Diesel prices seemed to take their own variation of summer vacation: they laid low all summer long, even reaching an 18-month low of $3.64 during the first week of July 2. But, all good things must come to an end. As the kids returned to school, diesel prices returned to their previous highs and climbed higher. While there's little impact on the average person at the present, the rising prices are putting financial stress on trucking companies nationwide. Also impacted are some retailers who are being forced to add fuel surcharges to customers' orders in order to keep their business in the black.
Trucking company management teams are keeping busy trying to find the best ways in which to make their fleets more fuel-efficient. Furniture Today mentions the Shelba D. Johnson Trucking company, which recently purchased 20 new and used tractors because they get better mileage than their old fleet. They are also buying bulk quantities of diesel for drivers who fill up at the terminal in Thomasville, N.C. While the two cents they save per gallon may look unimpressive, consider that they use approximately 7,000 gallons each day. That two cents quickly adds up to more than $50,000 in savings each year.
Other ways in which trucking companies can help improve their bottom line are to check the tires on their tractors. The better the rubber grips the road, the more fuel they'll save. Auxiliary power units can be installed so drivers don't need to leave the engine idling, thus saving diesel. Attaching wind skirts to trailers can reduce wind drag, thereby making the trucks more fuel efficient. Companies can also use enterprise fleet management software to help keep track of their customers and manage drivers in order to maximize productivity while reducing costs and keeping drivers -- and their cargo -- safe on the road.
While trucking companies do their best to keep their expenses as low as they can, they need to pass some of the increased costs onto their customers in the form of surcharges. Most furniture carriers adjust their surcharge weekly, after the most recent diesel price data is released. However, many consumers have not seen an increase in the products which they buy, even as diesel prices have risen. In an article at ABCNews.com, Mark Zandi, an economist at Moody's Economy.com, says most of the burden is being shouldered by transportation companies and retailers and it won't cause the economy to worsen if the prices stay at their current levels. If the upward trend continues, however, retailers will need to raise prices in order to remain profitable.
Companies with diesel trucks are being impacted by the fuel prices, but diesel cars are still on the drawing boards at a number of car manufacturers. In the next few years, expect to see a rise in the number of diesel cars on the roads as they are said to get 20 to 40 percent better mileage than same-size gasoline cars. Even with the increased price of diesel over gasoline, drivers of these new cars would be ahead of the game, financially speaking. Mercedes-Benz has multiple diesel vehicles available in the United States and they are only $1,000 more than their gasoline counterparts. The company's spokesman, Keith Price, says that overall, the benefits of the vehicle will outweigh the initial cost and increased cost of diesel.
As winter draws near and fuel prices may rise higher, business and fleet owners will be watching the fluctuating fuel prices with a close eye. While new technology and equipment standards help with the cost of fuel, continuing increases will force distributors to raise prices which will undoubtedly send shockwaves through the economic system. The best way to prevent this is for decision makers to cut costs whenever possible to compensate for the tumultuous gas and oil market. Smarter vehicles, more efficient engines and eco-friendly, gas saving routes are the best options for operating margin stability.