Will Energy Costs Effect Just in Time Logistics?

Post date: Oct 29, 2012 4:33:49 PM

With the very high costs of energy in the US today I am beginning to wonder whether just in time logistics will continue to be the way things are done. I see just in time logistics economies being based on a couple of things:

High Tech Goods suffered deflation (ie. price were always going done)

Transportation is Cheap

Warehouse real-estate is expensive

With the costs of energy going up and the pace of inflation increase some of these factors are going way. In fact, with the costs of commodities that go into electronics, such as copper, increasing it may be the case that we have inflation and price increases on a regular basis. These changes mean that it may make business sense for some organizations to begin purchasing, full truck loads of products and optimizing more for total costs including the increase in transportation.

I think with the increase costs of energy and the inflationary pressures we are seeing some changes in approached to logistics will be necessary. It will be interesting to see which companies will recognize these changes and take advantage of them to get a lead over their competition.

Southwest Airlines has already done something similiar to the rest of the airline industry with their hedge on fuel prices.