Change in Diesel Prices May Affect Trucking Companies
There are several expenses that trucking companies can’t get around no matter how much time they dedicate to logistics management. Fuel is one such expense, as even truck designs that provide a better highway fuel economy still use a substantial amount of diesel. Given this, it is understandable that many organizations are concerned whenever the price of this valuable resource changes. A recent turnaround in diesel prices could mean additional expenses and damaged profits for many trucking companies.
Rising prices of fuel have squeezed the profits of trucking companies in the past, and a recent change indicates that a similar pattern may soon follow in the next quarter of 2016. Companies may be able to offset this issue by tacking on surcharges, but the increase in price is one that many are worried about. A 14% price increase over the last three months has even them most profitable trucking companies concerned about managing these costs in the most effective manner possible.
Earlier this month, diesel prices were at about $2.27 per gallon. A few months ago, the price was just under two dollars. Increased demand for diesel both locally and abroad has been a contributing factor to the quick rise in price. Rising oil prices have influenced the increase, and companies have had a hard time managing the increase even with traditional surcharges. The rapid increase in price has been difficult to keep track of, and carriers are scrambling to cut expenses.
Surcharges of this type are common, but it is understandable that a sharp change in price like this has led many carriers to look at other expenses they may be able to cut. A change in parts, reduced emphasis on logistics and administration, and even reduced hours for drivers have all been common changes used by companies in the past to manage costs. Many hope that this price increase will level out as the year progresses and that cutbacks will only have to be temporary.