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stever
11-05-2009, 03:50 PM
Our company operates a fleet of tugboats throughout the US, and I'm looking to reduce my cost for diesel fuel. I get daily "rack" pricing that I assumes shows the wholesale price to the distributors, and I also get daily pricing from some local distributors. The "rack" prices are essentially the same as I'm being quoted from the various distributors, which would indicate the distibutors are not actually paying the "rack" price, but something lower. Any chance that anyone could enlighten me on the the typical distributor margins, how their cost relates to the published rack prices, and what I might expect to obtain if I go out to market with an RFP?

Thanks---Steve

KatinaC
11-09-2009, 08:31 PM
Steve,
You don't say where your source is coming from for your daily rack prices. You need to use O.P.I.S. to get this info. www.opisnet.com. O.P.I.S. is the industry benchmark. (I don't work for them.) You could then negotiate a set mark up of cents per gallon with the opis rate as the base cost per gallon per day. Then set up some kind of blanket order with your local distributor. A detailed RFQ with estimated volume and many details will get the best results. Good luck.

mereli
02-16-2010, 04:47 PM
Buyers will pay a differential to the rack price based on their volume... distributors typically pay a few cents below rack price, end-users pay a few cents above. We might be able to help you negotiate a better deal than you're getting now. My company, ChemConnect, helps commodity buyers by running online bids (auctions) for these types of products. I would suggest that you run a quarterly auction for your diesel requirements. Have the distributors bid a differential to the OPIS index (or a fixed price), and pick the lowest distributor. You'll be amazed at how much lower they will go if they can see what they have to do to win your business, and they are guaranteed the volume if they win.