Go Back   Forums > ISM Discussion Area > Commodities Discussions

Thread Tools Display Modes
Old 11-05-2009, 03:50 PM
Posts: n/a
Default Diesel pricing

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?

Reply With Quote
Old 11-09-2009, 08:31 PM
Posts: n/a

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. 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.
Reply With Quote
Old 02-16-2010, 04:47 PM
Posts: n/a
Default Rack Price

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.
Reply With Quote

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump

All times are GMT. The time now is 10:13 AM.

Powered by vBulletin® Version 3.7.3
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.