Diesel prices continue to rise, put strain on shippers
As fuel prices rise, expect to see everything else cost more to make up for lost revenue.
LINCOLN, Neb. (KLKN) – As the national average price of diesel increases to well over $5 per gallon, trucking companies are left with few avenues to pursue if they expect to break even.
Nebraska Trucking Association President Kent Grisham puts it quite succinctly when he says, “they charge more for shipping”. Explaining further, he adds, “When they charge more for shipping, the price of the product has to go up. It’s a cycle, and it ends the same place every single time, and that is in the bank account of the individual Nebraskan.”
The price problem goes beyond just shipping products to the store, though.
“Diesel consumption begins with the tractors and trailers at farms. The irrigation systems, those all run on diesel”, says Grisham. “The trucks that take the food materials from the farms to the processing plants… many of the processing plants have equipment that runs on diesel.”
It’s easy to see how it all adds up to higher prices for just about everything. In the long term, the solution is to look into biodiesel and other alternative fuel sources. In the short term, however, it’s knowing when to walk away, a solution that’s not without problems of its own.
“A lot of them will just abandon states that are just too expensive to operate in”, says Grisham. “They’ll try to pick up more routes in states where it’s more profitable for them, or at least gets them closer to breaking even.”
The smaller the company, the bigger the problem. If large shipping organizations are seeing a strain, the smaller local businesses are nearing the breaking point. It’s all part of a problem that doesn’t seem to have an end in sight.