Trucking Sector Takes Advantage of Low Fuel Costs
Even though the operations of the trucking industry are not entirely smooth nowadays, they are still not experiencing any major potholes. As compared to last year’s numbers, the tonnage of the transported goods has increased by 2.5% and will continue to rise throughout the next year. Although factory inputs have decreased slightly, the inventories have continued to increase as well.
Bob Costello, chief economist at the Arlington, VA-based American Trucking Association, said, “There’s been some interesting developments in 2015. The industry is still growing, but freight slowed down. If you ignore the Great Recession, inventory levels are at the highest we’ve seen in more than a decade.” According to Costello, lower fuel prices have served as an advantage as well as disadvantage for the transportation enterprises.
The oil prices have dropped to an 11-year low, with the price of $36 per barrel. This is the result of the advanced local production and low consumer demand. According to energy analysts, the bottom-out oil prices of crude have increased the demand for oil carrying trolleys. Regarding the oil-carting trucks, Costello stated, “That generates a lot of business for trucking, going and getting the oil and gas.”
Moreover, the haulers don’t have to pay an additional $5 for a gallon of diesel fuel. According to Triple-A the diesel fuel prices are reported to stay at an average of $2.141. Costello said, “The drop in diesel fuel prices have been a big help. For most trucking companies, diesel is right up there with driver pay as a No. 1 expense. A driver shortage continues to be an issue, despite the slower growth in volumes. You got a shortage of drivers, driver pay is going to go up, so they’re taking some of that savings and giving it to the drivers.”
With fuel prices dropping, the fleet companies are able to pass the profit savings to their drivers, which can help in retaining them. The low fuel charges have also helped in cutting down the surcharge on the delivery products.
According to Dick Donnelly, CEO of Warren Transport, a Waterloo-based trucking firm, it has been a positive impact. He further said, “There’s over a dollar difference per gallon in fuel this year, so charges and shipping costs have been reduced considerably because of that.”
Even though the low fuel prices have complimented the trucking industry in 2015, the transportation sector is still skeptical over the plummeting farm industry which is a major component of their business.
Donnelly explained the slumping agricultural economy and its effects on the trucking enterprises by saying, “Our goal is to diversify and find multiple shippers of better and different segment of the industry manufacturing outside of ag products and ag construction. We’re meeting it head-on, and we’re making positive steps to getting into those markets and recovering what we’ve lost. It has been a big hit.”
Regardless of the problems that the trucking industry is facing, Costello is hopeful that it will continue to perform well and boom next year. He said, “I wouldn’t say this is the greatest time we’ve ever seen, but it’s certainly not the worst. But most importantly, the fundamentals are solid. We just need to work through this inventory. Things in 2016 can be even better than they were in 2015.” – See more at: http://truckernews.com/trucking-sector-takes-advantage-of-low-fuel-costs-p620-90.htm#sthash.E8NzoWde.dpuf