Don't leave fuel price exposure to chance: NAB


Transport operators need to manage their exposure to fuel price risks if they are to survive rocky times, NAB says

By Ruza Zivkusic | November 30, 2011

Transport operators need to manage their exposure to fuel price risks if they are to survive rocky times, an expert warns.

National Australia Bank (NAB) Risk Management Director Stuart Stillman says while some transport and logistics firms have negotiated to pass on higher fuel prices to their customers, the vast majority have not.

"It is no longer acceptable to leave fuel price exposures to chance," he says.

"Singapore gas oil is around two to three times more volatile than the Australian dollar or Australian short-term interest rates, yet most companies do not have an effective risk management policy to cover fuel price risk."

About 57 percent of diesel fuel in Australia is set by reference to the prevailing Singapore gas oil price. Fuel taxes represent about 37 percent and shipping costs represent the balance, Stillman adds.

He says the primary objective of keeping track of fuel price rises to minimise risk, increase price control and avoid losses.





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