Solving the high price mystery and providing solutions to help carriers save at the pump.
Diesel prices. How high will they go? That’s a question that is yet to be answered. Right now, we can confidently say that they are high. One year ago, the average price of diesel was $3.13 according to AAA. Now, the average price is above $5.50. With this rise in prices, there are lots of questions to be answered. Questions like…
- Why are prices so high?
- What can carriers do to improve their fuel efficiency and save at the pump?
- How will shippers be impacted?
The answers to some of these questions are a bit complicated, to say the least, but we’re here to help.
Let’s start by tackling the question we all have asked ourselves: Why are prices so high? We like analogies here at LYNC, so here’s one for you. Imagine you are about to dig into a delicious cake. Ingredients were needed to make that cake, and each ingredient added to the total cost of the overall recipe. That’s what we’re dealing with when we look at diesel prices. As you well know, there is a lot going on in the world right now that is contributing to these high prices. Take the situation in China, for example. Several cities there are currently under lockdown due to COVID-19, and the country’s economy has slowed. Traders believe this could be an indicator that the global economy may be headed for a slow down as well. Another factor is the ongoing crisis in Russia and Ukraine. We touched on this in our blog from March that specifically focused on the potential effects of this crisis. You can read it here.
One of the most concerning factors that is contributing to this is something that is just now really beginning to play out. As we enter into the summer months, there are major concerns about diesel shortages, especially on the East Coast. The Wall Street Journal’s Market Watch recently published an article stating that the country’s supply of diesel fuel has been diminishing since the start of the pandemic in 2020. The decline can also be attributed to a recent rise in diesel exports and a reduced refining capacity. For people, like us, who love numbers, the US government’s Energy Information Administration said the inventories of distillates just hit a low of 104 barrels. This is 23% below normal and a 17-year low. Major trucking stations like Love’s and Pilot have released statements saying they are closely monitoring these shortages. You can trust that our team will keep an eye on the situation as it develops as well.
What Can Carriers Do?
Is this situation concerning? Of course, it is. Much of it is out of our control, but there are things carriers, specifically, can do to save money at the pump.
- Download an app like GasBuddy to monitor diesel prices as you drive.
- Sign up for fleet fuel cards. These cards are usually designed to work like credit cards. Some even come with features that allow carriers to put limits on the amount of fuel a driver can purchase in a day or keep track of purchases in real-time. There are a ton of card options out there. The key is to find the right one for you because some have a larger network of stations than others. You can also get fleet fuel cards from specific gas companies like Exxon, Sunoco, Shell, and BP.
- Add wind resistance equipment to your trucks. Less wind resistance means more savings.
- Keep a close eye on your tire pressure. Underinflated tires mean you won’t get as many miles per gallon.
- Use cruise control because it maximizes fuel consumption.
- Avoid the temptation to overfill your tank.
- Adjust your cargo so that it is even and low. If you have an uneven load, place your higher cargo towards the front of your trailer.
- Idling isn’t a fuel-efficient tactic. Avoid doing it as much as possible.
- Look into trucks that run on electric or alternate fuels like natural gas.
- Use a GPS app to avoid traffic jams when possible and to find the quickest routes.
We’ve Got Your Back
Carriers and shippers, LYNC Logistics is here for you. We know you have questions and concerns. Shippers, we also know you are wondering what all of this means for shipping prices and what you can do now to prepare for any price increases. Our team is ready to walk with you every step of the way as we navigate this situation that is changing by the minute. At LYNC, there are no brokers, just fixers. Give us a call at (423) 305-7600 to speak with a member of our team today