Impact of Rising Fuel Costs and How To Save Thousands on Fuel
It is no surprise that fuel costs are one of their biggest expenses for trucking companies. The rise of fuel costs has an enormous impact on the trucking industry. It is hopefully clear, now more than ever, that it is important to find ways to save on fuel. This is especially true for newer and/or growing trucking companies whose finances may be tight. In this blog post, we’ll explore how rising fuel costs affect the trucking industry and how trucking companies can save thousands on fuel.
The Impact of Rising Fuel Prices on the Trucking Industry
As you sit and read this article it is likely you have discussed with others how higher fuel prices have affected your life. The rise in fuel prices has been felt by businesses and consumers in the U.S and the world, especially trucking companies. When fuel prices rise, trucking companies are met with several difficult decisions and changes to make.
Higher costs at the pump cause trucking companies to adjust to the increase in their operating expenses. This increase leads them to do one of two things: raise their rates or absorb the cost. This decision can lead to huge financial difficulties for trucking companies. It can be even more problematic for smaller trucking companies as they operate within tighter budgets and absorbing these increased expenses is not as likely. Often, without the ability to absorb these increased fuel expenses, it can potentially lead to them shutting down operations indefinitely.
It is recommended to not raise rates for hauling loads, but rather use a fuel surcharge to offset the increased fuel cost. This is an industry accepted practice that is specifically in place to protect trucking companies in a rising fuel cost environment. If the trucking company has a contract with a direct shipper, it should make sure a baseline fuel cost is referenced and the pre-approval of charging a fuel surcharge should that baseline cost be exceeded. If the carrier is hauling for a broker, then the rate confirmation should indicate the availability of the surcharge. An owner-operator should expect the carrier to pass through all of the surcharge as well. Remember, the surcharge is not intended to cover the complete increase in fuel cost but is used to help offset it. The trucking company still has to manage all of its expenses to absorb the impact. The next best solution, and one that can help regardless of low or high fuel prices, is finding ways to save on fuel.
How Trucking Companies Can Save Thousands on Fuel
There are a number of ways that trucking companies can save money on fuel. One of the most common ways is to use a fuel card when purchasing fuel for your fleet. These fuel cards can offer discounts of $.25 – $.50 cents per gallon (average savings of 69 cents per gallon is based on actual in-network TCS client transactions 0f 2022) which equals sweet savings for the business.
There are tons of fuel card programs on the market, and it can be overwhelming when it comes time to choose. Choosing the right fuel card for your trucking business can have a major impact on your bottom line. Here’s recent blog that discussed how to find the best fuel card.
Another way trucking companies can save money with fuel costs is to sign up for a fuel management program. Fuel management programs help businesses track their fuel usage and mileage for their entire fleet. The program will collect all the necessary data and then suggest improvements to routes and ways to improve mileage, leading to savings.
One last way to save thousands on fuel costs is to install devices on your trucks that help monitor speed and idling times. These features can help you make necessary changes to driving habits and thus save money on fuel. By following these tips, trucking companies can save thousands of dollars on fuel every year.
Hopefully it is clear now how rising fuel prices have arguably the largest and most direct impact on the trucking industry compared to others. Rising fuel costs leave trucking companies with two hard choices to make. Raise the rates they are charging (if no fuel surcharge is available) or find some way to absorb the extra costs. Making these decisions can lead to financial difficulties for the company and potentially shut them down indefinitely. However, there are a number of ways outlined in this article that trucking companies can take to save money on fuel, such as using fuel cards or signing up for a fuel management program. By following these tips, trucking companies can save thousands of dollars on fuel every year.
Have any thoughts on our fuel-saving tips? Leave a comment below.
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