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An era of persistently high oils price has an tremendous influence to the multinational corporations that have come to rely on globe-girdling supply chain. Crude prices have backed off last month's run toward $150 a barrel. But they persist above $110 a barrel, a level that was hard to fathom even a year ago. The end of cheap oil heralds a potentially dramatic reshaping of the globalized trade flows that have emerged in the past two decades. Rising transport costs are suddenly a key factor in decisions about both where to place factories and how much inventory to stockpile. 

This is a huge disadvantage for IKEA because it relies so much on transportation. The more expensive fuel gets, the more IKEA have to pay to ship furnitures from factories to retailers all over the world, which means more expensive products. Also, IKEA may have to charge more for the shipping cost from retailers to consumers, which can make them less likely to buy. 

Source: http://usatoday30.usatoday.com/money/industries/manufacturing/2008-08-11-cargo-costs-oil_N.htm

 





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