Diesel prices head down for first time in six weeks
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By the slimmest of margins, the average price per gallon of diesel gasoline saw its first decline in six weeks, according to the Department of Energy’s Energy Information Administration (EIA).
The average price fell 0.1 cents to $4.016, marking the first decline since the average price dropped from $3.873 from $3.886 the week of January 20. Prior to this week, the average price per gallon rose a cumulative 14.4 cents.
Even with a decline this week, the average price per gallon remained over the $4 per gallon mark for the second straight week. Last week was the first time diesel topped the $4 mark since hitting $4.006 the week of March 25, 2013.
Compared to the same week a year ago, the average price per gallon is down 11.4 cents.
Oil barrel prices headed up $2.33 to $104.92 on the New York Mercantile Exchange as of this morning, with the Associated Press reporting that that price headed up as Russia’s military advance into Ukraine raised fears of economic sanctions against one of the world’s major energy producers.
As prices continue to rise, adjusting budgets is only part of the solution when it comes to dealing—and living—with fuel price fluctuation, according to shippers.
In some cases they look for hedge diesel prices when it is applicable, shippers have told LM. This involves committing to a certain price on fuel at which pay to a certain rate at which point it is frozen at that rate for the shipper. And it also requires shippers to be focused on keeping their drivers on the road as much they can and being profitable and not in detention.
As previously reported by LM, other steps being taken by shippers to combat high fuel prices include things like focusing more on utilization and efficiency by doing things like driving empty miles out of transportation networks.
And the fact that if prices rise on average has a direct effect on fuel surcharges paid by shippers is always top of mind for them.
“Continued increases in fuel surcharge will drive shippers ultimate transportation spend to all time highs,” a shipper said in an interview. “Carriers will do all they can to pass any excess cost back to the shipper, smaller carriers are definitely feeling the pain associated with the fuel increase and are demanding more for their services. When it becomes time to negotiate rates, carriers will be talking a lot about the cost of fuel and using it as a leverage point for general rate and line haul increases. Shippers must be acutely aware of what percentage of their invoice cost is actual fuel surcharge.”
About the AuthorJeff Berman Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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