Why are we so concerned with fuel prices?

It also just sucks to lose profit when it’s completely unnecessary. None of this should be happening right now.

I buy at least 15,000 gallons per month so going from 2.50/gal to 5 or who knows… $7.50 a gallon is a major punch to the gut. I only have one customer where rates are based on FSC. Also, when the customer is paying higher overall rate due to FSC, there is even less appetite to raise the line haul.

And like Catmando said it spills over into tons of other products. It’s just completely uncalled for having oil and fuel this high.

My employee and driver wages are thru the roof, insurance is high, equipment is completely crazy. If rates do indeed even go down while fuel is rising then it’ll be quite the squeeze and the gravy train screeches to a halt.

 

Well it isn't only the fuel prices.

Fuel prices combined with skyrocketing inflation and complete instability in the world, have created a situation that is a giant question mark and is careening out of control. No one really knows what to think or what to expect but you can see the dark clouds Brewing. And the powers-that-be are shutting their eyes and taking their hands off the wheel and just stomping on the accelerator. Things are truly out of control and only getting worse and it certainly does not look like it's going to get better any time soon.

Now the American people were pent-up during the pandemic and when they finally were able to come back out they wanted to spend and do things. But with all of this out of control, uncalled for insanity, it would be completely reasonable to believe that intelligent people would be spending less and saving more for whatever this is that's coming.

On top of that it isn't just expensive fuel, it's that it is rising so fast that it's difficult to keep track of. When you blink your eyes and fuel has risen by a dollar or $2 or $3, because it probably will, do you really think that the rates are instantly going to jump with that?

You don't really have to be a genius to see that if fuel rises that quickly and there's any decrease in demand that could cause a dramatic shift in rates. I'm not saying that this positively is going to happen, but I would bet that at the very least the increase in fuel will not be offset with the loadboard rates equally, and all of the pieces are in place for this to become something really bad.

Now some people in some segments may not be affected as badly as others, but this is just not looking good.

 

This is the reason I do not believe rates will go down too far. All the mega's now have higher paid employees. They will have to operate that way for now on unless everything crashes.

 

Short haul only. They've gotta throw an extra 150 on top of the rates now. 1350 has to be 1500 now

 

Everyone for some reason always thinks the Mega's run for cheap, thats simply not true.

 

Hauling grain/pet food in bulk doesn’t have a FSC.
And the rate is based on weight.
Say 40/ton 25 ton is 1000$
Now why pay $500 fuel, when the same load and fuel cost was $250.
Commodities don’t rise as well as general freight.

Thats why dog food shortage, the meat and bone and soybean meal, or brown rice and oatmeal pellets rate are the same as 10 years ago.
Actually I’m wrong it was 90/ton to mid Kansas, now it’s 75/ton.
So base that on 25 ton.

 

Not saying they do. I am pointing out that the base line for them is higher than before with Raises in all aspects of trucking. So they will not be lowering it down as much as they have in the past.

 

We transport our own product, so as a % of revenue, transportation is tiny. Still, we'll react, first by changing our distribution routes and times so we can cram more on the trucks, second, by slowing down, and third, by charging more to the customer. We already raised prices close to 10% last March on product (which includes freight in this case), and may bump it again this year. I typically don't raise prices due to fuel until people have had an opportunity to fill up their own vehicles a couple of times and have felt the "ouchy". A lot less arguing that way......