A fuel spike does not wait for your next budget.
Fuel is 25 to 35 percent of logistics cost. When it jumps 10 percent and you have no scenario ready, the gap quietly erodes two to four months of margin before pricing catches up. With most operators still on spreadsheets and a reporting lag of one to three weeks, the spike is felt in cash long before it is seen in a report.
Cost and Profitability Consulting · 150+ models since 2010 · TDABC
Fuel is 25 to 35 percent of logistics cost, so a 10 percent fuel rise with no scenario in place erodes two to four months of margin before pricing responds. The danger is amplified because around 65 percent of operators still run on spreadsheets with a one to three week reporting lag, so the margin is gone before the number arrives. Scenario modelling on a TDABC cost base lets an operator pre-compute the surcharge or route change that protects margin at each fuel level, turning a reactive scramble into a prepared lever.
The margin is gone before the number arrives.
A fuel spike hits cash immediately and the report weeks later. Industry research shows around 65 percent of operators still run on spreadsheets, with a reporting lag of one to three weeks, so the response is always late by construction. By the time the loss is visible, two to four months of margin can already be gone, and you cannot reprice the past. The only defence is to have the answer ready before the spike, not to compute it after.
A 10% FUEL RISE, WITH AND WITHOUT A SCENARIO
Illustrative. Without a prepared scenario, margin dives and crawls back over months. With the surcharge pre-computed on a TDABC base, the dip is shallow and brief. The shaded gap is the recoverable margin.
Pre-compute the lever for each fuel level.
Cost on a TDABC base
Know the fuel content of each route and order, not a fleet-wide guess, so the model responds where fuel actually bites.
Build the scenarios
Pre-compute the margin impact and the protecting move for plus 5, plus 10 and plus 20 percent fuel.
Set the trigger
Tie each scenario to a fuel index level, so the surcharge or re-route fires the day the market moves, not weeks later.
Protect the margin
Pull the prepared lever, surcharge, frequency change or re-route, and keep the two to four months you would have lost.
Frequently asked questions
- How much does a fuel rise hurt logistics margin?
- Fuel is 25 to 35 percent of logistics cost, so a 10 percent fuel rise with no scenario in place erodes two to four months of margin before pricing responds. The danger is amplified because many operators still run on spreadsheets with a one to three week reporting lag, so the margin is gone before the number arrives.
- What is fuel scenario modelling?
- Pre-computing, on a TDABC cost base, the surcharge or route change that protects margin at each fuel level. Instead of reacting weeks after a spike, the operator already knows the lever for plus 5, plus 10 or plus 20 percent fuel and can pull it the day the market moves.
- Why does the reporting lag matter?
- Industry research shows around 65 percent of operators still run on spreadsheets with a one to three week reporting lag. The fuel spike is felt in cash long before it is seen in a report, so without a prepared scenario the response is always late, and the lost margin is unrecoverable.
Have the answer ready before the next spike.
The Profit Check needs no data upload. It points to where a fuel scenario on a real cost base would protect the most margin, and what that margin is worth.
- Duration
- 12 to 15 minutes
- You receive
- Score, 7 dimensions, sector benchmark
- Price
- Free, no email needed
Who you would be talking to
Miguel Guimarães, Founding Partner
Cost and profitability practitioner for 25+ years. Lectured alongside Professor Robert S. Kaplan at the CFO conference in Amsterdam (2009).
Call +351 910 313 731
