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Diesel prices slide for the first time in five weeks

By Jeff Berman, Group News Editor
August 06, 2013

Diesel prices dropped for the first time in five weeks, with the average price per gallon dipping $0.6 cents to $3.909 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

This decrease follows four straight weeks of increases, during which time prices rose a cumulative 9.8 cents. That four-week stretch of gains more than erased the 7.3 cent cumulative decline which occurred over the previous three weeks prior to these recent gains. Compared to this week last year, the average price per gallon is up 5.9 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.

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. 

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.”

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).


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Article Topics

News · EIA · Diesel Prices · Diesel · All topics

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