Possible acquisitions of electrical machinery, cutbacks in transport and the optimisation of shipping routes have become key in the strategy adopted by distributors of drugs, construction materials and consumer goods in their battle with fuel prices, after fuel budgets have already been exceeded by as much as 15%.
The poor infrastructure only compounds the problem as it causes higher fuel consumption and thus puts even more pressure on distributors' costs.
"In the first five months of 2008, fuel costs soared by 11.29% above the budgeted levels. We cannot estimate the figure for yearend because we do not know the trend of fuel prices, or modifications of the transport fleet," says Florin Kubinschi, CFO with the biggest consumer goods distributor, Interbrands Distribution.
On the segment of construction materials distribution, on average fuel budgets were exceeded by 15% and the percentage could go up by yearend if oil prices continue to rise at the same rate. "To counter the effects of higher fuel prices, we're trying to raise consumption efficiency through the optimisation of shipping routes and renewed transport fleets," say the representatives of Dedeman, who also specified the weight of fuel costs in overall costs in the first six months of this year rose by 20% against the same period in 2007.
Certain players, such as drug distributors, are experiencing problems that also derive from the particularities of this activity. "(...) Distribution in the pharmaceutical field requires greater flexibility in line with customers' requests, who cannot always plan and anticipate the drug volumes needed and often require goods urgently," stated Robert Popescu, chief operating officer with Mediplus Wholesale, the distribution unit of A&D Pharma, the biggest player on the pharmaceutical market.
Market players say the fallout is not as serious as th
