Purchasers save on transport despite fuel costs

4 June 2008
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05 June 2008 | Paul Snell

Buyers can still save money when buying transport services even though the cost of fuel is rising.

Analysis of tenders, carried out by online sourcing firm Trade Extensions, revealed in the 10 months up to March 2008 buyers who tendered for shipping services saved up to 10 per cent, and those tendering for transport routes within Eastern Europe saved as much as 14 per cent on original costs.

On average each tender attracted bids from 12 carriers, and routes from Eastern to Western Europe received bids from as many as 20 suppliers. Tenders analysed by the firm were worth more than ?300 million (£237 million) in total.

Joe Critchley, vice-president of sales at Trade Extensions, told supplymanagement.com although fuel costs were high, other factors were influencing falls in market prices.

"What we saw in 2006 was a different market for transport. There was a lack of capacity, a hot summer, economies were doing well, demand was high and there was a shortage of transport," he said. "Now even though the fuel price is high, it is largely a buyers' market following expansion."

He added the firm was increasingly advising clients to place a "fuel price mechanism" in their contracts with suppliers. This activates a price increase for the supplier when fuel reaches a certain level of cost.



SMjun2008

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