by Simon Quicke
04 July 2008
Resellers have been warned that they will have to monitor cash flow to cope with increasing fuel and packaging costs.
The latest warning follows recent admissions by distributors that they intended passing on fuel costs through the channel, revealed by MicroScope last month.
Financial management and credit checking specialist e-bcm has described the increases in the cost of packaging and transport as “inevitable” as the high price of oil continues to have repercussions.
“The costs of all kinds of packaging – from plastic bags to milk cartons – is going up and the price of moving goods from A to B is also going to rise. With the market as it is, smaller manufacturers and producers that do not have the ability to finance higher borrowing – are going to get squeezed,” said Dennis Scott, commercial director of e-bcm.
He added that the companies that were likely to suffer most were those that would find it difficult to pass on costs because they were operating in highly competitive markets.
His advice for resellers was to get on top of cash flow and make sure they monitor terms and conditions to ensure they didn’t lose out on money that might be owed to them.
Last month at the Global Technology Distribution Council investors meeting in London a series of senior figures in distribution confirmed that they would have to pass on fuel hikes.
Speaking at the event the CEOs of several major distributors pointed out that they were already taking a hit with the margin points they had to give to cover transport costs and could not continue to cushion the increases from the channel.
The fuel issue has been concentrating channel minds over the last 18 months with distributors considering diverse options including centralised warehouses and encouraging customers to pick up orders.
