Carriers Impacted Amidst Fuel Supply Chain Issues and Fuel Price Escalation

Trucking companies across the country are bracing for effects in the fuel supply chain.  An increasing fuel shortage is possible and being closely monitored, given a variety of causes. The latest and largest reason being the shutdown of the Colonial Pipeline, due to the May 7th cybersecurity attack by an Eastern European-based criminal organization.

This pipeline transports approximately 45 percent of the fuel consumed on the East Coast. Another reason includes the government relieving of coronavirus restrictions of which have led to recently increased activity among consumers, amidst supply that was artificially low. 

As these supply chain issues in many East Coast states are leading to a decrease in overall fuel supply, there is an immediate heightened consumer panic demand on top of the consistent diesel fuel trucking demand. Due in part to this, fuel price is climbing and is anticipated to climb even more. Per the United States, Energy Information Administration (EIA)’s weekly releases, the price of diesel per gallon has escalated for a record of 17 consecutive weeks. 

A semi truck's fuel economy averages around 7 miles per gallon. And although a particular driver’s mileage varies based on route, weather and traffic, most drivers travel over 600 miles on any given workday. Thus, what are some of the ways that carriers are impacted by the current fuel supply chain issues as well as increased fuel prices?

  • Drivers with routes in states on the East Coast, along with their carriers, are closely and increasingly monitoring the fuel shortage, and determining if the planned load delivery should be delayed to those particular areas hit the hardest. 
  • As most trucking companies tie their fuel surcharges to the weekly United States’ EIA’s average diesel pump price, the nation’s diesel price increases correlate with the increased amount charged to the shipper for freight transportation 
  • Ordinarily, higher fuel prices mean higher overall carrier-imposed freight costs. The shipper has to then pay more to transport the freight, of which the receiver, and eventually the consumer, help to shoulder that burden.
  • In times of rising fuel prices, shippers often consider more fuel-efficient and economically practical alternative modes of transportation, such as intermodal carriers or rail. In addition, some companies that have flexibility in the usage level of goods or services tied to fuel costs will look to cut back on the frequency of services as a cost reduction measure.
  • Many carriers begin to emphasize fuel cost controls and waste management to drivers. For example, these measures, among others, all greatly impact a driver’s overall fuel economy: reducing idling time, maintaining tire pressure, cutting out-of-route miles, and driving above the truck’s fuel-efficiency optimal point.

Although the Colonial Pipeline resumed operation on the evening of May 12th, there is uncertainty about the collateral damage of this pipeline shutdown amidst the economy rebounding from the coronavirus-related government shutdowns. Fuel availability and pricing considerably affect the carriers, as well as most parties in a supply chain. If your organization would like assistance in navigating throughout the transportation & logistics industry business conditions, we invite you to contact us and visit the Schneider Downs Transportation & Logistics Industry Group. For additional information, visit the Our Thoughts On blog.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2023 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
SEC Charges SolarWinds and CISO Timothy Brown For Misleading Investors
Think Before You Click: Fake Browser Updates are Back in Style
Protect Your Manufacturers: 3 Common Cyber Attack Methods to Watch Out for in 2023
Protect Your Students, Faculty and Staff: 3 Common Cyber Attack Methods to Watch Out for in 2023
Single Audit Reporting Reminders
Protect Your Retail Business: 3 Common Cyber Attack Methods to Watch Out for in 2023
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Pittsburgh

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×