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Cass transportation index

Cass Transportation Index | 2022 Key Points

Cass transportation index

If you work in the transportation and freight industry, then the Cass Freight Index is one of the most valuable resources available online.

This resource is used to understand transportation trends, volumes, and expenditures across the U.S. Since its conception, it’s been a valuable source of information in the industry.

In this guide, we’ll cover everything you need to know about the Cass Transportation Index and how it works. We’ll focus on some key points from the December 2022 index, mainly looking at the index insights into the trucking industry.

What is the Cass Transportation Index?

The Cass Freight Index measures the overall freight volumes and monthly freight expenditures in North America. The index has been published since 1955.

This index covers all intra-continental foresight shipments, including raw materials and finished goods. The index covers all modes of domestic transport, although truck hauls make up more than 75% of all activity.

The Cass Freight Index data is updated with monthly statistics on shipment volumes and expenditures. This data is important for understanding freight industry trends through an ongoing monthly comparison.

The Cass Freight Index is compiled by Cass Information Systems, an automated payment systems provider. Cass Freight Index shipments cover over 1200 divisions of more than 400 manufacturers and companies.

Other Indexes Related To The Cass Transportation Index

How to start a semi truck business

Cass Information Systems also produces the Cass Truckload Linehaul Index, which measures the fluctuations in U.S. domestic baseline truckload costs. The purpose of this is to separate the linehaul elements of truckload costs from other trucking cost components – such as fuel costs.

There is also the Cass Intermodal Price Index. With intermodal transport, the cargo stays in the same container while being transferred across different modes of transport. This index monitors changes across U.S. intermodal costs. So while the Linehaul Index only covers linehaul rates, this index monitors all costs.

There are also other indexes similar to the Cass Transportation Indexes, such as the Transportation Services Index compiled by the U.S. Department of Transportation (DOT), and the Morgan Stanley Proprietary Truckload Freight Index. These are all useful supply chain indicators and valuable resources for monitoring freight trends.

The Cass Truckload Linehaul Index

As mentioned above, the Cass Truckload Linehaul Index monitors baseline truckload costs in the U.S. This monthly index measures the market fluctuations in truckload linehaul rates per mile. This index provides an accurate indication of market fluctuations in truckload pricing in the U.S.

Because this index only looks at the linehaul component of truckload costs, the freight transportation industry can use it as an accurate reflection of trends in baseline truckload prices. As trucking makes up the vast majority of recorded Cass shipment volumes, this index offers some of the most valuable industry insights.

How is it Measured?

Data from the Truckload Linehaul Index comes from freight invoices paid on behalf of the entire Cass client base, a combination of contract and spot rates.

Highway

As Cass manages $44 billion in freight spending each year, this data provides meaningful insight into transportation industry trends.

To measure freight shipments in this index, the per-mile linehaul rates are monitored, independent of any other cost factors – like accessorials or fuel.

Key Points: Cass Transportation Index December 2022

The Cass Freight Index is a valuable source of information for anyone involved in the transportation industry. Here are some key takeaways from the December 2022 Cass Shipments Index:

  • Cass Freight Index shipments were measured at 1.161, a -3.9% year-over-year change.
  • Cass Freight Index expenditures were measured at 4.231, a -4.3% year-over-year change.
  • Freight rates are on track to fall 5% in 2023, based on the normal seasonal pattern of this index.
  • Cass Inferred Freight Rates were measured at 3.644, a -0.4% year-over-year change.
  • The index saw sharp declines in ocean rates and many commodity prices.
  • Expenditures in the Cass Freight Index rose 23% in 2022 after a record 38% increase in 2021.

Key Points From The Truckload Linehaul Index

  • Truckload Linehaul Index was measured at 150.54, up by 1.7% on a year-over-year basis.
  • Spot rates were down significantly on this index.
  • The larger contract market is adjusting downward more gradually.
  • New truckload contracts are mostly being renewed with notable rate reductions.

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Final Thoughts

If you’re going to stay on top of monthly trends in the freight and supply chain sector, then the Cass Index is possibly the best place to access this data. Understanding this index and monitoring monthly data changes will help any trucking and freight business make more informed decisions.

Looking at the key trends from the December 2022 report is important, as it helps you better understand the state of the industry going into the new year. This provides valuable insights into trends for the year ahead.

