Starting the beginning of this month, there was another rise in fuel prices that has put even further pressure on the trucking industry to take effective countermeasures towards alleviating the impact of fuel price volatility on trucking companies. The recent increase was an exceptional 6 yen/liter (approximately 20 cents per US gallon) and in the August 7 issue of Logistics Japan, the subtitle beneath the headline was "Increase Exceeds Trucking Association's Room for Patience."
Until now, the dramatic rise in fuel prices has been counteracted in Japan in primarily two ways: 1) take internal action within company to reduce any waste in fuel usage and 2) join with other companies to form a purchasing cooperative to bring additional discounts. However, this only focuses on the supply-side and fuel usage levels, which eventually provide diminishing returns in terms of reduced costs. The Japanese trucking industry as a whole hasn't been able to successfully pass along these fuel price increases to customers as has been the trend in the USA. Especially the "long tail" of the trucking industry--the small- to mid-sized companies--face the greatest pressure in terms of maintaining margins.
As the article states, gradually industry voices are saying that the trucking industry "now can't help but approach customers anew for negotiation on rates." Whether this can happen will mean the life or death of some companies unable to keep pace with the business changes necessary to counteract higher fuel prices. These companies typically do not possess the economies of scale to gain pricing leverage nor the management systems to develop and diversify new ways of doing business. The Trucking Association is encouraging the entry of more smaller firms into fuel purchasing cooperatives to receive discounts, but pressure is coming from fuel suppliers suggesting that these discounts can go only so far. Eventually, it is my opinion, these increases need to be pushed on to the end-consumers.