The Impact of Low Fuel Cost on the Trucking Industry
by Apex Capital | April 5, 2016
In America, drivers have been very excited about the drop in fuel prices over the past year. Who wouldn’t? Since 2014, there has been a steady, yet dramatic, decline in gasoline as well as diesel fuel. We saw the price of diesel go from over $4 down to less than $2 in some areas. It’s great for the average traveler. It’s not always so great for the trucking industry. This article will explore the causes and effects of low fuel prices on truck drivers and their companies.
Causes and Effects of Low Fuel Prices on Truck Drivers
Across the globe, increased oil production and decreased demand have helped to depress oil prices. Events which should cause oil prices to rise (militants in the Middle East, the rise of ISIS, fighting in Libya and conflicts with Russia) have not been enough to slow down the intense decline in oil prices. Here in the states, things like more drilling, better fuel efficiency and standards and a boom in North American crude production has changed the balance of supply and demand.
The effect all of this has had on the trucking industry has been major. With a decline in diesel prices comes an imbalance in the industry’s practice. Shippers and manufacturers tend to pay by the mile. To keep their own investment and enterprise running smoothly, many shippers are paying as low as $0.28 per mile, according to alltrucking.com. But sadly, most of them pay so little that it’s difficult just to keep your truck running in decent shape. In the past few years, shippers and freight forwarders have been lowering their freight invoice prices. What this means is that the driver is still taking the same route, the same freight and the same amount of time, but is getting paid less. Truck drivers have to haul more to earn what they were making a couple of years ago.
What Can You Do?
There is no way to predict with certainty how oil prices will change, if at all, over the next year. Here at Apex, we’re working diligently to ensure that our clients don’t feel the brunt of the price decline. With the Apex Fuel Finder, our clients can plan their entire trip, find the cheapest fuel along the way and even find the truck stops with even more discounts on top of that! We’ll be watching, and waiting, to see what happens with fuel prices and other challenges around the industry. Subscribe to our newsletter below to receive up to date and important information regarding the trucking industry and fuel prices!