Exam 14: Issues and Challenges of Global Supply Chains

Correct Answer:

Verified

The motor carrier industry has an incredible demand for fuel and is therefore highly sensitive to price increases. The motor carriers consume three time more fuel than the airlines. The motor carriers consume more than 54 billion gallons of fuel and 7% is diesel fuel. Fuel is approaching the annual labor cost for the motor carrier industry which is the largest industry expense.
During the period of fuel price escalation,use of fuel surcharges helped the industry cope,however not all companies were able to properly manage this expense and a number went out of business. The challenge of passing off increased fuel charges has been difficult for the truckload carriers who compete with lower profit margins.