 

How to start a semi truck business

How To Start A Semi Truck Business | 8 Steps

How to start a semi truck business

The commercial trucking industry is a vital part of the US economy. Trucks move around 72% of all goods in the country. Starting a semi-truck business can be an excellent opportunity!
With the proper preparation and planning, a semi-truck business can be a successful and rewarding venture.

Let’s talk about how to start a semi-truck business.

Semi Truck Business Success | 8 Steps

Step 1: Research The Semi Truck Industry

Before you start a trucking company, it’s crucial to research the industry and understand the market. Look at the trends, the competition, and the potential customers. Understanding the industry will help you make informed decisions and ensure your business is booming.

For example, when researching the industry, you can start by looking at the current market trends. This can include investigating the demand for trucking services in different regions, the commonly transported goods, and the current rates for trucking services.

By conducting this research, you can better understand the industry and the market. You will be able to identify potential opportunities and challenges and make informed decisions about your business strategy.

Step 2: Create a Semi Truck Business Plan

Once you understand the industry well, the next step is to create a business plan. A business plan should outline your goals and strategies, and the steps you need to take to achieve them. It will also help you secure funding and attract investors.

business plan

A trucking company business plan should include the following key elements:

  • Executive Summary: A summary of the main points of the business plan, including the purpose of the business, the target market, and the critical strategies for achieving success.
  • Company Description: A description of the company, including the legal structure, ownership, and management team.
  • Market Analysis: An analysis of the industry, including the current market trends, the competition, and the potential customers.
  • Services: A description of the services that the business offers, including the types of goods that will be transported and the routes that will be covered.
  • Marketing and Sales: A description of the marketing and sales strategies, including the target market, pricing strategy, and promotional activities.
  • Operations: A description of the day-to-day operations of the business, including the logistics of transporting goods, the maintenance of the vehicles, and the management of the drivers.
  • Financial Projections: Financial projections for the business, including income statements, balance sheets, and cash flow statements from your business bank account.

Step 3: Obtain The Necessary Licenses And Permits

Starting your own trucking business requires obtaining the necessary licenses and permits. These include a commercial driver’s license and the authority to operate as a motor carrier.

For example, you will need to obtain several licenses and permits to operate a semi-truck business. These may include:

  • Federal Motor Carrier Safety Administration (FMCSA) Operating Authority: This is also known as an MC number. This is required for any company that operates commercial vehicles transporting goods in interstate commerce.
  • USDOT Number: This is a unique number assigned by the FMCSA to identify commercial motor carriers.

Man in truck

  • State Operating Permits: Some states also require a separate permit to operate within their borders.
  • Commercial Driver’s License (CDL): Drivers operating commercial vehicles, including semi-trucks, must have a CDL.
  • Vehicle Registration: Each vehicle used in the business must be registered with the state and have proper business insurance.

It’s important to note that the requirements for obtaining licenses and permits may vary depending on the state. It’s also crucial to comply with federal and state regulations regarding safety, insurance, and other operational standards.

Step 4: Secure Funding

Starting a semi truck business requires a significant financial investment, and securing funding is crucial.

Consider options such as traditional bank loans, equipment financing, or working with a lender specializing in the trucking industry.

Mission Financial Services is a preferred loan process agent for national and regional dealership chains and family-owned, independent, and franchised dealerships. They also offer loans to first-time buyers and loans to those with bad credit scores.

For example, if you want to start a semi-truck business with five trucks, you will need to purchase or lease the trucks, trailers, and other equipment. Additionally, you will need to pay for insurance, maintenance, and other expenses.

Starting the business may cost a significant amount, which may not be feasible to cover with personal savings or credit cards. In this case, you’ll need to secure funding through a loan or other financing options.

Handshake

Working with a lender specializing in the trucking industry, such as Mission Financial Services, can be helpful. They understand the specific needs and challenges of the trucking industry.

They may also offer financing options tailored to the needs of trucking businesses, such as loans for purchasing or leasing trucks and trailers or loans for covering operating expenses.

Step 5: Purchase Or Lease Trucks And Trailers

Once you have secured funding, focus on purchasing or leasing trucks and trailers. When it comes to purchasing or leasing trucks and trailers, there are pros and cons to each option.

