Transportation

Energy efficiency and concerns about energy price fluctuation

Fluctuation in energy prices and dependence on carbon-based energy sources are serious concerns for transportation and logistics companies. Many companies undertook various measures, such as broad-based collaboration across business and government to achieve major gains in energy efficiency. A recent survey revealed that the majority of the T&L companies are quite concerned about energy prices, as fuel costs are critical to the industry’s profitability.

Oil prices saw huge price volatility continuing from 2008. The decline in crude oil prices since late last year has helped various companies cut back on their fuel and fuel tax expenses. The price of crude oil took a U-turn, with a sharp fall from $147 per barrel in July 2008 to less than $44 per barrel on December 22, 2008 and has recently rebounded to about $70 per barrel. Most companies are planning to further improve operational efficiency to reduce energy consumption by investing in energy efficient technologies.

Commenting on this aspect, Chairman, President, and Chief Executive Officer of ACE Aviation Holdings, Robert A. Milton, stated the airline sector has responded to rising energy costs by managing capacity more effectively. “Traditionally, what’s happened is that airline capacity worldwide just keeps going up until one or more airlines collapse, and then it picks right back up,” he said. But the U.S. broke with tradition and reduced capacity in response to high fuel prices.