How Falling Bar Fuel Surcharges Play Role In Your Steel Sourcing Strategy

Continued from Part One.

With the global economic crisis dragging commodity prices — namely oil prices — down, how long will falling bar fuel surcharges last?

It’s hard to say, but one thing’s for sure: jumping on lower bar fuel surcharges and locking in lower steel prices as a buyer is essential.

Fuel Surcharges as a Plank in your Sourcing Strategy

Although written with the airline industry in mind, this article contains a headline lesson that’s important not to forget for any buyer, including steel buyers: make sure fuel surcharges occupy a spot on your radar when sourcing materials, as they are an increasingly essential component of a company’s spend.

Carlson Wagonlit Travel, the UK’s biggest travel management company, recently put out a report highlighting how travel buyers can cut down on their spend, citing fuel surcharges and “ancillary product” spend as the key things to track.

According to the article, “on the subject of fuel surcharges, the report said that these had become ‘commonplace, less transparent and more expensive over the last few years…the surcharge now appears to be disconnected from the actual price of fuel and unfairly targets the business segment more than leisure.’”

Although these points may not necessarily reflect how the steel industry does business, it is true that companies — be they distributors, end-users, etc. — must keep a close eye on fuel surcharges as part of their larger spend, so they don’t become less transparent and more expensive.

An excellent way to benchmark bar fuel surcharges for the primary region you do business in or the region(s) you buy from: track them weekly on the MetalMiner IndX℠ 

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