivery in favor of a Monday-through-Friday schedule at an estimated annual savings of $2 billion. USPS ended fiscal-year 2012 with a $15.9 billion loss. The Postal Service’s strong recent growth in package delivery, supported by e-commerce sales, convinced authorities to keep a six-day delivery schedule for packages. USPS has seen a 14-percent rise in package volumes in the past two years. Mail will also be delivered to P.O. Boxes on the same schedule.

Global Logistics News: East and Gulf Coast Longshoremen Reach Deal with Ports, Finally Ending Container Cliff Threat

SCDigest Editorial Staff | February 06, 2013

Deal Still has to be Ratified by Rank and File, but that is Near Certain; Does Anyone Care about Costs to Shippers? It appears that finally the many months of tension regarding a potential strike at East and Gulf coasts is really over. Late last Friday, George Cohen, director of the Federal Mediation and Conciliation Service, which has been mediating in the negotiations between the dock workers union and port interests for months, announced that a tentative agreement had been reached at last.

At issue is the royalty payments date back to a deal done with the union in the early 1960s, as containerized freight started to take hold, and port workers were concerned the resulting improved handling of freight would lead to massive job losses. So, they were able to negotiate a fee that would be paid by ports and terminal operators on each container that moved through the port – the idea being that this would provide compensation for the loss of jobs that each container in effect represented. These royalty payments, first started in the late 1960s, reached $211 million in 2011 alone, averaging some $15,500 per worker at the 15 affected ports. With the increased tonnage and a general decline in the number of ILA members in the past 20 years or so, payments per ILA member have continued to rise. At Savannah, for example, they increased from $6,028 in 1996 to nearly $36,000 per worker in 2011. Naturally enough, the union takes a slice, bringing the ILA itself more than $20 million in 2011.

PwC’s 16th Annual Global CEO Survey Reveals Continued Focus on Supply Chain

SCMR Editorial | January 29, 2013

The latest results on supply chain and operations from PwC’s 16th Annual Global CEO Survey, suggest that U.S.-based CEOs remain reluctant to abandon cost-cutting until the economy shows further signs of strengthening. The 16th annual survey, based on the responses of 167 US-based CEOs, lead to the following observations:

Operations:

• In 2012, 81% of CEOs implemented cost-cutting measures; in 2013, 71% of CEOs are planning cuts
• 44% of CEOs are investing to increase the operational effectiveness of their company. 29% of CEOs plan to outsource a business process or function. 17% of US CEOS plan to “insource” a previously outsourced business process or function. Business are looking for opportunities for innovation and competitive advantage in their operating model to offer customers more, and to do so at a lower cost.

Other points made in the Supply Chain survey include:

• 90% of US CEOs see economic volatility ahead. In 2013, 53% of US CEOs plan to strengthen engagement with key suppliers to both minimize costs and maximize supply chain flexibility and delivery performance
• Globally, industries most focused on supply chain engagement include:
  1. Industrial manufacturing (84%)
  2. Consumer goods (80%)
  3. Energy, oil, and gas (79%)
  4. Technology (76%)
• 43% of US CEOs say 2013 will bring more shifts in consumer spending behaviors
• 41% of US CEOs are concerned about energy and raw material costs
• Sustainable supply chain – reducing the company’s environmental footprint – is of interest to 43% of CEOs.

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Study Suggests Shorter, Intra-Regional Routes Develop as Near-Shoring Becomes More Attractive

Air Cargo World | January 30, 2013

An international supply chain survey conducted by BDP, its Centrx consulting unit and Temple University’s Fox School of Business suggests that historic global trade flows from manufacturers in the East to consumers in the West are undergoing a gradual shift toward shorter intra-regional routes as companies seek to reduce the distance between the production and consumption of their goods.

Researchers surveyed more than 200 companies throughout the world, with annual revenues ranging from $100m to over $10bn. Of the supply chain executives surveyed, 87 percent indicated their companies are considering moving production closer to end markets, or have already begun to do it.

“There are three principal reasons for this phenomenon,” said Arnie Bornstein, BDP’s executive director of marketing and corporate communications. “First, emerging nations are starting to trade with one another, shortening world trade flows. Second, Asia, Latin America and the Middle East have growing middle classes driving demand for consumer goods. And third, it makes both operational and economic sense to have shorter supply chains, where goods are produced and consumed within the same part of the world.”

UPS to Rollout Fleet of Electric Vehicles

Supply Chain Brain | February 05, 2013

UPS Inc. announced on Feb. 5, 2013, the deployment of 100 fully electric commercial vehicles that will be delivering packages around the state. The announcement will help implement Governor Jerry Brown’s Executive Order to achieve widespread deployment of zero emission vehicles throughout California. “These all-electric vehicles remind us that California continues to be a dynamic center of innovation,” said Governor Brown. “These trucks were built here, they’ll be driven here and they’re already changing the way business is done here – cutting emissions and eliminating the need for tanker trucks worth of fossil fuels.”

These UPS electric trucks will reduce the consumption of conventional motor fuel by approximately 126,000 gallons per year. Additional benefits include reduction of carbon emissions and noise. The vehicles have a range of up to 75 miles and primarily will deliver packages to customers in Sacramento, San Bernardino, Ceres, Fresno and Bakersfield.

“We currently operate more than 2,500 alternative fuel vehicles worldwide with a variety of hybrid, electric and natural gas technologies, making UPS the leader in logistics sustainability,” said Myron Gray, president of U.S. operations for UPS.

Weather and other events can cause disruptions to gasoline infrastructure and supply

EIA | February 1, 2013

The gasoline supply chain has five main parts: producing or importing crude oil; importing gasoline; refining the crude oil into gasoline; blending gasoline with ethanol at distribution terminals; and selling the gasoline at retail stations. Between each part, various storage and distribution logistics steps are involved to move and store both crude oil and gasoline. Disruptions can affect any part of the supply chain, and during major disruptions such as hurricanes or power outages, the Department of Energy issues situation reports to provide information about a disruption’s effect on gasoline supply and other energy infrastructure and supply issues.