Across the United States, large and small shippers, alike, are going back to the drawing board in order to adjust budgeted fuel allocations and transportation costs from severe oil market instability in the wake of Russia’s invasion of Ukraine and the subsequent international sanctions that followed.
A year ago, diesel prices were $3.07 per gallon nationally on average; yesterday, they reached a new record at $5.13 per gallon on average (https://gasprices.aaa.com). If prolonged, the pressure on fuel could result in an overall increase of up to 10% on transportation costs for U.S. shippers.
Supply chains were already having a difficult time trying to recover from COVID-related cost increases of carrier capacity limitations, equipment shortages and backlogged cargo collecting late fees from dwelling at ports and inland terminals. Now, businesses moving goods international or domestically will feel the impact across all modes; air, ocean, trucking and intermodal.
8 THINGS U.S. SHIPPERS CAN DO ABOUT INCREASING FUEL COSTS
- Budget, budget, budget. Fuel increases were not predicted at the end of last year and shippers should re-evaluate what was budgeted for transportation.
- Consider where you can cut miles out of your supply chain.
- Distribute smarter by reducing the frequency of shipments and establishing minimum order quantities with customers.
- Choose intermodal over long-haul for half the fuel surcharge of trucking.
- Manage speed of delivery expectations or end up paying more for expedited service.
- Increase average truckload weights to optimize efficiency and reduce fuel costs. The less weight per container, the more trucks must be used to move the same amount of cargo.
- Reduce domestic Less than Truckload (LTL) and opt for Full Truckload to receive preference from carriers.
- Find partners, not short-term promises. Collaborate with your logistics partners to implement real solutions for your supply chain. Rate-baiting will only deliver empty promises on the long-run.
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