Fuel surcharges are going…

November 13th, 2007 at 06:35am David Bush - Iasta

I have no idea, but SCDigest tried to take a stab at it recently and, of course, they do not know either. However, this article does a nice job of presenting two sides of the issue. We deal with freight and fuel surcharges frequently, here at Iasta, because we have many clients in the food service, retail, manufacturing and CPG industries. These global companies are constantly dealing with the impact of freight to landed cost.

The information in this story describes the Goldman Sach’s view that indicate crude oil will be $95 by the end of 2008. (I remember when $100 barrels of oil where considered doomsday scenarios no more than 2 years ago!). This would be a catastrophic development.

However, ISI Group’s - Mike Rothman, predicts more sane levels of $45 a barrel and has a deep portfolio of data to back up his claims. The summarization at the end is equally non-conclusive by stating, “So for which scenario should shippers plan? It’s impossible to say, of course, other than to note Rothman’s view is based almost exclusively on supply-demand data and historical patterns. Others say “It’s different this time.” One thing we do know is that geopolitical events can have a huge impact on perceptions and can also drive prices higher regardless of the fundamentals.”

Of course, if we knew what was going to happen, it wouldn’t be very fun though, would it? Plus, how are all those traders going to make their Ferrari payments if they are not moving the price of oil around on a daily basis??

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Entry Filed under: General, Global Supply Issues/Risk