Purchasing

Pros
  • Ownership: When you purchase a truck or trailer, you own it outright and have the flexibility to customize it to your business’s specific needs.
  • Equity: As you pay for a purchased truck or trailer, you build equity in the equipment.
  • Tax deductions: You can take advantage of tax deductions for the equipment, such as depreciation.
Cons
  • Upfront cost: Purchasing trucks and trailers requires a significant upfront investment, and it may not be feasible for businesses with limited capital.
  • Maintenance costs: As the trucking business owner, you are responsible for all maintenance and repairs, which can be expensive.
  • Depreciation: The value of the equipment will depreciate over time, which can impact the resale value.

Leasing

Pros
  • Lower upfront cost: Leasing requires a smaller upfront investment than purchasing, making it more accessible for businesses with limited capital.
  • Lower maintenance costs: Maintenance and repairs are often included in the lease agreement, saving money on maintenance costs.

  • Flexibility: Leasing allows you to upgrade to newer equipment more frequently, which can benefit businesses that need to keep up with new technology or regulations.

Cons

  • Lack of ownership: When you lease equipment, you don’t own it outright and may not have the flexibility to customize it to your business’s specific needs.
  • Limited equity: As you make payments on a leased truck or trailer, you don’t build equity in the equipment.
  • Higher costs in the long run: Leasing equipment over an extended period can cost more in the long run than purchasing it outright.

Consult with a transportation consultant or financial advisor to help evaluate your options and make the best decision for your business.

Step 6: Hire Drivers

Even as an owner-operator, a semi-truck business relies heavily on its drivers. Hiring qualified, professional drivers who can ensure the safe and efficient transportation of goods is essential. When hiring drivers, consider the following qualities:

  • Commercial driver’s license (CDL): Drivers operating commercial vehicles, including semi-trucks, must have a CDL.
  • Driving experience: Look for drivers with experience driving semi-trucks and a good driving record.
  • Knowledge of federal and state regulations: Drivers must be familiar with federal and state laws regarding transportation, including hours of service, inspection, and maintenance requirements.
  • Communication skills: Drivers must communicate effectively with dispatchers, customers, and other drivers.
  • Problem-solving skills: Drivers must be able to handle unexpected situations and make quick decisions.

Woman truck driver

  • Physical stamina: Driving a semi-truck can be physically demanding, and drivers must be able to handle the job’s demands.
  • Professionalism: Drivers and owner-operators must professionally conduct themselves and be able to represent the company in a positive light.
  • Safety-minded: Drivers must prioritize safety and follow safety protocols and regulations.

Step 7: Build A Strong Network

Building a solid network of contacts and relationships can benefit your business in the trucking industry.

Here are a few ways to build a strong network:

  • Join industry associations: Joining industry associations such as the American Trucking Association (ATA) can provide opportunities to connect with other trucking professionals and stay informed about industry trends and regulations.
  • Partner with other trucking companies: Consider partnering with other trucking companies to share resources and pool expertise.
  • Develop a good relationship with suppliers: Building a strong relationship with suppliers will help you keep costs down and deliver the goods on time.
  • Provide excellent customer service: Building a solid relationship with customers can lead to repeat business, positive word-of-mouth, and new business opportunities.

Connecting with other trucking companies, suppliers, manufacturers, distributors, and customers can help you gain new business, improve logistics, and stay informed about industry trends and regulations.

Step 8: Keep Accurate Records

Keeping accurate records is essential for the success of a semi-truck business. Here are a few benefits of keeping accurate records:

book keeping

  • Financial tracking: Accurate record-keeping can help you track your income and expenses and monitor the financial performance of your business. You can use this information to make informed decisions about your business and plan for future growth.
  • Compliance with regulations: Keeping accurate records can help you ensure compliance with federal and state laws. This includes keeping track of service hours, vehicle maintenance and inspection records, and driver qualifications.
  • Taxes: Accurate record-keeping can help you file taxes correctly and take advantage of tax deductions.
  • Auditing: Accurate record-keeping is essential. You may be subject to an audit by the Federal Motor Carrier Safety Administration (FMCSA) or other regulatory bodies.
  • Efficiency: Accurate records can help you improve the efficiency of your business. It does this by allowing you to track inventory and deliveries and manage staff and vehicles more effectively.

Final Thoughts

Starting a trucking company requires significant time, money, and effort. Still, it can be a successful and rewarding venture with the proper preparation and planning.

