Barloworld says plan today, survive tomorrow

Barloworld Optimus reckons companies can protect themselves against a depressed economy and can even come out of it stronger and better equipped to face the future.

Fraser Ironside, global business development director at Barloworld Optimus, said: 'Downsizing and running away may be the natural responses to the events of the past few months, but companies that substitute the knee-jerk reaction for a cooler-headed and longer-term view stand the best chance of surviving and will reap the rewards once the corner has been turned.' Inventory costs are now rising faster than transport costs, indicating that survival hinges on closer examination of whole supply chains rather than focusing on transportation costs alone.

Ironside added: 'Trends in the US are traditionally reflected here, so it's significant US logistics costs have risen 52 per cent in five years, driven by higher inventories, interest rates and fuel costs.

'Their logistics costs are now USD1.4 trillion, 10.1 per cent of GDP, and inventory carrying costs have risen faster than transport costs for the fourth consecutive year.

'Falling retail sales drive lower manufactured and shipped volumes and this results in rising inventory levels as demand falters, redundant capacity in the manufacturing base, falling throughputs in warehouses, eroding economies of scale and reduced order volumes driving smaller shipment sizes, resulting in higher cost per unit transportation.' Ironside said low fuel prices in the 1990s and early 2000s caused widescale development of centralised warehouse networks across Europe, but the soaring price of oil earlier this year, driven by growing industrialisation in China and India, has prompted some observers to forecast that current European warehouse configurations could revert back to more traditional 'country' models.

Ironside added that costs become higher when companies fail to consider the possibility of change.

With oil price now at GBP0.98 per litre on the forecourt, the typical cost per mile for a full truck load is GBP0.56.

With oil at the July peak of USD147 ppb and GBP1.32 on the forecourt, cost per mile rose to GBP0.75.

At USD200 pbb forecourt costs will rise to GBP1.51 and cost per mile GBP0.86.

Back to top