The Importance of Unbundling Your Fuel and Freight Costs

In Europe today, shippers often compensate their transport partners with an all-inclusive transport charge. While this bundled approach simplifies transactions, historical data shows transport charges have risen even as fuel prices fall. Fuel, as a commodity, should be treated as a pass-through expense, distinct from the service-based freight costs. By separating fuel from the overall transport charge, shippers can achieve a line of sight into movement-level data that provides transparency to consumption and emissions data, thereby securing a competitive advantage.

Unpacking the total transport cost

An all-inclusive transport charge presents significant challenges, primarily due to the unpredictable nature of fuel prices. Fuel prices are influenced by different factors than freight costs, including supply, demand, and seasonality. When fuel is included in the transport cost, shippers accept all risks associated with fuel price volatility, leading to reduced transparency in billing and hindering fair and accurate fuel reimbursements. For instance, an analysis we conducted for a shipper transporting freight from Paris to Madrid between January 2019 to April 2024 revealed a 27% increase in transport costs. Interestingly, diesel fuel prices decreased by 21% during that period. These disparities highlight the essential need for separating fuel from the all-inclusive transport charge.

A new approach for transportation energy management in Europe

Gaining clear visibility of fuel and freight costs is crucial for procurement leaders to optimize their supply chain operations. Europe Fuel Recovery offers a paradigm shift. By separating fuel from total transport costs, companies can reimburse transport contractors a weekly market-based fuel reimbursement based on wholesale fuel prices and ensure fair compensation for their service.

With this enhanced transparency, procurement leaders can:

• Uphold economic responsibility by aligning their fuel program with macroeconomic trends impacting fuel prices.
• Lower transport costs by reimbursing transport contractors a wholesale diesel fuel price, closer to what they pay at the pump.
• Establish accurate kilometers-per-liter metrics that align with the fuel efficiency of the equipment used for transporting goods, thereby reducing annual fuel consumption and costs.
• Utilize fuel consumption data to effectively track transportation lifecycle emissions and implement carbon footprint reduction initiatives.
• Gain valuable insights into fuel and freight data for continuous improvement opportunities and alignment with industry standards.
• Boost productivity by eliminating monthly or quarterly reconciliations.

Europe Fuel Recovery provides a clearer picture of the real costs involved in moving goods, empowering procurement leaders to manage their expenses more effectively

Make the switch to Europe Fuel Recovery

By unbundling fuel and freight costs, companies can achieve cost savings, increased transparency, and better control of their carbon footprint. With this new approach to transportation energy management in Europe, procurement leaders can stay ahead of the curve and secure a competitive advantage.

Switching to Fuel Recovery is simple and hassle-free. Our team of experts will work closely with you to understand your specific needs and tailor a solution that best fits your business goals. We believe that transparent fuel reimbursements are crucial for sustainable growth and efficient supply chain management. Learn more about Europe Fuel Recovery and how it can benefit your transportation network.