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How to Navigate Rising Fuel Costs

Posted - March 8, 2022

By: Ben Cubitt, SVP, Consulting

We are living through a time of historically tight trucking capacity, escalating transportation costs and record labor shortages. Gas prices are just the latest commodity to hit carriers’ and shippers’ bottom line. Nationwide, they quickly surged to over $4 a gallon, and are expected to continue to rise over the next several weeks. On top of that, surcharges are up .06-.07 cents per mile.

This dramatic increase has led to fuel costs per mile doubling since 2020 and fuel surcharges, as a percentage of total costs, doubling as well.

Rising Fuel Costs Chart March 2022

The ramifications for shipping costs, on top of already historically high linehaul rates, will be severe. When fuel spikes like this, shippers must be prepared to evaluate their end-to-end transportation networks.

Here are some actions shippers can take to mitigate risks as they begin to strategize and evaluate the new cost environment:

  • Ship from optimally designed network configuration to minimize network miles
  • Assess network model to reduce miles and evaluate adding DC’s / cross-docks
  • Maximize equipment utilization
    • Focus on trailer fill, and ship trucks and containers at max weight
    • Evaluate and reduce the frequency of deliveries in order to increase fill rate
    • Establish minimum order quantities with customers
  • Review product packaging to identify opportunities to improve equipment utilization
  • Optimize mode selection by shifting:
    • Parcel to LTL
    • LTL to pool
    • Pool to truckload
    • Truckload to heavy weight truckload
    • Heavy weight truckload to intermodal
    • Intermodal to rail
  • Consolidate orders
    • Ensure all parcel and LTL shipments shipping to the same customer are consolidated
    • Combine parcel and LTL and optimize mode to pool or multi-stop truckload shipments
    • Identify shippers ordering more than once per week and work with the customer to understand optimal shipping patterns, sailing schedules, etc.
    • Find partial load matching opportunities to combine lightweight truckloads or higher weight LTL shipments into truckload shipments
  • Utilize intermodal where it makes sense
    • Complete analysis to include fuel projections for intermodal vs. truckload shipments
  • Align shipping points and capacity
    • Determine the most cost-effective shipping locations
    • Limit out-of-alignment shipments
  • Minimize empty miles
    • Utilize dedicated fleets when possible
    • Identify backhauls within your extended network
    • Collaborate with other shippers and partners
    • Identify opportunities where you can leverage continuous moves
  • Train and measure driving behavior for dedicated fleets
    • Cruise control usage
    • Idle percent
    • Tire inflation
    • Maximize use of aerodynamics
    • Measure out of route miles
    • Reduce speed of fleet where possible

Transplace works with shippers to proactively identify areas of waste and inefficiencies in their networks. For more information, connect with a Transplace expert.