While sticker shock used to be predominantly experienced in the mall or on a retailer’s website, today’s drivers are experiencing it at the pump. While the increased costs drastically change the budgets of some commuters, the ramifications of increased fuel prices are multiplied exponentially across the transportation and logistics industry. As a result, the mounting pressure against today’s industry leaders intensifies as rates decline and fuel surcharges rise.
The State of Diesel Costs for Summer 2022
According to the US Energy Information Administration (EIA), the national average for highway diesel has remained above $5.00 since March 14, 2022, and above $5.50 for the first four weeks of May’s data. With a $2.23 difference between May 23, 2021, and May 23, 2022, national rates, major global carrier networks have continued to institute significant surcharges. Utilizing the EIA data from the week prior, FedEx has a 19% ground surcharge for the week of May 30, while UPS’s ground surcharge is slightly less at 17.75%. With international and express rates accruing higher surcharges, global shippers have to choose between “the lesser of two evils” to focus on saving money in other areas.
What’s Keeping Fuel Higher?
While the sources of rising fuel costs are complex and interconnected, a few primary reasons rise to the top. First, when the demand for fuel suddenly decreased so drastically at the beginning of the pandemic, the oil industry could not find ways to stop production fast enough to prevent flooding the market with record-low costs of fuel. As the demand rapidly rose at the beginning of 2022, the Russia-Ukraine war stripped the global market of available crude oil sources.
In addition, the US Census Bureau News released data that showed quarter one e-commerce sales added up to 14.3% of total sales at an estimated $1,747.3 billion total. This 2.4% increase from the last quarter of the previous year proves that direct-to-consumer sales are continuing to level their home in the retail market. However, as consumers make fewer purchases in person, where the end consumer covers the final mile of transportation, shippers have to foot the bill for increased carrier optimization.
How Can Shippers Maintain Control Over Rising Fuel Costs?
Although the current supply chain climate might leave shippers feeling cornered, a better transportation strategy outfitted with cutting-edge technology can enable shippers to take back ownership of their freight costs.
- Multimodal Visibility – By leveraging a freight visibility platform, shippers can track carrier progress to verify if and when they need to end a partnership.
- Cost Transparency and Understanding – Because freight invoice errors happen, shippers must prioritize the collection and comprehension of all operating costs.
- Shipment Consolidation – A business intelligence tool with actionable analytics can tell shippers when consolidating options such as zone skipping should be considered.
- Reducing Sense of Urgency in Every Order – While some orders truly qualify for expedited service, when a shipper maintains available capacity through their carrier network, they can take their time choosing the right option and returning customer quotes.
- Funnel All Data Through Single Source of Truth – Freight analytics are only helpful if the underlying data is robust, high-quality, and actionable. Ingesting and then normalizing data into a system that yields better decision-making, business intelligence, and analytics technologies.
Keep Your Transportation’s Fuel Costs Out of Mind With Actionable, Insightful Insights From Intelligent Audit
While the rising gas costs are unescapable outside of work hours, the stress accumulating in the freight atmosphere can be stressful. By partnering with a freight audit and business intelligence company, shippers can gain insight into operations, optimize technology usage, and take control of business costs. Intelligent Audit has been a premier source of smarter, more efficient shipping for over 20 years. So start a conversation with Intelligent Audit today.