Diesel costs have reached staggering levels. Rising fuel costs have affected every link in the supply chain, across all modes of transportation. Companies throughout the industry have had difficulty weathering these costs, which threaten their overall profitability.
“The shipper and the receiver of commercial goods will often be hit from origin to destination,” Kent Williams, Averitt EVP of sales and marketing, said. “Moving goods from overseas factories to distribution centers to ports, then facing more dray and more regional transportation when goods arrive stateside, is costly. Every stop along the way adds fuel costs.”
The impact of soaring fuel prices isn’t contained to the logistics industry. End consumers ultimately feel the effects of rising energy costs via inflation. According to AAA, diesel fuel is currently sitting at an average of $5.78 per gallon. Meanwhile, the annual inflation rate climbed to 8.6% in May.
Fuel has become most carriers’ second-largest expense, after driver salaries. This has inspired carriers to take steps to reduce their fuel consumption through a variety of different avenues — from technology to driver training.
At Averitt, leaders are paying more attention to the aerodynamics of their tractors and trailers in order to optimize fuel. Additionally, the company has installed auxiliary power units on their sleeper trucks in order to give drivers access to heat and air conditioning without idling their vehicles overnight, significantly reducing overall fuel consumption.
Other high-tech equipment solutions Averitt embraces include adaptive cruise control and an automatic tire inflation system.
Saving money at the pump is a team effort involving both carriers and drivers. In addition to being cognizant of their equipment specs, Averitt provides driver training sessions to reinforce fuel-conscious driving habits and utilizes technology to ensure the most efficient routes are chosen each and every time.
“Drivers really embrace technology as a whole,” Williams said. “They are very attuned to the price of fuel, and they understand what they are paying at the pump both when filling up their own personal vehicles and when fueling our equipment.”
Shippers can also support carriers in their efforts to cut back on fuel consumption by streamlining their own workflows.
Some shippers are prone to sending out multiple shipments from a single warehouse to the same consignees on the same day. Simply consolidating these orders into one pickup could make a world of difference for the carriers moving those loads.
For smaller shippers with some delivery flexibility, sending out more orders on fewer days — for example, switching from five days a week to three days a week — could also prove to be an effective fuel-saving technique.
Other effective solutions include wholesalers and distributors working together to create fewer, larger shipments and nearshoring, according to Williams.
At the end of the day, every player in the supply chain will feel the effects of exploding fuel prices. Working together — and seeing each other as collaborators instead of competitors — provides the most effective way for all companies to weather the storm.
Future of Supply Chain
JUNE 21-22, 2023 • CLEVELAND, OH • IN-PERSON EVENT
The greatest minds in the transportation, logistics and supply chain industries will share insights, predict future trends and showcase emerging technology the FreightWaves way–with engaging discussions, rapid-fire demos, interactive sponsor kiosks and more.