We are all aware of the drop in fuel prices, and the inherent benefit this brings to the general consumer. However, it is worth examining both the pros and cons of these lower prices when it comes to commercial transportation.
The good news is that the trucking industry is most certainly benefiting from a drop in operational costs due to the lower gas prices, while these lower prices last. It is worth noting that diesel prices are lowering at a slower rate than regular gasoline, so the benefit is slightly diminished for those companies operating on diesel. Also, since there is a surcharge on fuel within the industry to try and protect against huge fluctuations, the benefits are there, but arguably not as noticeable as they would be for the general public. But taking advantage of any opportunity to increase bottom line is obviously going to help with growth of individual companies, and in the industry overall.
The U.S. Energy Information Administration (EIA) provides regular On highway diesel fuel prices, and is a great source of information. It is even possible to sign up for email updates and release schedules. Fuel price planning at your fingertips is a great tool.
Source: Energy Information Administration
In a recent article in the Houston Chronicle, Andrea Rumbaugh examines the ‘mixed blessings’ of a drop in fuel prices for transportation related businesses within the industry as a whole. The prognosis is that there is really nothing negative about a drop in fuel costs and hopefully all these savings will trickle down to customers so everyone can benefit. In the final week of December 2014, the U.S. Department of Energy reported retail diesel at a low of $3.213. Figures like this have not been seen since 2010.However, with constant changes to the economy, one has to be aware of continual fluctuations in commodities such as fuel. Fuel is obviously a major cost for trucking companies, who must always be taking shifting prices into consideration when planning budgets and operating costs. Ensuring a steady cash flow is what keeps any company healthy, so any tool that can help is worth considering. With that in mind, Transportation factoring, a commercial financing option that can help with cash flow challenges by getting paid while still on the road, is well worth exploring. When it comes to fuel management, there is also a great program to enable further discounts at the pump, allowing you to save up to 24 Cents per gallon.
Explore the best options in terms of small business loans or alternative financing for your trucking company, to keep the wheels rolling, and the cash flow on target for success.