One of the most critical items on the P&L expenses of a logistics company is fuel, which makes one of the largest components of the fleet budget. The operations of a logistics company very much depends on fuel. The rising fuel cost can impact the profitability of the business. While the price of crude oil is much cheaper in the previous years, the price today is still sensitive to economic fluctuations. This may pose great uncertainties for managers in cost accounting.
To save cost, in the long run, logistics companies should consider hedging their exposure to the rise of aviation fuel by the use of options. Conversely, they should invest in more fuel-efficient vehicles, such as biodiesel and electric vehicles to lower the fuel cost. Besides cost efficiency, switching to alternative fuels would also help contain environmental pollution.
Increase use of route optimisation and mobile apps can also positively impact fleet fuel budgets.
Our advisory professionals are able to help you in the following areas:
- Identify the key energy costs in logistics and transportation business
- Carry out commodity hedging
- Possible modifications to the business model to manage fleet budget more effectively
Find out more about our advisory services.