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As Oil and Gas Suppliers See High Growth, 3 Freight Areas of Concern Causing $3.7 MM in Lost Profit

Oil and Gas suppliers to the oil and gas industry are experiencing a rare phenomenon in today’s economy: Growth. Oil and Gas suppliers will need expert service and technology to stay competitive and so they may focus on their core.

The increase in shale oil and gas extraction projects has triggered spectacular growth in North American drilling projects, but with this growth comes transportation challenges as suppliers of pipe, chemicals, drilling equipment, water, sand, and other materials must move products to and from an expanding number of drilling sites, many of them in remote locations. All at a time when fuel costs are rising and transportation carrier capacity is shrinking.

Oil and Gas Suppliers Losing Profit with Inflated Freight Costs

oil and gas suppliers workerMany oil and gas suppliers in this sector are adapting slowly to these logistical challenges. As a result, it is estimated that their freight costs are inflated 15%–30%. For a company with $200 million in annual oil and gas sector revenue, that equates to as much as $3.7 million in lost profit – every year.

Today, oil and gas industry suppliers are scrambling to service the rapid expansion of North American rig sites. Transportation has been a secondary consideration to moving products to and from development sites, but this is changing. As the industry matures, expect the following:

  • Increased competition and margin pressure, which will magnify the focus on transportation and its impact on the price of products and services
  • Increased executive oversight and demand for greater accountability for the transportation spend
  • Increased use of alternate modes to reduce costs and ensure capacity

As this shift occurs, you’ll have a choice: Develop transportation expertise yourself or seek help from an industrial freight specialist to provide the expertise, systems, and capacity to serve the growing O&G industry. A strategic partnership won’t be right for all companies.

At the very least, however, establishing a relationship with a non-asset-based 3PL with a strong carrier base could provide a vital hedge against capacity constraints.

Oil and Gas Suppliers Descend Upon the Eagle Ford Shale Region for The South Texas Oilfield Expo

Looking to provide logistics services to improve business processes and save money on freight, Cerasis will exhibit products and services at The 2013 South Texas Oilfield Expo. Through demonstrations and expert consultation at booth 1704, Cerasis will offer education to these oil and gas suppliers to help combat these rising freight costs.

If you are in the Houston area next week, The 2013 South Texas Oilfield Expo will be held on Wednesday, September 18th and Thursday, September 19th, 2013 at the American Bank Center in Corpus Christi, Texas. Thousands of exhibitors and attendees from across North America will converge in Corpus Christi for the two-day event. Representatives from every facet of the industry will be on hand, with heavy equipment displays, demonstrations, door prizes and more.

oil and gas suppliers south texas oil field expoThe South Texas Oilfield Expo is the premier trade show in the Eagle Ford shale region. This event is an Oil and Gas Exposition. It will feature new technologies, new hardware, new equipment, and new ideas to help your company to get it done better, faster, and cheaper.

If you are not able to make this regional show as an oil and gas supplier, then check out the other events in the oil and gas industry, put on by Texas Classic Productions a professional trade show management company that specializes in developing and hosting oil and gas industry events.

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