Impacts of Fuel Price Increase on Logistics and End User Assignment - 2

Impacts of Fuel Price sum up on Logistics and End User - Assignment ExampleThe researcher states that over the past decades, logistics exe have intercourseives tried to cut down inventory cost by moving the goods as fast as possible through the supply chain. However, growing render costs changed the whole scenario, and hence today companies tend to keep more than than inventories on hand. In addition, organizations consider shipping larger loads and increasing buffer stocks as both potential ways to fight mounting fuel prices. Reports indicate that companies are relying on more fuel-efficient modes of goods vogue such as rail and water in response to rise in fuel costs because those transportation facilities are beneficial to ship larger loads and to sign congestion. In addition, the logistics industry focuses more on short sea shipping and moving freight along inland waterways to mitigate the unfavourable effects of growing fuel prices. The drastic increase in inventory cos ts is a lease impact of rising fuel costs. Increased product density is another major consequence of hiking fuel prices in the logistics industry. Logistics sector would be compelled to establish central warehouses when fuel prices increase constantly. Companies may be squeeze to depend more on in-sourcing in order to trim down logistics costs, and the situation, in turn, would drive changes in warehousing and distribution. In the worst case, firms may consider relocating their production at customer plant sites to reduce transportation costs or near-shoring to achieve optimized inventory levels. In the context of increasing fuel prices, logistics departments of competing firms may operate collaboratively to cut down unnecessary transportation costs. Gross, Hayden, and Butz point out that adverse increase in fuel costs over the past few years have resulted in the optimal phase of centralization of logistics networks. The authors add that the optimal configuration of logistics ne twork is greatly influenced by varying fuel prices.