Freight-Shipping-Rates-Not-Affected-By-Drop-In-Fuel-Prices
September 25, 2008
During the week of Sept. 8, fuel prices for diesel dropped over 2 cents a gallon, the seventh such decline in as many weeks reports the Department of Energy. Unfortunately, the Gustav hurricane did cause refining disruptions, so that a nominal fall in crude oil prices did not affect fuel pricing substantially.
Senior economists report that the small decline is a signal that there may be no future diesel fuel price declines in the near future. Despite the recent 44 cent drop over the past several weeks, diesel fuel is still almost 89 cents more expensive that it was at the same time last year. This means trucking companies paid more than $900 million more in fuel costs as compared to last year.
Freight shippers who are looking for cheap freight shipping and lower freight costs need to be aware that most freight companies are not passing lower fuel costs on to their customers. Rather, freight companies continue to push for higher fuel surcharges, insofar as fuel surcharges have become a profit center for carriers during the past year. This profit center is making up for lower freight tonnage in the industry in general.
LTL and truckload freight companies alike defend their not reducing freight charges. "We're getting killed by fuel increases," complains one freight company operations manager. "Diesel goes up 200% in the past few years then backs down a few percentage points. That doesn't help us much."
The bottom line for freight shippers is that they need to work with larger volume outfits that are able to negotiate lower fuel surcharges with their freight carriers. When shippers get their freight quotes, they should be sure that fuel surcharges are part of the quote; then they can be sure they are getting the cheapest freight shipping rates they can obtain in this challenging marketplace.