Fuel is the most significant operational expense for trucking companies. When a fuel price surge occurs, it can greatly impact profitability. In order to stay competitive and profitable, trucking companies must closely monitor the increase of fuel costs and secure the lowest fuel rates possible.
Fuel prices fluctuate daily due to crude oil price changes, which are influenced by global supply and demand. External factors like natural disasters (hurricanes, floods, wildfires) and geopolitical events (wars, supply chain disruptions) can cause an unexpected fuel price spike, leading to increased operational expenses for carriers.
The key to surviving these fluctuations is preparation. Below, we outline what a fuel price spike means and how trucking companies can stay profitable when the cost of fuel soars.
What is a Fuel Price Surge?
A fuel price surge occurs when the price of fuel sharply increases due to a supply disruption or heightened demand. This can happen suddenly and be driven by multiple factors, including the following:
Crude oil supply issues
Global supply chain disruptions, drilling bans, or political instability in oil-producing regions can lead to fuel shortages, which increases the price of fuel across the industry.
Natural disasters affecting refineries
Events like hurricanes and floods can damage fuel production facilities, slowing down refinery output, and causing sudden spikes in fuel prices.
Geopolitical instability
Wars, trade restrictions, or conflicts between oil-producing nations can disrupt fuel supply chains and drive up costs rapidly.
Seasonal demand fluctuations
The demand for fuel typically increases during peak travel seasons, causing the cost of fuel to rise accordingly.
Government policies
Changes in fuel taxes, emission regulations, or transportation policies can also contribute to fuel price fluctuations and impact truckers.
An increase in fuel costs puts added pressure on trucking companies, forcing them to find ways to save money and maintain profitability.
8 Tips to Stay Profitable During Fuel Price Surges
Fuel price fluctuations can significantly impact trucking businesses, making it essential to find ways to cut costs and maximize efficiency. Carriers can maintain profitability even when fuel prices surge by leveraging cost-saving tools, optimizing operations, and adjusting financial strategies. These eight tips will help you stay ahead of rising costs.
1. Leverage the OTR Fuel Card for Maximum Savings
Fuel expenses make up a large portion of operational costs, but truckers can reduce their burden with the OTR Fuel Card. With competitive fuel discounts, the Fuel Finder tool for locating the best prices, and additional savings on maintenance and tires, truckers can maximize every dollar spent on the road.
Fuel Discounts
The OTR Fuel Card helps carriers save on average $0.50 per gallon and up to $2.25 per gallon. These savings accumulate quickly, reducing operational costs during fuel price surges.
Fuel Finder Tool
The OTR Fuel Finder, integrated into the OTR Mobile App, helps truckers find the best fuel discounts along their route, ensuring they access the lowest available prices.
Additional Cost Reductions
Besides fuel savings, by becoming an OTR Fuel Card user you gain access to discounts on tires and truck maintenance, offsetting the financial burden of fuel price increases.
2. Optimize Vehicle Maintenance for Better Fuel Efficiency
A well-maintained truck runs more efficiently and consumes less fuel, helping to offset rising fuel costs. Regular oil changes, properly inflated tires, clean air filters, and fuel injector maintenance can significantly improve fuel economy. Simple preventative maintenance measures can go a long way in keeping operational costs under control.
Regular Oil Changes
Clean oil enhances engine performance, reducing fuel consumption and improving mileage. Skipping oil changes leads to higher friction and decreased efficiency.
Tire Pressure Monitoring
Underinflated tires increase rolling resistance, which forces the engine to work harder and burn more fuel. Keeping tires properly inflated saves fuel over long hauls.
Air Filter Replacements
A clean air filter improves air intake, leading to better fuel combustion and overall fuel economy. Dirty filters make engines burn more fuel unnecessarily.
Fuel Injector Maintenance
Clogged fuel injectors lead to poor fuel atomization, reducing efficiency. Keeping them clean ensures optimal fuel performance and lower fuel expenses.
3. Adjust Driving Habits to Conserve Fuel
Fuel-efficient driving habits can make a substantial difference in fuel consumption. Reducing idle time, maintaining steady speeds, and using cruise control all contribute to better fuel economy. Additionally, minimizing excess weight and strategically planning loads to avoid deadhead miles can further reduce unnecessary fuel expenditures and increase profitability.
Reduce Idle Time
Idling wastes fuel without adding any mileage. Turning off the engine when parked for long periods helps cut unnecessary fuel consumption.
Maintain Steady Speeds
Speeding and rapid acceleration use excess fuel. Keeping a consistent speed, particularly on highways, maximizes fuel efficiency.
