News and Articles
July 31, 2022
The trucking industry has suffered dramatically in the past few years, with several conditions straining its profits and functions. Supply chain issues, driver shortages, and escalating fuel costs continue to hit the field hard. Their risks remain tangible and prevalent in an economy facing significant inflation. Agents can offer their clients help by discussing the benefits of trucking risk management programs. In a time of uncertainty, additional input could prove essential.
How Are Gas Prices Affecting the Trucking Industry?
Escalating gas prices stress trucking companies, creating immense pressure to complete jobs and make money. A recent Insider article discussed the impact of fuel problems, citing owners’ complaints of drastic financial costs. Many spend hundreds of dollars on gas a week to complete jobs. Owners report that they struggle to make gains from their regular jobs in a field.
The United States Energy Information Agency reports diesel and gasoline price changes. As of July 2022, the average amount for diesel within the country was $5.27 a gallon. This number is a bump of $1.92 from a year ago. Trucks requiring 120 gallons spend $632 to fill a tank. Every extra dollar spent last year reduces the company's income. Diesel remains critical, an expense that companies can’t cut.
Traditional runs no longer meet business needs, increasing pressure and stress on a busy and necessary industry. Owners must find a way to offset financial differences without making transportation out of reach for their clients but suffering additional losses.
Are High Gas Prices Causing Changes in the Trucking Industry?
Trucking companies face challenging decisions. Can they afford to fulfill a contract, or must they pass on business because it's not cost-effective? These difficult decisions have forced some smaller companies to evaluate their everyday budgets and obligations. Smaller groups may pick up more local jobs, having to double up on their workload. They're working overtime to meet their usual financial obligations.
If possible, trucking establishments add fuel surcharges or freight charges to offset the financial strain of increasing gas prices. They must fill tanks to deliver orders; this tag-on alleviates some gas pump concerns. However, local groups or trucking companies with signed contracts must consider other options. Their agreements prohibit such modifications. Instead, these groups evaluate their overall budget to find cuts in other areas. Management assesses maintenance and overhead, reducing as much as possible and adjusting shipping methods. Some places consider rail viable, sending things by train rather than by truck.
Trucking companies are navigating tricky waters and have a lot on the line. Work with them to understand how trucking risk management can alleviate some of their concerns and help them through these unpredictably hard times. As an agent, understand and emphasize your client's circumstances. ◼
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