Last month in Las Vegas, Nevada, the Gravitate team attended the WPMAEXPO 2023, an event that brings together petroleum marketers, carriers, convenience store owners, and their vendors to network, share knowledge, and strategize on how to improve their businesses.
From our three days at WPMAEXPO, here are our most important observations on the main concerns and priorities of marketers, carriers, and c-store owners.
1. Driver shortages are finally subsiding.
Over the last few years in this industry, much focus has been on driver shortages and their impact on the supply chain.
There’s good news—the driver pool is expanding at last! This is most likely owed to:
● Dramatic increases in driver pay
● A widespread shift toward hourly pay, which has helped to attract more drivers
The payment model for trucking should reflect the time and effort drivers put in. Every minute spent loading, unloading, safety checks and driving deserves compensation. However, there is a debate on the right compensation model as hourly pay is simple to administer and largely appreciated by drivers, but it doesn’t create an incentive to be efficient.
By implementing a more comprehensive payment structure, both parties win. Drivers are fairly compensated for their time and companies better retain high-quality, valued drivers.
However, it’s worth noting that driver shortages are asymmetric with respect to geographies. In highly competitive markets, such as Houston, Denver, or Nashville, drivers have many employment alternatives. But in more stable markets, drivers are easier to recruit and retain.
2. Supply is still a challenge in many markets.
Many refinery-supplied markets are short on product with high prices for spot product. As a major example, the six-week, cold-weather shutdown at the Suncor refinery near Denver, which accounts for about 40% of the gasoline supply in Colorado, has resulted in a very tight market in the region, from Colorado up to Idaho and Montana.
3. High margins are here to stay.
With rapid inflation affecting everything from labor to equipment, services, land, and capital, the per-gallon breakeven for retailers has skyrocketed over the last three to five years. To support these higher costs, the profit per gallon of fuel has increased as well—and many experts predict it will remain up.
4. Accounts receivable (AR) delays can be crippling.
Collecting on your AR quickly has always been a critical issue in our industry especially for fuel carriers.
Because of rising interest rates, minimizing AR aging is critical to avoid greater expenses and to maintain healthy cash flow. Yet, at many companies personnel are still chasing paper to finalize and validate invoices.
Companies recognize the need to streamline the flow of data in order to speed up payment. Often, a missing or inaccurate BOL is the culprit. There are systems available now that support a more streamlined data flow and enable faster and more complete fuel and freight reconciliation.
5. Companies want to consolidate systems.
Many companies struggle with an ever-growing number of applications that have overlapping functionalities, which increases confusion and complexity for system users and creates operational inefficiencies. But it’s a major challenge to understand where software overlaps and where functional gaps exist without the expertise and time to invest in this activity. This often results in companies adding new applications before they remove legacy tools, which only compounds the problem.
Often, an outside perspective on as-is technology and an assessment on existing functionality is a good first step before deciding to purchase new software.
6. Company consolidation is front and center again.
Hot topics of conversation included BP’s acquisition of TravelCenters of America’s (TA’s) 281 c-store locations, a deal expected to close by mid-2023, and rumors of Kum & Go. On one side, we see big oil companies getting back into the c-store business, while on the other side, we see continued land-grabbing from large c-stores and venture-backed companies.
Up next: catch the Gravitate team May 2-4 at the 2023 SIGMA Spring conference.
