Subscribe to our free, weekly email newsletter!

Diesel prices increase for the fourth straight week

By Jeff Berman, Group News Editor
July 30, 2013

The increase in diesel prices appears to be more than a trend again, with the average price per gallon rising 1.2 cents to $3.915 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

This marks the fourth straight week of increases, following gains of 3.6 cents, 3.9 cents and 1.1 cents, respectively, with the last four weeks accounting for a cumulative 9.8 cent gain. 

The four-week stretch of gains has more than erased the 7.3 cent cumulative decline which occurred over the previous three weeks prior to these recent gains. And compared to this week last year, the average price per gallon is up 11.9 cents.

Regardless of the fluctuation in diesel prices, shippers are cognizant of the impact diesel prices can have on their bottom line—for better or worse.

And they continue to be proactive on that front, too, by taking steps to reduce mileage and transit lengths when possible as well as cut down on empty miles. And even through shippers want to adjust budgets in order to offset the increased costs higher fuel prices bring, it is not always an easy thing to manage.

Shippers have told LM that adjusting budgets is only part of the solution when it comes to dealing—and living—with fuel price fluctuation. 

UPS Freight President Jack Holmes said at the eyefortransport 3PL Summit that fuel increases need to be taken into account as part of the shipper-carrier relationship.

“A carrier—who is a partner—simply passing expenses on to [a shipper] is not in my opinion a carrier you want to do business with,” said Holmes. “The one you want to do business with is the one who will tell you ‘this is what has happened and here is what we will do to mitigate that expense’ and hopefully you do things on fuel efficiency and idle time that get you closer to negating the impact of those things on your business but those are the differences between a vendor relationship and a partner relationship—which does things to help each other.”

When asked if they expect to pay higher fuel surcharges in the coming months, a recent Logistics Management reader study of roughly 420 shippers found that 39.1 percent said yes they did, 44.1 percent said they did not expect to have to pay higher fuel surcharges, with 16.8 percent stating they were unsure.

Brittain Ladd, a global supply chain consultant, told LM that the primary strategy for shippers to combat raising fuel costs is to conduct supply chain network optimization to model the impact of rising diesel fuel and transportation costs, which he said is key as transportation costs become more important relative to production, inventory and facility fixed costs.

With that as the backdrop, Ladd said his recommended strategy for shippers is to “identify opportunities to increase the number of distribution centers to minimize distance travelled for outbound transportation and to make operational changes to trade down to lower cost transportation such as air to ground and trucking to rail. The challenge of course is that lead times and replenishment to meet customer demand must be analyzed and processes updates to adjust to the new transportation reality.”

A major contributor to the recent spike in gasoline prices is Middle East tension among oil producing countries. At press time, the average price per barrel of crude oil on the New York Mercantile Exchange was $104.32. 

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

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. .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Seasonally-adjusted (SA) for-hire truck tonnage in October at 135.7 (2000=100) was up 1.9 percent compared to September’s 133.1, and the ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment was 139.8 in October, which was 0.9 percent ahead of September.

The average price per gallon of diesel gasoline fell 3.7 cents to $2.445 per gallon, according to data issued today by the Department of Energy’s Energy Information Administration (EIA). This marks the lowest weekly price for diesel since June 1, 2009, when it was at $2.352 per gallon.

In its report, entitled “Grey is the new Black,” JLL takes a close look at supply chain-related trends that can influence retailers’ approaches to Black Friday.

This year, it's all about the digital supply network. In this virtual conference, we will define the challenges currently facing supply chain organizations and offer solutions designed to transform linear operations into dynamic, automated networks that offer seamless communication, visibility, and the ability to respond and optimize processes at any given time.

In his opening comments assessing the economy at last week’s RailTrends conference hosted by Progressive Railroading magazine and independent railroad analyst Tony Hatch, FTR Senior analyst Larry Gross said the economy continues to slog ahead at a relatively tepid pace, coupled with some volatility in terms of overall GDP growth. And amid that slogging, Gross said there is currently an economic hand-off occurring between the industrial sector and the consumer sector.

Article Topics

News · EIA · Diesel Prices · Diesel · All topics


Post a comment
Commenting is not available in this channel entry.

© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA