fuel Business

How fuel prices affect the trucking industry

02.20.2020 - 11:52 AM Comments: 0

Fuel, almost literally, is what makes the world go ‘round. It not only has an enormous effect on people’s day-to-day lives, but it also has a massive effect on the economy as a whole. 

In the trucking industry, changes in fuel prices can even dictate economic fluctuations, as it has an enormous trickle-down effect from corporations to consumers. And the issue is, there’s currently no way to get around it.

Whether you’re an owner-operator or an owner of a trucking company, there’s always going to be a fixed cost: fuel.

Fuel is consistently ranked as the top expense throughout the trucking industry. Depending on the cost of fuel for any given week and a carrier’s fuel surcharge, industry folk either finish with a hefty sum or much less than they had expected.

Additionally, it makes spending time on the road a double-edged sword. If you don’t run enough, you save on gas but make less from shipping. If you run a lot, you’ll make money from shipping but lose money on gas. 

Ultimately, owner-operators and companies don’t have a say on fuel prices, so they really have no choice but to run. Subsequently, when fuel prices skyrocket, there is an industry-wide domino effect that trickles down throughout the industry.

When fuel costs rise, it forces carriers to react and raise prices for shippers as well. That then means that shippers will increase prices for receivers to make up for the added costs. 

As the shipping process becomes expensive, it means receivers also have to make up that cost, which inevitably falls on the consumer. Essentially, a rise in fuel prices will usually end up becoming a rise in the costs of products.

It’s also important to note how price hikes on fuel for the general public affect people’s spending habits, however. When people have to pay higher prices for gas, it’s less likely that they’ll spend money elsewhere. 

By combining these two situations, you basically get a difficult economic situation. When people are not buying products, it means that there are fewer products to ship. This then means loads will become limited for truckers, and without loads, truckers can’t make money.

While there’s never been a dramatic rise in prices that has caused complete economic disarray, it’s important to consider how rising fuel prices create the potential for a nationwide, or even global, recession.

So, what do you think about the effect fuel has on the economy? Let us know in the comments or on social media.

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