The Impact of Fuel Pricing on the Trucking Industry 

Fuel powers the trucking industry. When fuel prices spike, trucking businesses experience smaller profit margins and increased pressure to make enough money to offset higher fuel costs. Bigger fuel bills mean truckers need to maximize their fuel efficiency and avoid routes that consume excessive fuel.

Rising fuel costs in trucking are always a possibility. Even if prices are down from 2024, they can still go up. Carriers and owner-operators must understand how to cope with rising fuel prices and employ fuel management strategies to keep their businesses profitable.

Factors influencing trucking fuel prices

Global and domestic conditions affect fuel prices, and most of these factors are out of your control. For example, a war in another country or a local storm can lead to sudden changes in fuel costs. Here is how each factor contributes to the final price of your diesel:

• Crude oil: Crude oil is petroleum that companies pull from the ground. It needs refining before it can be put into your truck and used as fuel. The price of crude oil alone makes up 50% of the cost of United States retail on-highway diesel. Global supply and demand can spike crude oil prices and increase the cost of diesel.
• Global events: Global conflicts, natural disasters, or even decisions made by the Organization of the Petroleum Exporting Countries can cause price shifts.
• Refining capacity: Once crude oil is harvested, it needs refining. However, problems in the refining process create cost spikes. If there are maintenance issues, refinery outages, or local issues, the diesel supply can become limited.
• Seasonal demand: It’s common to see higher fuel costs in summer as more people travel. Weather events like hurricanes also increase demand and prices.
• Environmental policies: Renewable fuel standards and policies may drive up costs in the long term. Governments working to reduce carbon emissions and invest in renewables could increase taxes on fossil fuels.
• Taxes: Transportation taxes and regional regulations can increase fuel prices.

The impact of fuel pricing on trucking rates

Rising fuel costs can stretch your operation thin, increase expenses, and cut in to your profits. Fuel is the second-highest cost per mile for carriers, with driver wages coming in first. Reducing your cost per mile is critical for increasing profits. With fuel taking up so much of your expenses, it’s critical to know what you’re up against and come up with ways to reduce fuel costs.

Reduced profits

When major expenses increase in cost, profits suffer. Carriers and owner-operators could see reduced margins as fuel prices rise. If you have fixed-rate contracts locked in, you often can’t pass those increased costs down through surcharges. Instead, you have to eat the cost and hope you can make up profits somewhere else.

Small business challenges

Independent drivers often don’t have the resources or cash flow to absorb price spikes like larger operations. Owner-operators might cut routes, delay maintenance, or park their trucks to avoid dealing with price increases. Without enough freight, small businesses can fail, so it’s critical to have a way to stay afloat when fuel prices remain high.

Difficult fleet planning

Fleet managers often adjust route planning to reduce fuel costs. They might reroute trucks and limit load acceptance, which strains operations. Managers have to stay on their toes and plan routes on short notice as prices jump. Week-to-week swings make budgeting more complex, which can slow efficiency.

The effects of fuel prices on the supply chain

The effects of high fuel pricing don’t stop at the trucking industry. They ripple out into the entire supply chain. When diesel costs rise, the price of moving goods increases, which means transportation budgets, delivery times, and consumer prices all shift. If fuel is more expensive, transportation costs balloon, and these price increases are passed on to the consumer.

Carriers will try to avoid shipping in certain lanes, while high-profit freight will see increased competition. Everyone in the industry will face pressure to drop prices initially to undercut the competition. It’s common to see some businesses disappear or reduce consumer demand as prices increase. Consolidated shipments and reduced shipping lanes lead to delays, further driving up costs. High fuel prices create a more expensive, slower supply chain.

Strategies for reducing fuel costs in trucking

While you can’t control fuel prices, you can control how you handle them. The right fuel management strategies for trucking can help you survive difficult times and stay profitable.

1. Invest in route optimization.

Deadhead miles lead to higher fuel costs without any profit to make up the difference. Use route planning tools to reduce empty runs and cut unnecessary detours. Route optimization tools help you avoid traffic jams and cut fuel costs. You can also consider jumping on a load board to fill empty trailers. Load boards point you to loads that fit your operation, so you avoid deadheading and driving empty miles that only cost you money. Truckstop Load Board Pro and Advanced levels both feature Fuel Desk, a tool that helps you cut fuel costs and optimize your fuel spend.

2. Use regular maintenance.

Preventive maintenance pays off more than you might think. Maintained engines are efficient engines, and they use less fuel than worn-out parts. Clean air filters and inflated tires can also improve fuel mileage. A little maintenance will boost fuel efficiency and reduce breakdowns.

3. Track performance.

Encourage drivers to avoid idling for extended periods, and invest in safe driving training to improve fuel conservation and driver safety. Then, track driver performance to optimize fuel use and driving efficiency. Telematics systems show you driving habits, which lets you adjust driver behavior to reduce fuel use and freight hauling inefficiencies. With carrier monitoring services like Truckstop SaferWatch®, you can review carriers for safety and reliability. Partnering with carriers who drive safely and have a successful track record can reduce your wasted fuel costs.

4. Try fuel surcharge contracts.

Fuel surcharge policies can help control your fuel costs. When negotiating your contracts, build in clear fuel surcharge policies. If fuel costs increase, you have surcharges built into your agreement to help offset these expenses. With a contract in place, you can maintain trust with partners and avoid complications over fuel costs. This protects your business relationships and bottom line.

5. Consider fuel card programs.

Fuel card programs can help reduce fuel costs in trucking. Investing in a fleet fuel card lets your operation access fuel discounts when you fill up at certain locations. Use card programs to track fuel expenses and make driving more affordable. The Truckstop Fuel Card, for example, can save you up to $2 a gallon on fuel all across the country.

Maximize load profits with Truckstop.

Rising fuel prices are part of the game, but they don’t have to eat in to your profit margins. Truckstop offers the technology you need to find profitable loads and reduce expenses on the job. The Truckstop Load Board makes it easy to find profitable loads, work with reputable brokers, and optimize your freight operation from your phone. Plus, Truckstop Rate Insights gives you access to the latest rate data so that you can stay competitive. Request a demo today to navigate the freight industry with confidence.