Weathering the storm

During a natural disaster, you need supply options. Ensuring that you have allocations and truck time to supply your customers can be the difference between keeping or losing a long-time valued business relationship. It is during tight supply times, like we saw recently with hurricanes Harvey and Irma, that you should have a contingency plan in place to secure the fuel you need. As wholesalers and marketers, several questions and considerations should be addressed in order to have confidence that you can obtain product, and obtain it quickly, during times of tight supply.

SUPPLIER RELATIONSHIPS ARE KEY

When everyone is scrambling to get their hands on the same product, having sufficient supplier relationships is critical to ensure your trucks get loaded with the necessary product. In some cases, like if one of your suppliers communicates a significant supply disruption, your best option may be to send trucks to load elsewhere. In situations such as these, it's important to build relationships with suppliers in surrounding areas and be authorized to fuel at nearby terminals to save time and effort and avoid the risk of having a truck return with an empty tank altogether.

Like having relationships with terminals outside of your normal loading area, another important precautionary question to ask is whether you have carrier relationships that allow you to move product from locations outside your normal geographic area. Having this capability can drastically improve your chances of securing the fuel you need during a large-scale supply disruption in your normal geographic area. And if so, are your drivers carded at these new terminals? This variable will affect your driver's ability to secure fuel from a sophisticated and robust terminal automation systems or legacy terminal solutions which both require an authorization process to fuel.

Building these contingency plans takes forethought, and can't be done by simply picking up the phone when you have trucks turned down at another terminal. Making sure you have credit terms with these suppliers in advance is important and, if you don't, knowing what steps to take to get them is an essential next step. Almost every fuel contract will have a force majeure clause - so make sure you read the fine print and are aware of your supplier's contractual intent for when a natural disaster occurs.

Furthermore, it's important that your relationships with suppliers, whether in your standard location or in the surrounding areas, are developed enough where you can reach them after hours. In the case of a major supply disruption, like that of a hurricane, that you can reach them outside of standard business hours to confirm your allocations - or at the very least - learn that you need to load product elsewhere so you can plan truck times accordingly and in a timely manner. Sometimes even more important is that you make yourself available so that they can reach you to confirm allocations or warn of a supply disruption. You would hate to have your suppliers trying to get in contact with you to share critical supply information without an efficient way to get a hold of you.

SECONDS COUNT

One thing is certain when trying to secure fuel during a tight supply market - seconds count. For wholesalers and marketers, it's important to be equipped with technology that makes the most of your precious seconds.

Advanced technological solutions can help you to immediately identify where product is available and where you have allocations. Your price discovery tool should show you prices not just within your immediate area, but in any geography where you may pick-up product. They should also allow you to easily see prices, and where you have allocations available - all on one screen. During a crisis, you may very well be picking up product several hundred miles away. It's important in these situations that you calculate-in transportation costs to price your product correctly. Did you know an advanced price discovery tool can automatically calculate freight costs for you? Along with real-time price information, supplier communication is also key.

Seconds most certainly count when communicating with your suppliers. In the case of terminal outages, receiving immediate notifications for outage updates for your suppliers can save you precious time from calling around. In addition to notifications, you want a real-time view of allocations. Suppliers that use an online, real-time product allocation portal not only set themselves apart but make the lives of those loading much easier - especially when there are outages in certain areas.

Critical weather updates are another benefit of an advanced price discovery tool. Do you have a solution that alerts drivers to severe weather conditions such as wind, rain and hail? Having your drivers notified when dangerous weather is within a certain number of miles to them helps keep your carriers, and your product, safe.

When equipped with the right technological solutions that can identify where you have product available, especially during times of severe weather like we saw with hurricanes Harvey and Irma, securing the fuel you need becomes much easier. It also helps keep your drivers, and your product, out of unsafe driving conditions with targeted weather alerts for your trucks. But, securing the product is only half the battle.

ONLY HALF THE BATTLE

Once you secure the fuel, capitalizing on having that product by selling it quickly to your customers is critical. To do this effectively, access to real-time spot ticker information is critical. Savvy marketers watch this information closely in tight supply times to see if it is ticking up or down. Having your finger on the pulse can tell you when you should pull loads to get the best price. For example, if the spot ticker is rising, your sales team has the ability to sell additional fuel by recommending to clients that they buy an extra load today to avoid even higher prices tomorrow or in the coming days.

Does your sales team in the field have immediate access to pricing data? For the most profitable margins, it's important for them to have real-time, mobile access to this information so they can give potential customers a price on the spot, and secure a deal.

CONCLUSION

Securing fuel in times of tight supply is a challenge faced by wholesalers and marketers alike. What we learned from hurricanes Harvey and Irma is that, to secure the fuel you need, having a combination of robust supplier relationships and real-time price and allocation information gives you an advantage by saving you time and effort when securing product and improving margins when you turn around to sell it.

In the event of a hurricane or any other supply disruption, being equipped with advanced technological solutions can better prepare you to secure and sell fuel with confidence.

ABOUT THE AUTHOR

Loretta Terranella is regional sales director for DTN. She has worked in the petroleum fuel distribution industry since 2001, where she has held positions with both Commercial Fueling Network and Advantage Energy Systems. DTN provides price notification, business document delivery, market intelligence, and business transaction support to North American refiners and refined fuel marketers.