How Rising Fuel Prices Impact the Trucking Industry
As a business owner, you’re well aware of the volatile nature of fuel prices. You may not know how these fluctuations affect the trucking industry and your business. Fuel prices have reached almost $4 this year , affecting the entire trucking industry. If you want your business to survive, you’ll need to know the effects of rising fuel prices in the industry. Below are five ways rising fuel prices influence the trucking industry and what you can do to mitigate the impacts.
Higher Operating Costs
This increase in expenditure filters down to the shipper in the form of higher freight rates. While you may be tempted to put pressure on your trucking company to keep rates low, doing so could result in service cuts that jeopardize the timely delivery of your goods. So here are some ways you can reduce overall operating costs.
If you have unused fuel trucks, it’s time to transfer that fuel to other trucks. First, you must invest in transfer tanks for gasoline and diesel fuel. These transfer tanks come with fuel pumps and hoses to make the process easier. You can also use this opportunity to inspect your trucks for any leaks.
Next, you’ll need to determine how much fuel you can transfer. Once you’ve chosen the amount, fill up the tank and put the fuel into a truck ready to go.
Reduce Deadhead Miles
One of the main ways trucking companies reduce their fuel costs is by lowering deadhead miles. Deadhead miles are empty miles driven without a load . This can happen when a truck driver delivers a shipment and doesn’t have another load to pick up immediately. To avoid this, plan your loads so drivers can provide one load and immediately pick up another. This will minimize the number of deadhead miles and save on fuel costs.
Less Money For Investment
Given that most transportation companies operate on tight margins, even a slight increase in fuel prices can eat into their profits and prevent them from reinvesting in their business. This lack of reinvestment puts a strain on an already aging fleet of trucks and could lead to more accidents and delays. As a shipper, you can help offset this by ensuring your freight rates cover not only the cost of shipping but also the cost of maintaining equipment. This will incentivize trucking companies to invest in newer, safer vehicles while helping ensure your goods are delivered on time and in good condition.
Small Companies are Vulnerable
Due to their smaller size, they often lack the negotiating power of larger carriers to secure better fuel prices from suppliers. In addition, they tend to have less financial cushion to weather sudden price spikes. As a result, small carriers are more likely than their larger counterparts to go out of business when fuel prices rise — which could leave you without a reliable shipping partner when you need one most. To avoid this problem, it’s essential to build relationships with carriers of different sizes. Hence, you always have backup options should your primary choice be forced out of business due to market conditions beyond their control.
More Drivers Might Quit
Many drivers are paid based on how many miles they drive, which means that when fuel prices go up, they feel the pinch just like everyone else at the gas pump — except their income doesn’t increase along with the gas price. This wage decrease can lead to driver turnover as drivers look for jobs that offer better pay and more stability. To help retain your drivers (and maintain good customer service), consider adding a per-mile fuel surcharge that covers increases at the pump or switching to a salary-based pay model that insulates drivers from fluctuations in fuel prices.
Increased Idling Costs
Idling trucks not only add emissions of harmful pollutants into the atmosphere but also increase engine wear and tear, which contributes to higher maintenance costs for trucking companies (and, ultimately, shippers). One way you can help reduce idling is by using telematics data (i.e., GPS tracking information) provided by your trucking company to optimize delivery routes and ensure drivers aren’t idling unnecessarily waiting for loads or stuck in traffic jams.
Not only will this save on wear and tear for trucks, but it will also help reduce pollution caused by idling engines — making it a win-win for everyone involved.
Rising fuel costs have far-reaching effects throughout the trucking industry — from small mom-and-pop shops to major multinational carriers. Truckers need to be aware of these effects and take steps to mitigate them whenever possible. Understanding how higher fuel prices influence different aspects of the trucking industry can ensure your business isn’t adversely affected should there be another spike at the pump.