When gas prices were high, the reasons that shipping costs had gone up were pretty evident. Anything that shipped in a vehicle that used gasoline meant higher costs due to fuel. Now that fuel prices are plummeting, it seems like shipping costs should be lowered to match the drop in fuel. Truth is, full truckload shipping isn’t going down at all. Here are some of the reasons that the shipping industry is not tied as tightly to fuel prices as you might think.
Where Are the Drivers?
After 2008, times were hard. Because of shrinking economies, commerce slowed down. If buyers aren’t buying and sellers aren’t selling, then there is no need for truck drivers to have their trucks operating. Simply put, many truck drivers were forced out of the business. They sold their trucks and moved on to other industries in order to make a living. Now that the economy is starting to recover, there aren’t enough drivers to fill all the trucks. A shortage drives up the cost of shipping.
The government likes to think they are helping, but sometimes they accidentally cause more problems than they solve. In this case government regulations are causing shipping lines extra work. The main regulations come in to main areas: drivers and emissions.
Old trucks were not very fuel efficient. They also do not have modern pollution controls. This means that fleets that want to keep operating without fines have to invest in new trucking equipment to meet new regulations. This forces carriers to increase their shipping costs to cover their new equipment. Yes, the new environmental regulations do some good, but they keep costs high.
In addition to increased regulation on trucks, there is also more regulation governing just how long drivers can stay behind the wheel. This does improve safety and forces drivers to take breaks, however it increases the time in between deliveries. More time means less runs that a carrier can complete in a week, so they have to raise costs accordingly.
Location can be critical in getting shipments where they need to go. Locations can also be a main driver in just how much it costs to get your goods moved by a carrier.
Keep in mind that carriers want to make the most of the runs that they take. So, shipping out of a small town to a large town might cost less, as there will be more opportunities to pick up another cargo in the larger town. The converse to that is also true: shipping into a small town might limit options for the carrier, so they will charge more.
If you are shipping out of a large town, you have to keep in mind the competition for the carrier’s attention. More opportunities to ship mean less choice in carriers. Less choice means higher prices.
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