Fuel prices rising, affecting trucking industry

Each year, the cost of fuel for passenger vehicles and commercial trucks starts to rise around the start of the summer, as more people hit the road and demand rises. It seems as though 2018 is no exception, as the cost of diesel is certainly on the rise, and having a potentially significant effect on not just the trucking industry, but also the cost of everyday goods.

Along with the cost of drivers - which has been skyrocketing for some time as the trucker shortage wears on - fuel prices are likewise ticking up at rates not seen in some time, according to Trucks.com. Trucking companies' expenses are dominated by fuel and labor costs, and as of mid-June the price of a gallon of diesel had risen 29 percent year-over-year to the highest level in almost three and a half years.

A costly future?
Meanwhile, experts are predicting that diesel costs are only likely to keep rising for much of the rest of the year, and could close 2018 hovering around $3.50 per gallon, the report said. Coupled with higher labor costs, that could start to put the pinch on more companies in the trucking industry in the second half of the year, which will then be passed on to shipping clients and eventually consumers.

"So when you see these increased costs you are going to start to see those bear out in transportation costs for the supply chain," Rebecca Brewster, president and chief operating officer of the American Transportation Research Institute, told the site.

What comes next?
The problem over those previous 12 months is that the harsh winter weather experienced in much of the northern U.S. led to significant demand for heating oil, which diverted production capabilities away from bolstering diesel reserves, according to Barron's. Likewise, damage to refineries along the Gulf Coast by September's barrage of hurricanes and tropical storms set back normal production capacities and schedules.

Industry data shows that the U.S. uses about 39 billion gallons of diesel fuel for the trucking industry, and government data likewise shows that national fuel reserves are now at the lowest level, the report said. This has created something of a perfect storm to drive up expenditures and keep them inflated.

To put the rising cost of fuel into context, a day's worth of driving for just one tractor trailer now costs freight companies about $340, and again, that number is only likely to keep rising over the next several months, according to Tallahassee television station WTXL. For most vehicles, a five-cent increase in the cost of a gallon adds another $20 per fill-up, so even smaller trucking companies have seen their fuel expenditures rise by hundreds or even thousands of dollars per month over the past year.

These are issues freight companies certainly need to monitor closely, especially as labor expenses continue to rise. Making sure there's enough in the budget to keep trucking operations running smoothly and continually meet demand is vital to continued success in this increasingly competitive environment.