Although the trucking industry constantly changes, one issue always remains constant: cost. With fuel prices fluctuating daily, it’s not uncommon for fuel costs to cause even the most well-established industries to feel the pinch. Fuel prices will only get higher in the coming years, which is why we’ll look at how elevated fuel prices are affecting the trucking industry today and what you can do to avoid being affected by this cost tomorrow.
What Happened
The American Transportation Research Institute, a non-profit research organization for the trucking industry, published its 18th annual Top Industry Issues report on October 22. The report identifies the top industry concerns, including fuel prices, driver shortage, truck parking, driver compensation, the economy, and for the first time, speed limiters.
According to ATA Chairman Harold A. Sumerford Jr., “ATRI’s list is a true depiction of what it was like to be a trucker this year.” Finding drivers and high fuel prices were two of our industry’s main concerns; these problems were made more challenging by the economic situation and the ongoing truck parking shortage. Thankfully, ATRI not only identifies the problems but also suggests a variety of potential fixes that policymakers could implement.
Fuel prices were named the top industry concern in a year with record-high fuel prices, surpassing the driver shortage, which had been the utmost concern for five years. The lack of available truck parking was also among the top problems this year, followed by the shortage of drivers. Rounding out the top five this year was Driver Compensation and the Economy.
This year’s survey included more than 4,200 participants from the trucking industry, including motor carriers, truck drivers, industry suppliers, driver trainers, law enforcement, and others.
What is Happening to the Trucking Industry?
The trucking industry is one of the fastest-growing industries in the United States. The industry is expected to develop a 5.20% CAGR during the forecast period from 2022 to 2031. Additionally, trucking is one of the few industries that is seeing strong growth across all demographics — the number of 18- to 24-year-olds working in trucking increased by 53% between 2006 and 2016, while the number of people aged 55 and over working in trucking saw a 260% increase.
However, demand for goods is also growing, which puts pressure on trucking companies to invest in new technology and equipment. This has led to costs rising faster per dollar than the general inflation rate. Regular motor gasoline prices increased by 49% from January to June 2022, while diesel fuel prices increased by a slightly higher rate of 55%. In contrast, general inflation rose just 8.2% over the same period. This has put pressure on the trucking industry and put profits under threat.
How Elevated Fuel Prices Affect the Trucking Industry
With fuel prices rising faster than the rate of inflation, trucking companies are starting to see a significant drop in profits. As fuel costs are such a large part of the trucking industry’s costs, they are a crucial indicator of how profitable a company is. Rising fuel prices can strain a company’s profit margins, and many companies report that fuel costs account for half of their total costs. As the need to drive long distances is something that all trucking companies face, it’s not surprising that rising fuel prices are causing many companies to re-evaluate their routes and routes they are no longer serving.
Conclusion
Fuel costs are likely to rise further as the economy grows, and there is little sign that we are at the peak of the price spike. Fuel prices are unlikely to return to the kind of downward trend we saw in early 2017 when prices fell from $3 per gallon in February to $1.90 in July.
They are likely to remain at the current level or rise further in the coming years as the demand for fuel grows and oil production remains relatively stable. The trucking industry will likely feel the effects of rising fuel prices for some time, so companies must prepare for what’s to come.
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Contact us today to learn how to streamline your business and cut unnecessary costs.
