State of the Fuel Supply Chain
The Battle for Transformative Customer Experience
The events of the past few weeks are surely unprecedented. The impact of COVID 19 can be seen throughout lives all around the world. It has affected our health and the way we work and live. Coupled with that is the startling downward move of oil prices as a result of a global price battle.
While we hope the COVID 19 crisis abates soon, it will most certainly abate in time. What could be a longer-term impact for the refined products industry is the outlook of crude prices and the supply environment. There is a building view that we are in an environment of more supply than demand. There are many factors contributing to the downward pressure on oil prices. Advancement of electric vehicles (EVs) along with changes in the way we live and move around as a society are two such examples. Also, there seems to be nearly an infinite supply of crude as advancements in technology continue to liberate more ways to get at oil. The cost to do business continues to rise for a variety of reasons as well. The final factor is that customers are being conditioned to expect more in terms of experience. This is due to the rise of business to consumer products and solutions such as smart phones, Uber, and the like.
The combination of these factors will continue to put pressure on supply chain partners who deliver product from refiners to end users. Specifically, margin and volume pressure will combine to produce a disintermediation of some and rationalization of others.
Over the next few weeks and months, we will explore these ideas more deeply along with how companies can take advantage of this changing landscape.