- Link:
- http://hdl.handle.net/1721.1/61186
- Collection:
-
- Subject
- Engineering Systems Division.
- Creators:
- Shehadi, Charles A., III (Charles Anthony) Witalec, Michael R
- Contributors:
- Massachusetts Institute of Technology. Engineering Systems Division. Chris Caplice. Massachusetts Institute of Technology. Engineering
Systems Division.
- Publisher
- Massachusetts Institute of Technology
- Type
- Thesis
- Format
- 103 p.
- Language
- eng
- Rights
- M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See
provided URL for inquiries about permission.
- Rights
- http://dspace.mit.edu/handle/1721.1/7582
- Description
- This paper looks at some of these travails as well
as the common tools used to approach a volatile priced commodity,
diesel fuel. It focuses on the impacts of hedging for companies
that are directly impacted through the consumption of diesel fuel
in addition to companies that are indirectly impacted because they
outsource their transportation. It examines the impact of a fuel
surcharge and how it distributes risk throughout the supply chain.
To complement the research, analysis was conducted in the form of a
survey to benchmark the industry with respect to current practices
of hedging and fuel surcharges, a sensitivity test of a fuel
surcharge matrix to find its appropriate usage, and a simulation to
provide guidance as to the appropriate strategy for hedging.
Lessons learned from the survey flowed into the sensitivity testing
and simulation. These three segments of analysis highlighted the
problem of volatility, increasing cost, and inability to pass on
the cost, proving the true pain of fuel in the market. Ultimately,
the paper answers: How to utilize hedging and a fuel surcharge
program to stabilize the cost of fuel? The survey showed the wide
adoption of fuel surcharges, confirming the academic research. The
sensitivity test proved the need to keep the escalator variable in
line with a carrier's actual fuel efficiency and standardize for
all carriers. The simulation recommended longer term derivatives.
Putting this together, the fuel surcharge establishes stability for
the carrier, at the risk of the shipper. The shipper must maintain
that stability through its maintenance of the escalator in the fuel
surcharge matrix. Additionally, the shipper should hedge fuel via
long term derivatives to establish personal fuel cost stability,
creating a competitive advantage and enabling the shipper to
compete more effectively.
- Description
- by Charles A. Shehadi, III and Michael R.
Witalec.
- Description
- Thesis (M. Eng. in Logistics)--Massachusetts
Institute of Technology, Engineering Systems Division,
2010.
- Description
- Cataloged from PDF version of
thesis.
- Description
- Includes bibliographical references (p.
101-103).
- Rights
- M.I.T. theses are protected by copyright. They may be
viewed from this source for any purpose, but reproduction or
distribution in any format is prohibited without written
permission. See provided URL for inquiries about
permission.
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