Fuelling Business When Gas Prices are High
Rising gas prices are unwelcome news for every vehicle owner, but they are especially a cause for concern for businesses that use trucks to transport goods.
The trucking industry has always been competitive and saturated, and the increase in gas prices is suffocating many trucking companies, forcing some of them to close down.
However, there are measures that trucking companies can take to overcome the rising costs of fuel.
Understanding the Fuel Costs of Trucking Businesses
Big rigs generally have a fuel economy rating of about seven miles per gallon, and they may need more than 140 gallons of fuel a day to complete their routes.
In order to travel a distance of 1,500 miles, these vehicles need between 250 and 300 gallons of fuel. With diesel costing almost $4.00 per gallon in May 2013, trucking companies have to pay close to $1,200 for each of their trucks to travel that distance.
How Rising Gas Prices Affect Trucking Businesses
In order to keep their businesses profitable, many trucking companies have to raise their trucking rates to keep up with the rising costs of fuel.
In 2012, the general truck freight rate in the United States was about $2.55 per mile, which was $0.65 higher than in 2008.
Rising truck freight rates mean customers are starting to look for other more affordable shipping options, resulting in a loss of business opportunities for trucking companies.
Higher shipping costs have also influenced the types of goods that are transported by trucking companies, as many companies have to start shipping goods that they are not used to shipping in order to survive.
Additionally, an increase in gas prices can lead to a higher risk of accidents, as some companies try to reduce their shipping costs by investing less in safety.
What are Trucking Companies Doing to Overcome Rising Gas Prices?
Unlike ordinary vehicle owners, trucking companies cannot reduce vehicle mileage to save on fuel costs. Neither can they charge overly high trucking rates.
Many companies are trying to reduce their fuel costs by instructing their drivers to avoid fast accelerations, maintain the right tyre pressure and reduce idle time. Some companies are also implementing the use of GPS tracking systems to enable their drivers to determine the most efficient routes to take to reach their destinations.
Trucking companies can make their trucks more fuel-efficient by removing unnecessary accessories such as chrome pieces to reduce weight, installing aerodynamic features to minimize air friction and getting their trucks inspected regularly to ensure that they are in a good condition. Companies that are planning to purchase new trucks can save on fuel costs by opting for hybrid trucks.
While nothing can be done to prevent gas prices from rising, trucking companies can follow the tips provided in this article to reduce their fuel costs and increase their profit margins significantly.
About the Author: John McMalcolm is a freelance writer who writes on a wide variety of topics, ranging from business management to doctor reputation management.
Elon Musk's Boring Co. planning wider tunnels for freight
Elon Musk’s drilling outfit The Boring Company could be shifting its focus towards subterranean freight and logistics solutions, according to reports.
A Boring Co. pitch deck seen and shared by Bloomberg depicts plans to construct wider tunnels designed to accommodate shipping containers.
Founded by Tesla CEO Musk in 2016, the company initially stated its mission was to offer safer, faster point-to-point transport for people, particularly in cities plagued by traffic congestion. It also planned longer tunnels to ferry passengers between popular destinations across the US.
The Boring Co. completed its first commercial project earlier this year in April. The 1.7m tunnel system is designed to move professionals between convention centres in Las Vegas using Tesla EVs. It says the Las Vegas Convention Centre Loop can cut travel time between venues from 45 minutes to just two.
Boring Co.'s new freight tunnels
The Boring Co.'s new tunnel designs would allow freight to be transported on purpose built platforms, labelled as “battery-powered freight carriers”. The document shows that, though the containers could technically fit within its current 12-foot tunnels, wider tunnels would be more efficient. Designs for a new tunnel, 21 feet in diameter, show that they can comfortably accommodate two containers side-by-side, with a one-foot gap between them.
The Boring Co.’s new drilling machine, dubbed Prufrock, can tunnel at a rate of one mile per week, which is six times faster than its previous machine, and is designed to ‘porpoise’ - mimicking the marine animal by ‘diving’ below ground and reemerging once the tunnel is complete.
Tesla’s supply chain woes
Tesla is facing its own supply chain and logistic issues. The EV manufacturer has raised the price of its vehicles, with CEO Musk confirming the incremental hike was a result of “major supply chain pressure”. Musk replied to a disgruntled Twitter user, confused as to why prices were rising while features were being removed from the cars, saying the “raw materials especially” were a big issue.
Car manufacturing continues to be one of the industries hit hardest by a global shortage in semiconductor chips. While China’s chip manufacturing levels hit an all-time high in May, and the US is proposing a 25% tax credit for chip manufacturers, demand still outstrips supply. Automakers including Volkswagen and Audi have again said they expect reduced vehicle output in the next quarter due to a lack of semiconductors, with more factory downtime likely.
Top Image credit: The Boring Company / @boringcompany