By following these steps and making informed decisions, you can start a semi-truck business that will thrive in the competitive commercial trucking industry in the US.

If you want to start your own trucking company, don’t hesitate to reach out to Mission Financial Services for loans and financing options.

How Inventory Shifts are Impacting Purchase Decisions

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When it comes to buying trucks and equipment, the majority of owner-operators prefer the used market, according to Overdrive’s Truck Purchase and Lease Survey. Out of all of the survey’s respondents, 56% of them reported buying used trucks, 32% bought new, and less than 10% leased their trucks or equipment.

However, while purchasing used trucks and equipment is preferred among owner-operators, finding said trucks and equipment at a fair price is more challenging than ever. Thanks to the COVID-19 pandemic and the delays in production, brought on by component shortages, many owner-operators are forced to consider other purchasing options.

Unfortunately, truck dealerships aren’t receiving much in the way of new inventory. In 2021, new trucks were being ordered, but they wouldn’t arrive until December. And, to top it off, fewer trade-ins are making their way onto the lots, thus pushing prices of used trucks through the roof. In 2021, used trucks retailed for the most they ever have in the modern era. For example, a used sleeper, with over 450,000 miles on it, sold for a little over $90,000. This price was approximately 85.5% higher than the previous year. And while some industry professionals anticipated a slow descent in used truck prices in 2022, others caved to the pressure of the market and sold off their fleets for substantial amounts of money.

Photo Credit: Overdrive

Are higher lending rates to come?

Industry experts also predict that new truck production will eventually catch up and balance out. Once trucks start rolling off of assembly lines, used-truck buyers will want to consider the potential financing impact new truck production could have on trade-ins with higher mileage than normal. 

Financing a used truck is already a challenge due to the higher risk lenders take since used trucks typically face engine problems. When the trade-ins that drivers clung onto in lieu of new inventory arrive at dealerships, they will arrive with higher mileage and a higher risk of performance issues. Thus, lenders will be even more hesitant when drivers request financing and likely raise lending rates.

For small fleets, experts believe it may be wise to consider extending the life of their trucks and equipment through maintenance rather than buying new or used. And for any owner-operators who are searching for a used truck in today’s market, they can also expect higher down payments. In fact, those just entering the industry should be prepared to put 25-35% down. Overdrive recently surveyed a group of drivers who recently bought a used truck to further prove the state of the market. They found that 38% of used-truck buyers paid in cash, and 57% of buyers financed with a bank loan or through a captive or specialty lender.

Is a lower interest rate possible?

Despite all of this, there are ways to acquire a lower interest rate on your loan. The main factors that lenders look at to calculate the monthly payment include your credit score, the model year of your truck, how much money you put down, the owner/driver’s business experience, and your resourcefulness. 

“I’d rather lend money to a guy with a 600 credit score whose father was an owner-operator, grandfather was an owner-operator, brother is a diesel mechanic, and maybe his credit score is down because of divorce,” Grivas said. “That’s a great risk compared to a guy with a 700 credit score who’s just getting started.” 

When buying a new truck, experienced owners and drivers can expect a single-digit interest rate. However, drivers financing a used truck will see interest rates ranging from 10-13% or higher.

How Mission Financial Services can help.

We understand that sometimes times are tough and we’re here to get you back on the road to financial independence. Whether you’re a first-time buyer, have limited driving experience, or have bad credit, we can help.

Mission offers direct lending for owner-operator purchases, lease purchase buy-outs, repair loans, and title loans for operating capital. And even better, we will perform a complete review of applications and get you an answer within four hours.

Our approvals are structured as simple interest contracts with limited terms that let you build equity in your loan quickly to avoid additional finance charges. Mission considers all applicants living in all states except Hawaii and Alaska. And we offer affordable loans and report to all major credit bureaus so you can start turning your credit around. Why wait?

Get Started Today

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What Owner-Operators Need to Know About the Inflation Reduction Act

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On Tuesday, August 16, President Biden signed the Inflation Reduction Act of 2022 (Act) into law. The Act covers climate issues, taxes, healthcare, and other legislation in one bill, serving as a concise version of the Build Back Better bill.

What is the Inflation Reduction Act?

