Posted by: brandextenders | March 17, 2011

I’d Like One Gallon of Gas Please And Can You Check Under The Hood?

I remember as a kid pulling into a gas station with my dad or grandmother and they would roll down the window and say, “Fill-er up.”  There was no such thing as self-service then and while you heard the gas gurgling into your tank the attendant was washing your windshield and checking under the hood. Oh, and gas was about a quarter a gallon back then! That was then and this is now.

Money, Money, Money!

Today we’re paying close to $4 or more for a gallon of gas that is 79% higher than it was a year ago. Plus we have to pump it ourselves and if we don’t clean our own windshield then the splattered bugs and debris remains. What happened? Between the BP oil spill last year, increased worldwide demand and the current instability in the mid-East, not to mention our governments hesitancy to allow drilling within our country, fear has taken over the markets. The interesting thing is, according to stats from the U.S. EIA close to three-quarters of our crude oil comes from four countries of which only one is in the mid-east and our neighbor to the north, Canada, sends us the most.

 I give this background because the accelerated price of fuel is affecting so much in our lives right now, not just the cost of filling your gas tank. Food prices are rising at the fastest pace since 1974 and much of that can be linked back to gas. So what does this mean for us in the promotional products industry or any industry really where fuel prices and petroleum costs are a major factor?

  • It’s amazing how many products use petroleum in some form in their manufacturing. See this partial list from the Ranken Energy Corporation. As a result we’re beginning to see prices rising as the manufacturers, who’ve been absorbing much of the increases, are beginning to pass them along. Chances are whatever you sell and conversely, whatever you buy is going to cost more.
  • Adding to these price increases is the cost of transportation. It used to cost a manufacturer a few pennies per item they produced to transport it to its final destination. Now, those transport costs are up close to 79% over a year ago and are being passed on to the end-user in the form of higher prices.
  • As I wrote in a previous blog on the cost of cotton  the price per pound is now over $2.00 which is unprecedented. Add this to increased fuel and transportation costs and you’ll find that logoed apparel you order is going to take a bigger bite out of your budget.

One other are that will hit hard is the cost you’ll pay to ship anything anywhere. All carriers, including airlines, have something called the FSC or fuel surcharge. For shipping UPS or FedEx Ground that surcharge is up 30% over a year ago and for air freight, the rise is closer to 57%. And that surcharge is in addition to the regular cost for shipping. Importing goods used to be a much better deal if you had the time (8-12 weeks typically), but with the increased costs to ship things, even on a slow boat from China, the deals aren’t as good as they used to be.

Let us know how your business is being effected by all these factors and things you are doing to mitigate them. In some ways our economy has gone from the frying pan (recession) into the fire(inflation). Ouch!

I work with my customers to evaluate their promotional marketing needs and develop creative and measurable solutions based on those needs. I build long-term relationships to become a trusted advisor my clients turn to for their brand extension, promotional product, incentive and other branding needs. Contact me at stephen.woodburn@staplespromoproducts.com  

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