• Ahmad Khateeb

Why Market Rates are so Fluctuation? what can you do to avoid over costing in transportati

Diesel Prices Increment in Oman. Why Market Rates are so Fluctuation? Diesel prices in Oman, had not shown a regular behavior since 2014. The increments in 2014, 2015, 2016 and what we have of 2017 have been having very different performances. As you can imagine, this behavior was extensive to other fuels, which impacts directly in all transportation sectors. In Fact, during 2014, the price for this important fuel remained at 146 Bz (0,38 USD) per liter during the whole Year. That price, maintained Oman among the 10 countries with the cheapest diesel prices in the world, which allowed a very stable market for transporters.

In 2015, Diesel prices increased 10% up to 160 Bz (0,42 USD). The good thing was, that during 2015 even when fuel prices showed a significant increment, the new price remained fixed during the whole year. That situation allowed, once again, that transportation market kept stable on this year also. For 2016, the situation changed significantly. Fluctuations were registered month by month. When in fact there were months that Diesel prices were going down, there were another month when Diesel prices were shown increased. The most critical months were April and June, were the increments registered were 12% and 11% respectively on each month. Obviously, this irregular behavior brought a new factor of uncertainty to the market of Transportation, that at least for the two previous years remained quite stable. For transporters, it was easier to estimate fixed rates on the past, but from now on, at least in Oman, the market rates will suffer a lot of changes. This situation is not different for the rest of GCC Countries, where these fluctuations on Diesel prices started to been noticed as well. The good news for costumers, that are looking for good prices on their transportation and distribution accounts, is that as Diesel prices shown increments, also showed decrements on February, August and December in 2016. This situation implied, that even when transportation charges showed one price in one particular month, market rates could show a little decrements for the next month. Unfortunately, these decreases were only of 5%, but definitely they showed a significant point to consider different market rates every single month. What we observed during 2016 on Diesel prices, was a general average increment of 12%, but that year the monthly fluctuations demonstrated a more active year on the market rates for transportation. What we expect for 2017, is a similar situation to 2016. Market rates will be very fluctuation depending on the Diesel increments or decrements month by month. But what observe from now, is that even when Diesel prices remained fixed in January, they suffer a considerable increment in February, that was never seen before. The first fluctuation of the year was 16% up from the latest price, putting the Diesel price on an historical amount of 205 Bz (0,53 USD). What can assume from now, is that fluctuations will be seen during the whole year, but at the end, the average increment by the end of 2017 will remain less than 15%. With this scenario, what can companies do to avoid over costing in transportation? The first smart decision that companies should take, is the acceptance of fluctuations on the market rates. And with this situation in mind, hire those transportation companies that can adjust rates according to the fluctuations of the Diesel prices, that for sure, will show increments some months, but fortunately will show decrements on the prices also, for some other months. Regards, Beatriz Uzcategui Business Development Executive P.O. Box 474, Postal Code 324 Al Multaqa Street Sohar - Oman Mobile: +968 9133 6856 Office : +968 2670 4947 Fax: +968 2670 4947 Website: www.glplog.com Our logistics solutions that will run your business

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