The main points of the Inflation Reduction Act of 2022 include:

  • 15% minimum corporate tax rate: Corporations that generate at least $1 billion in income will now have a 15% tax rate, and stock buybacks will have a 1% excise tax.
  • IRS investments: The IRS will receive $80 billion to hire new agents over the next ten years.
  • Prescription drug price reform: Medicare will now be able to negotiate the prices of particular prescription drugs, and in 2025 Medicare recipients will receive a $2,000 limit on annual out-of-pocket prescription costs.
  • ACA subsidy extension: The current medical insurance premiums under the ACA, which were set to expire January 1st, 2023, will now be extended through 2025.
  • Investments in energy security and climate change efforts: Households will receive tax credits to offset energy costs, the government will invest in clean energy production, and there will be tax credits for reducing carbon emissions.

On August 7, the Inflation Reduction Act went to the Senate and passed with 50 Democratic votes and zero Republican votes. Once it reached the House on August 12, bill 220-207 was passed.

Ultimately, small businesses and hardworking Americans will profit from this legislation through the investments in deficit reduction, increased manufacturing, lowered drug prices, and the push for corporations to give back to their community. But what does this bill mean for owner-operators within the transportation industry?

What Owner-Operators Need to Know

The Inflation Reduction Act will make significant changes to the United States environmental policies, health care policies, and tax codes. However, for owner-operators and other small trucking businesses, the Act’s extended changes to the ACA subsidies and IRS investments will likely be the most impactful.

The increased and extended ACA subsidies will allow owner-operators without employer-provided health insurance access to affordable health care coverage. Marc Ballard, who handles the NAIT’s various health care avenues, said, “We’re seeing about 90% of people who enroll can get a plan for $100 a month. Take, for example, a guy who may be 45 with a spouse and two kids, lives in Florida, and expenses a bunch of his income. … Let’s say his net adjusted income is $60,000. He grossed $200,000, but the reportable income is $60,000. He could literally be paying zero dollars for a health care plan.” Those making more money may face an increase in coverage costs by just a few hundred dollars a month.

And while the ACA subsidy changes won’t affect independent business people as much, it’s wise to use this extension period to shop for different health care plans. Freight rates are slowing due to the rise in fuel costs, and owner-operators’ incomes fluctuate as the pandemic period breaks down. So, now is the time to consider income projections and any potential family or personal status changes, which could unlock new health-expense savings.

The $80 billion investment in creating a larger Internal Revenue Service could also pose a threat to owner-operators with more frequent audits. The Associated Press did disclose that armed agents will not come knocking on owner-operators’ doors unless they are under criminal investigation for dealings in things such as contraband. Truck drivers must also be conscious of their increased chance of being audited. And while the IRS does have a backlog, the 87,000 incoming agents will quickly clear it, making time for them to look at newer returns. So, be sure to be extremely thorough when filing your taxes.

The Future is Green

The $369 billion investment in green energy will also notably change the trucking industry. In the next few years, trucking companies could receive tax incentives to purchase trucks that operate on alternative fuel sources, including electricity and biogas. Similar tax incentives will be made available for installing supportive infrastructure at trucking headquarters. The bill will also offer grant and loan programs to trucking businesses to encourage and fund their switch.

 

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→ Rising Fuel Prices: An Ongoing Problem for Drivers

→ What is the COVID HOS Emergency Declaration?

How to Motivate Young Truck Drivers

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What Factors are Most Important to Younger Drivers?

In the last few years, the trucking industry has seen a tremendous shortage of drivers. For instance, in 2018, approximately 60,800 drivers left the industry for good. This year, about 84,000 drivers have exited their careers; if trends continue, we can expect fleets to be short 160,000 drivers by 2030. The question on everyone’s mind is: “Why does the truck driving shortage even exist?”

And while there are a number of reasons, many believe the shortage is caused by high turnover rates, dwindling compensation, and the aging of the workforce. The good news is that there may be a way to combat the ever-increasing shortage of drivers, and it starts with the next generation.

Currently, young people searching for a career don’t see truck driving as a viable path, and if fleets do not work to change this mindset, the shortage will only worsen. 

But, how exactly are you supposed to appeal to younger drivers? The answers may not be what you expect.

Why are younger drivers so important to the industry?

In 2020, people learned the trucking industry’s true value and felt its impact on our country’s infrastructure. Now, as the driver shortage wages on, more and more truck drivers are retiring, but they aren’t being replaced at an acceptable rate. And when they are being replaced, it’s not by younger drivers. However, if we want to see the industry recover and the economy thrive, younger drivers may be the answer.

