Be Informed: Weekly Fuel and Diesel Prices

February 9, 2017

It’s hard to believe that a few short years ago, the biggest economic concern for the freight industry was the price of fuel. It seemed that prices were destined to stay high as the world reach a so-called “peak oil” stage, and carriers and shippers started to prepare for this new norm. Then, almost as if by magic, oil prices dropped, and fuel was no longer an out of control operating cost.

Last year was filled with enough blockbuster events (inside and outside the world of freight) to last a decade, and those events have somewhat obscured the fact that oil prices are once again on the rise, and once again have the potential to significantly impact shippers and carriers.

The only difference now is that there is weaker demand than the last time fuel prices ramped up, when pent up inventory restocking led a freight resurgence that was followed by the beginnings of a true freight recovery.

But the current combination of weak demand and potentially higher diesel prices create what can only be called an unfavorable situation for carriers. They’d likely be unable to pass on higher fuel costs to customers due to overcapacity (a situation which would worsen for carriers if autonomous trucks gain traction sooner than later). And that could rebound on shippers, if the pool of carriers on certain lanes shrinks due to those pressures.

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