Diesel prices have been on the rise in recent months, and trucking companies are feeling the pinch. The cost of diesel fuel accounts for a significant portion of business expenses for truckers, so when prices go up, it can be difficult to stay profitable. In this article, we will take a look at how trucking companies are dealing with rising diesel prices and how it is affecting their businesses. We will also discuss some strategies that truckers can use to keep costs down.
A Look Back on Diesel Prices
Back in the mid-1990’s, we were spending roughly $1.20 per gallon, or $2.21 adjusted for inflation. In the U.S., we’re nearly seeing 2.5x that figure as a national average. We’ve seen the surge in the late 2000’s as the housing crisis ran it’s course, and again in the mid-twenty teens, as an industrial recession pushed on, and once again, we’re seeing a surge in prices at the pump. The upside is, each time we had a surge, as markets adjusted, prices normalized the same or below the pre-surge prices. The challenge is surviving the surge. Let’s now take a look at how innovative trucking companies, from owner-operators, to fleet operators, are finding ways to conserve fuel and manage their costs to ensure longterm success of their business.
Cutting Back on Unnecessary Expenses
One of the first ways that trucking companies are dealing with rising diesel prices is by cutting back on unnecessary expenses. This can include things like reducing empty miles, lowering idling times, and improving truck maintenance. By reducing these expenses, truckers can save money on fuel to minimize the impact to their bottom line, or losing business by a significant rate increase. Additionally, it may be a good time to review your insurance policy and premiums with a transportation insurance agent. Insurance costs have been rising over recent years, and working with an experienced agent in your industry may find ways to reduce your premiums or offer greater coverage for your particular needs.
Finding New Customers and Markets
Reducing empty miles seems like an obvious fix, however finding new customers and markets can be challenging, especially for owner-operators. Best advise for those looking to add to their customer base: diversify the types of freight that you haul or expand into new geographic areas. As you well know, diversifying freight types gets tricky if it requires modifications to your equipment. From dry van to reefer, flat bed to lowboy, the trailers you haul do limit the types of freight, but scanning load boards and you’re sure to find opportunities for a return trip with a load that is compatible with your existing equipment. The biggest takeaway is squeezing more out of your existing relationships may not be the most profitable strategy—keep eyes on the load boards.
Streamlining Rig: Maintenance and Fuel Efficiency
We all know that truck maintenance is crucial to the longevity of our equipment and to maintaining a good relationship with the DOT. What’s often over looked is how truck maintenance contributes to fuel efficiency. Simple things like keeping your truck clean, checking your tire pressure, and using the correct motor oil can help improve your fuel mileage by as much as 15%. If you’re not already doing so, consider tracking your truck’s fuel efficiency to help identify any areas where you can make improvements.
If you’ve maximized your truck and trailer’s efficiency, or maintenance costs are getting out of hand reducing your availability, or struggle to maintain competitive rates due to lesser performance than your competition, it may be time to replace your equipment. If you’re sensing now is the time to make a move, contact your ENGS representative to learn about our attractive truck & trailer lease and loan options that can give you an edge and drive greater profitability for your trucking business.