Millennials are now the nation’s largest generation, making up more than a third of the country’s domestic workforce. And now, they are searching for a promising career path with good pay and benefits. They may not realize that truck driving offers that and so much more. But what if we told you that fleets could also benefit from hiring younger drivers?

Hiring younger drivers will help fleets stabilize as the tide of retirement accelerates within the industry. Younger drivers will also help trucking companies slow down turnover and keep up with the high demand for shipped goods. But, to hire these drivers, fleets must first appeal to them.

How can fleets motivate younger drivers?

Many think the only way to recruit young drivers is by offering a competitive wage. However, there are more critical factors that young drivers consider before jumping into a career. In fact, the American Transportation Research Institute (ATRI) found that only 40% of drivers (ages 21 to 30) consider pay to be the main factor when joining a fleet. In comparison, 60% believe other factors hold equal or even more importance in their decision. These factors include career stability, work-life balance, career benefits, and company culture.

So, as long as your trucking company can offer a positive working environment and decent benefits, finding younger drivers won’t be as hard as one might expect. 

4 tips for attracting younger drivers

Other ways to attract younger drivers include:

1. Embracing social media.

It’s an age-old truth: to reach your target audience, you must go where they go. And if you are trying to reach a younger audience, you must use social media. Research shows that 86% of people (ages 18 to 29) use social media, and 88% are on Facebook.

A great way to reach younger drivers is through social media campaigns on platforms like Facebook and Instagram. These platforms have consistently ranked highly as a thriving source for driver leads. Using social media and reaching out to your local driving schools is a great way to bring young drivers into the industry.

2. Updating your promotional materials.

ATRI found that young drivers are more likely to apply for a job with a carrier if there is more initial information and transparency. An example would be creating a job posting with explicit expectations and requirements. Your company could even benefit from posting videos and other content that help convey what a day in the life of a truck driver is all about. Almost 25% of younger drivers believe that fleets should incorporate younger adults in their non-recruitment advertisements and company materials.

3. Modernizing your benefits.

According to the CDC, truck drivers are twice as likely to suffer from job-related health issues, like obesity, high blood pressure, and problems that come with a lack of sleep. And in today’s society, health is taking priority in younger people’s lives. Simply updating your wellness benefits could be the difference between a young driver accepting a job offer and declining it.

We suggest:

  • Starting a company-wide wellness program or paying for a wellness app subscription
  • Introducing incentives for incorporating healthy habits
  • Giving discounts on health insurance premiums
  • Offering more PTO and bonus opportunities
  • Supporting your drivers’ wellness in any way you can

4. Offering consistent scheduling.

Truck driving is known for putting a strain on drivers and their work-life balance, thanks to long hours, last-minute changes, and erratic scheduling. Offering more predictable off days and consistent scheduling could attract younger drivers to your company.

 

More Like This:

→ How to Retain Your Top Drivers During a Shortage

→ Why More Millennials Should Become Truck Drivers

→ Where is the Best Place to Work as a Truck Driver?

Rising Fuel Prices: An Ongoing Problem for Drivers

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5 Tips for Conserving Fuel

These days, the glowing numbers on gas station signs cause drivers to wince as they pass. What once was affordable for most drivers now costs anywhere between $4 and $6 a gallon in some areas. This surge in fuel prices has become a top concern for consumers, affecting drivers and the broader economy. 

Higher fuel prices, especially diesel, strain owners and operators, affect the cost of goods that require transportation via truck, and so much more. In this article, we will look at the reason behind increasing fuel prices, who they affect, and what drivers can do to conserve their fuel.

Fuel prices continue to climb, but why?

The Russian invasion of Ukraine primarily influences today’s surging fuel prices, however, prices were on the rise well before the war. Before the COVID-19 pandemic settled in, energy producers reduced their investments and cut back on projects that were less than profitable. Once the pandemic hit, these same producers minimized output even more as the need for petroleum diminished due to quarantine restrictions.

The economy has since reopened, goods are being manufactured, and the roadways are filled once again. The reboot of society led to a surge in demand and a tightening oil market that led President Biden to tap into the Strategic Petroleum Reserve in hopes of leveling prices, but this plan failed.Once Russia invaded Ukraine, the already fragile energy market was sent spiraling downward. With Russia being the largest oil exporter in the world and the U.S.’s ban on Russian oil imports, U.S. oil reached its highest price point since 2008 at $130 per barrel.  