Use Cruise Control
Cruise control minimizes unnecessary speed fluctuations, helping reduce fuel consumption over extended trips, and making routes more economical.
Avoid Unnecessary Weight
Extra cargo increases fuel usage. Removing unneeded items from trailers and optimizing loads can significantly improve fuel efficiency.
Limit Deadhead Miles
Empty miles contribute to fuel waste. Smart route planning ensures that return trips are optimized with loads, reducing overall fuel expenditures.
4. Improve Route Planning to Reduce Costs
Efficient route planning helps reduce costs by minimizing extra mileage, avoiding delays, and optimizing fuel use for smoother operations.
Use Fuel Finder Tools
Platforms like Fuel Finder in the OTR Mobile App allow truckers to see fuel prices in real time and select the most cost-effective locations.
Minimize Detours
Avoiding congested routes and unnecessary mileage helps prevent excessive fuel burn. Advanced GPS planning ensures efficient routes.
Monitor Weather and Traffic Conditions
Unforeseen delays increase idle time and fuel costs. Using weather and traffic apps helps plan the most efficient trips.
5. Implement Fuel Surcharges for Fair Compensation
Fuel price surges shouldn’t eat into profits. Implementing fuel surcharges in freight contracts helps carriers offset rising fuel costs. Negotiating with shippers to share these expenses and carefully tracking fuel costs ensures that carriers can adjust their pricing strategies accordingly and maintain financial stability.
Adjust Freight Contracts
Carriers should ensure contracts include adjustable fuel surcharges based on industry fuel price indexes to protect profits.
Negotiate with Shippers
Working with shippers to share the increase in fuel costs ensures that carriers are not absorbing all the additional expenses alone.
Track Fuel Expenses
Keeping detailed fuel cost records allows carriers to adjust pricing strategies and justify surcharge rates.
6. Use Freight Factoring to Maintain Cash Flow
Effective cash flow management is essential during fuel price surges. Freight factoring offers immediate access to cash, enabling carriers to cover fuel expenses and benefit from fuel advances without resorting to high-interest loans. This ensures steady operations despite fluctuating costs.
Faster Payments
Freight factoring provides immediate cash for invoices, reducing the financial strain caused by delayed shipper payments.
Cover Fuel Costs Immediately
Rather than waiting weeks for payments, factoring allows carriers to access funds quickly and cover rising fuel costs.
Avoid High-Interest Loans
Factoring is a debt-free cash flow solution that eliminates the need for expensive loans to cover fuel expenses. With OTR’s fuel advances, you can access funds immediately to keep your trucks moving.
7. Diversify Loads and Improve Load Efficiency
Maximizing revenue per mile is key to staying profitable during fuel price increases. By securing backhauls to reduce empty miles, focusing on high-paying lanes, and using load boards to find the best-paying freight, carriers can ensure every trip is as cost-effective as possible while keeping fuel expenses in check.
Combine Loads for Better Profitability
Running fewer empty miles by securing backhauls ensures that fuel expenses generate revenue.
Focus on High-Paying Lanes
Choosing loads with the best rates helps offset increased fuel costs and maximize profitability.
Utilize Load Boards Efficiently
Finding well-paying loads on the DAT Load Board ensures that every trip contributes to covering fuel costs effectively, helping carriers maximize their revenue and reduce empty miles.
8. Explore Fuel-Efficient Technology
Investing in fuel-saving technology can lead to long-term cost reductions. Aerodynamic modifications, such as trailer skirts, help reduce drag, while ELDs provide insights into driving habits that impact fuel efficiency.
Aerodynamic Modifications
Features like trailer skirts and fairings reduce drag, leading to better fuel mileage and lower consumption.
Electronic Logging Devices (ELDs)
These help track fuel efficiency, ensuring drivers maintain habits that conserve fuel and reduce unnecessary usage.
Fuel-Efficient Tires
Using low rolling resistance tires improves miles per gallon and reduces fuel expenditures over time.
Plan Ahead for Fuel Price Surges
Trucking businesses can’t control a fuel price spike, but they can prepare for it. By leveraging the OTR Fuel Card, maintaining equipment, optimizing routes, adjusting driving habits, and using freight factoring, carriers can navigate even the toughest increases in fuel costs without sacrificing profitability.
Staying ahead of fuel market trends and adopting cost-saving strategies ensures that trucking companies remain competitive and financially stable, no matter how high fuel prices climb.
Take action today to safeguard your business from the impact of fuel price spikes and unpredictable fuel markets.