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What Can Be Done To Help Contain The Inflationary Beast Riding On The Back Of This 20c Fuel Hike?

What if I were to tell you the land transport system in Malaysia is an inefficient mess that can easily be improved so this sector could easily absorb this fuel hike?

No one welcomes any rise in fuel costs because of the resulting inflationary effect on the overall economy. With the October 2nd 20 cent cut in the nations fuel subsidy affecting both petrol and diesel many citizens are bracing themselves for further rises across the board as the effects ripple out through the economy.

Well, whatever way we look at it we are facing the prospect of increased costs of goods and services and I read very little in the way to remedy this situation apart from the usual requests to repeal the price hike.

So What Can Be Done To Help Contain The Inflation Beast Riding On The Back Of This 20c Fuel Hike?

We Cannot Solve Problems With The Same Thinking We Used To Create Them

Efficiency Preventing The Inflationary Effects Of Rising Fuel Prices


Economies of scale have long been associated with decreasing cost of unit output but, as with anything that grows exponentially keeping the method of business operation efficient can be a challenge in itself.

Efficiency is the key word here and everyone associates inflationary pressure in the guise of a rise in the price of diesel to the transport sector that will automatically raise their prices which has a knock on effect on the goods being transported.

What if I were to tell you the land transport system in Malaysia is an inefficient mess that can easily be improved so this sector could easily absorb this fuel hike?

A recent study by Transport4U revealed that on every day of the week that 77% of goods vehicles owned by small and medium sized hauliers are travelling empty with no load on their return journeys after delivering their goods (survey done on journeys where the delivery part was in excess of 100km).

This issue is not just limited to the logistics sector in Malaysia as this is also an issue affecting many countries in the world.

So what did European and North American countries do to counter this issue I hear you ask, they introduced and encouraged the use of Freight Exchanges.

Intellectuals Solve Problems Genuises Prevent Them

To understand this issue you must first realise how it occurs and the reason is because of empty back loads, this is the road journey a truck takes back to its base after it has delivered its goods.

If a truck cannot collect a load for its return journey it must return to base empty, becoming part of the 77% of trucks running empty every day when the delivery journey has been in excess of 100km.

Freight Exchanges give logistics companies a platform to advertise their empty return loads and other logistic companies or warehouses operating in the same area can use this empty truck instead of chartering their own vehicle.

When you consider that it is usually cheaper to use an empty back load truck from another company than the logistics company using their own fleet you get to realise the full potential of utilising freight exchanges to improve margins in the industry.

This is a proven method of improving the efficiencies of the land transportation sector with some governments vocally promoting the use of freight exchanges as a calming measure for inflationary fuel hikes.

So there you have it, the land transportation sector in Malaysia is an inefficient mess that can easily be improved to soften the effects of subsidy reduced fuel hikes.

Written by Administrator on Friday October 3, 2014
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