Oil companies are now reluctant to drill and face obstacles like labor shortages and increasing prices for parts and raw materials. On top of that, Russian petroleum product exports are being sanctioned, pushing the price of diesel higher than ever.

All of these factors contributed to the national average of a gallon of gas reaching $4.589, according to AAA. Now, every state in the U.S. averages more than $4 per gallon. In some areas, like California, they’re averaging above $6. And diesel prices retail at an average of $5.577 a gallon, which is 76% higher than last year’s average.

Who is affected by rising fuel prices?

Higher fuel prices impact not only consumer spending but also company spending, affecting many industries, including transportation. For instance, Target is the latest company to speak out about its struggles with higher costs. Target CEO Brian Cornell said, “We did not anticipate that transportation and freight costs would soar the way they have as fuel prices have risen to all-time highs.” Cornell estimates that the higher fuel costs will run the company approximately $1 billion in incremental costs this fiscal year. Walmart executives had similar concerns, “fuel ran over $160 million higher for the quarter in the U.S. than we forecasted.”

But the prices aren’t just impacting domestic costs. Companies like Tractor Supply and Amazon have noted that their import freight costs have increased over the last year. Currently, the cost to ship an overseas container has doubled compared to pre-pandemic rates. Even the airline industry is experiencing the effects of higher fuel prices. The CEO of United Airlines explained that jet fuel prices would cost the company $10 billion more than in 2019.

The ultimate worry for freight companies is how the higher fuel prices will affect the overall cost of operations. A carrier moving shipments from the West Coast to the East Coast will have to pay approximately $1,000 more in fuel costs than in 2021. If things continue in the same direction, this inflation will impact truckload shipping, ocean freight shipping, air cargo shipping, and train shipping costs, which will ultimately cause a domino effect throughout the economy.

Source: truckstop.com

5 Tips for Conserving Fuel

Conserving fuel is no longer just a want or a good deed. It’s now something we must do to save money. In the U.S. alone, the trucking industry consumes approximately 38 billion gallons of diesel annually. And 39% of drivers’ operating expenses come from fueling their rig. So, drivers must do what they can to improve their fuel economy.

Here are a few ways they can do so:

1. Drive more responsibly

Follow speed limit signs and take things slow. Studies show that every 5 mph over 65 mph yields a 7% decrease in fuel economy. You can also do things like:

  • Switch off the air conditioner (weather permitting)
  • Avoid idling unnecessarily
  • Turn off your engine when not in use
  • Use cruise control on the highways (if possible)

2. Improve your truck’s aerodynamics

Research shows that about half of a truck’s fuel is consumed, overcoming aerodynamic drag while traveling at highway speeds. Lucky, there are a few simple ways to improve your truck’s aerodynamics, including using a roof-mounted cab deflector, a deep angled bumper, or a sun visor to push wind to the top of your trailer. You can also use side fairings to avoid turbulence underneath your trailer.

3. Be conscious of the traffic conditions

Every time you have to restart your rig due to stop-and-go traffic, you use a considerable amount of fuel. So, it’s essential to use your GPS and monitor traffic conditions to get to your next location efficiently. Avoiding traffic will also help your clutch last longer.

4. Engine oil & fuel

By simply using the recommended grade of motor oil for your truck, you could improve your fuel mileage by up to 2%.

We also recommend:

  • Filling up your truck first thing in the morning
  • Pump fuel at a low setting to minimize vapors
  • Fill up well before you reach ‘Empty’

5. Conduct regular maintenance checks

Regular maintenance can go a long way in saving you fuel.

Maintenance practices include:

  • Filling up your tires and changing them when needed
  • Checking your trailer and drive axle alignment
  • Watch for any fluid leaks
  • Invest in an engine overhaul if yours is older
  • Replace any old or worn-out parts, like fuel injectors

At the end of the day, improving your fuel efficiency by 2% to 3% can help you save your hard-earned money and keep your rig running like new.

 

 

More Like This:

→ How the Truck Parking Crisis Affects Us All

→ Top 6 Ways for Fleet Owners to Conserve Fuel

→ How to Save on Diesel Emissions Repair Costs

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