What You Should Know About Rising Fuel Prices

With government regulations shifting, frequent occurrences of natural phenomena¹ and increased supply without increased demand, the fuel economy has been in a state of flux. According to a recent outlook report from Deloitte, while 2017 was a year of growth for the oil and gas industry, 2018 is set to be a period of change. Gas prices are already on the rise across the country in the first few weeks of 2018,² and it's unknown how high they'll reach.

For carriers and small shipping companies, any increase in fuel prices can drastically influence overhead operations costs and impact profitability. Let's take a look at why rising fuel costs are important to independent shipping organizations and discuss actionable steps that businesses can take to thrive despite rising costs.

Fuel prices are trending up

Overall, crude oil prices are poised to increase to around $60 per pound in 2018.³ This in turn will make average gasoline prices rise to around $2.57 per gallon in 2018⁴, up from $2.42 per gallon in 2017,⁵, with diesel prices also on the rise. These numbers may seem like a few pennies and dollars now, but will quickly compound into a huge blow to overhead costs. As it stands, carriers, shippers and distributors rely heavily on both gasoline and diesel to get shipments from point A to point B.

Additionally, while the rising costs of both gasoline and diesel are important for all carriers to consider, they’re even more critical for hazmat distributors in the oil and gas industry. Time is money when it comes to moving fuel, and these carriers especially must proactively address fuel efficiency and work to shorten travel times. This includes tapping into more efficient routes, instant location information and improved response times.

How small businesses can combat higher prices

One of the easiest ways for all carriers and small trucking companies to start streamlining fuel efficiency in 2018 is through the use of technology. Near real time software can help companies better understand where trucks are going, the routes they are taking, and where opportunities for improvement lie.

For example, DiPinto Brothers in Edison, New Jersey specializes in delivery of containers to and from the ports in the New York area. It operates more than thirty vehicles that travel throughout the Northeastern seaboard, and its fleet racks up 133,000 miles per week.

"You have to route accurately so good planning is vital," said John Puya, Fleet/Safety Director at DiPinto Brothers. "It's all about taking the most direct route so you don't waste driver time or fuel."

Find out what's impacting your fuel efficiency

To continue to combat the effects of rising fuel costs in 2018, businesses can leverage near real-time GPS tracking to monitor fuel efficiency–allowing them to better understand how much gasoline or diesel is consumed by their fleet each year. In addition, they can pinpoint where there is waste in their operations and create action plans to become more efficient long-term.

Some of the lesser-known areas that impact fuel efficiency include:

Find out how your peers view and use GPS fleet tracking with 2020 Fleet Tracking Trends Report. Download now. 

• Vehicle Speed: Did you know that every time a driver goes 5 mph above the posted speed limit it can cost up to 20 cents more per gallon of gas? Sophisticated GPS fleet tracking systems can monitor when drivers are exceeding posted speed limits and help managers educate on efficient speed methods.
• Idle Times: Another shocking area of fuel waste is idle engines. According to the U.S. Department of Energy Office of Energy Efficiency & Renewable Energy, Idling can use a quarter to a half gallon of fuel per hour.⁶ Owners and managers can leverage GPS fleet tracking software to be notified when a truck is idle for too long, allowing them to engage with their drivers in a teachable way to help increase productivity and reduce fuel waste.
• Routing & Dispatching: At the end of the day, increasing fuel efficiency comes down to shorter routes and better-informed drivers. When dispatchers are tracking traffic patterns in near real-time, they can quickly inform drivers of most direct route for the shortest travel times. For service vehicles, dispatchers can use GPS location services to easily identify vehicles in the area and send the closest ones to any job site.
• Vehicle Maintenance: Making sure your fleet receives regular maintenance can keep fuel costs down over time. In fact, keeping an engine properly tuned up can help increase gas mileage by an average of 4%.⁷ Quality fleet management systems can alert drivers, managers, and owners when vehicles are due for maintenance based on date, mileage, or engine alerts.

With the right technology and ample planning and preparation, all facets of your business, from back-end operations to drivers, can streamline efficiency and stretch the boundaries of fuel costs in 2018.

¹ http://fortune.com/2017/08/31/hurricane-harvey-gas-prices-national
² https://business.gasbuddy.com/gas-prices-continue-to-move-higher-as-2018-begins
³ https://www.eia.gov/outlooks/steo
⁴ https://business.gasbuddy.com/wp-content/uploads/2018/01/2018fueloutlookvUSF.pdf
⁵ http://bjournal.com/2017-saw-gas-price-swings-2018-starting-off-in-the-middle
⁶ https://www.fueleconomy.gov/feg/driveHabits.jsp
⁷ https://www.fueleconomy.gov/feg/maintain.jsp