How to Manage Rising Fuel Prices
Impacts to small carriers and reefers are particularly hard hit…
By Kelly Greenlee
Whether you’re in the logistics industry or not, you’ve experienced the increase in fuel prices across the nation. Independent truckers and carriers are feeling the squeeze even more as the rising costs affect their bottom line.
Smaller Carriers Are in a Tough Spot…
Typically, smaller carriers don’t have access to the broad network larger carriers do which allow them to negotiate for cheaper fuel prices. Mixed with the current parts and labor shortage, many small carrier companies are being forced to choose between maintenance or fuel. Because these small carriers usually have tighter profit margins than the bigger trucking companies, they may face major problems in the near future.
Smaller carriers also tend to have less financial cushion and less capital than their larger counterparts.[i] Since bigger companies had a stockpile of fuel and other materials, they are just now feeling the effects of fuel increases, while the smaller companies have been suffering for some time now.
The Heat of the Summer Is Only Making Things Worse…
Summer months always mean a price increase at the pumps, but the industry is already feeling it more this summer than ever before. Not only is there an increase in driving during the holidays, but more people tend to take vacations while the kids are off from school. This is also the time when refineries switch from the winter fuel blend to the more labor-intensive summer blend.[ii]
The usual demand plus outside influences such as geopolitical conflicts and global demand contribute to rising prices as well. These increases in fuel prices directly translate to increased operating costs which then turn into increased prices for the customer. Industry experts expect the current fuel climate to continue until 2023, making it of crucial importance for businesses to have a financial cushion.[iii]
It’s not all bad, though. If we can continue domestic oil and gas production, the prices should remain relatively stable. Also, the FMCSA is adding fuel and natural gas products to an Hours of Service waiver.[iv]
How Do I Increase Fuel Efficiency?
With all these increases, trying to make your dollar stretch further is top priority. The most obvious way to increase fuel efficiency is to be mindful of your driving. Idling too long, accelerating and decelerating too much, and speeding can all affect your fuel consumption and reduce efficiency.
For reefer trailers specifically, inspect your liner, insulation, roof, and floor regularly for thermal integrity. Keeping your load cool is of the utmost importance, and if these aspects of your trailer are not well-maintained, it could end up costing you a lot of money. Your cooling units will have to work overtime to keep your load at the right temperature. If moisture gets into the liner, reefer trailers can gain hundreds (sometimes even thousands) of pounds over the years, reducing efficiency and load size. Additionally, a traditional liner will not prevent outgassing. Outgassing can cause a reefer trailer to “lose up to 25% of insulating capability, reducing the ability to maintain thermal integrity.” All of which could really wear on your fuel and bottom line.[v]
All in All…
Downward pressure on pricing combined with upward pressure on costs is a recipe for disaster for carriers. In constantly changing economical environments such as these, it’s important to have the right connections. Third-party logistics providers have a vast network that can help you weather the tides. A seasoned broker like RMX helps protect you against major shifts as capacity and supply disruptions continue to be present.
CONTACT US today to experience next-level logistics services.