In 2008 one of the key cost drivers was fuel surcharges, which reached unprecedented levels and threw off many a transportation budget. Exhibit 1 shows the monthly fuel surcharges for Ground and Air services for 2008 and 2009 year-to-date. 
     
    Exhibit 1: Fuel Surcharges by Month
    2008            Jan        Feb        Mar      Apr     May       June        
    Ground        6.25%   6.25%   6.00%   6.25% 7.75%    8.50%  
    Air              19.50% 18.50% 18.50% 20.00% 25.00%  28.00% 
     
    2008           July       Aug      Sept      Oct       Nov        Dec
    Ground      9.50%  10.25%   10.50%   9.25%   8.25%    6.75%  
    Air            32.50% 34.50%   34.50% 27.00%  28.50%  15.00%
    2009         Jan         Feb         Mar        Apr
    Ground    4.75%     3.25%      2.75%    2.50%
    Air           7.50%    1.00%       2.50%     0.00%
    The reaction from the shipping community to last year's cost is still being felt today. It is one of the reasons companies are re-bidding their transportation business and developing new contract terms in an attempt to control this variable cost component. But is it possible to take a proactive approach instead of a reactive one in addressing this topic?

    The surcharges for Ground and Air are based on the On Highway Diesel Fuel and Gulf Coast Jet Fuel indexes. Here is the 2008 and 2009 year-to-date numbers that are used to set the carrier surcharge
     level.
    Exhibit 2: The Cost Drivers on Highway Diesel Fuel and Gulf Coast Jet Fuel Indexes
    2008           Jan       Feb       Mar          Apr         May      Jun
    Diesel         330.8    337.7    388.1       408.4       442.5    467.7
    Jet Fuel      260.47   272.82  312.45     336.46      373.76  387.82
     
    2008          Jul          Aug       Sept      Oct         Nov         Dec
    Diesel        470.3      430.2      402.4    357.6      287.6     244.9
    Jet Fuel      388.63   327.06    339.33   231.47    187.96    137.51
     
    2009          Jan         Feb
    Diesel       229.2     219.5
    Jet Fuel    146.92   125.94
     
    What may be new information and of interest to you is the Energy Information Administration's Short-term Energy Outlook. Published monthly, it could provide you with some insight into future cost levels for diesel and jet fuel. See Exhibit 3.
    Exhibit 3: 2009 Monthly Department of Energy, Short-term Energy Outlook
    Janaury         FirstQ      SecondQ  ThirdQ    FourthQ
    Diesel              228             229         225        224
    Jet Fuel           153             159         155        155
     
    February        FirstQ       SecondQ   ThirdQ  FourthQ
    Diesel              228              231         226       227
    Jet Fuel           156              160         156       158
     
    March           FirstQ         SecondQ   ThirdQ    FourthQ
    Diesel             219                213         218        224
    Jet Fuel          146                140         148         155
    Applying March's forecast numbers to the carriers' 2009 Fuel Surcharge charts (available on their website) we can use the following chart to estimate fuel surcharges for the remainder of this year:


                             Diesel index / Ground FSC  Jet Fuel index / Air FSC

    Q2                                  213 = 2.25%                          140 = 1.50%

    Q3                                  218 = 2.50%                          148 = 2.50%

    Q4                                  224 = 2.75%                          155 = 3.50%



    The energy price trend at this time is stable with a forecast of modest increases through 2009. But be wary. We are always just one geopolitical event, one OPEC production level decision, or one hurricane away from a return to upward price volatility.

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