Prices aren’t quite this low any more but they are lower than they’ve been in years. Fluctuating gas prices affect the entire supply chain.
Travel officials expect lower gas prices for U.S. consumers by this summer—that is, if refinery maintenance ends smoothly and if crude oil remains relatively cheap, according to a recent report from the AAA. This is a different story than what consumers have experienced in recent years as gas prices have soared to all-time highs.
According to the report, average U.S. gas prices are up 37 cents per gallon since falling to near a six-year low of $2.03 per gallon on Jan. 26. It is common for gas prices to rise 50 cents per gallon or more in late winter and early spring as refineries conduct seasonal maintenance, which can limit gasoline production.
The average price of gas in March was $2.43 per gallon, which was the cheapest average for the month since 2009.
Gas prices affect supply chains
While summer vacations will probably be more affordable because of this latest development, we hope that it also leads to consumers seeing lower prices elsewhere.
Fluctuating gas prices can wreak havoc on supply chains as the cost of gas makes it more expensive to make certain products and it certainly costs more to transport all products. Financial decision makers in companies from merchandise providers to food providers have to make decisions that usually include raising their prices to adjust for the extra fuel costs associated with transportation.
This phenomenon is also true for logistics companies. Some logistics providers rates don’t decrease when gasoline prices go down because they are trying to make up for lost revenue when rates were higher, On Time Logistics has its fuel surcharge tied to the U.S. Energy Information Administration’s Gasoline Index. This means that our surcharge will move up and down based on its weekly average price and allows us to keep costs lower when possible.
Making decisions about your logistics provider
That said, when gas prices fluctuate, thus raising prices across the supply chain, it’s an excellent opportunity to examine your supply chain service providers to make sure you are receiving the best service at the best rate possible.
We at On Time Logistics know that many factors go in to creating a rate schedule for logistics services and advise clients or potential clients to ask questions not only about the specific rates but also how the business is run.
- What is the company’s fleet maintenance program? Well-maintained vehicles generally get better gas mileage
- Is the company capable of providing the services needed when it’s needed on a consistent basis? Reliable service is worth paying for because it will cost more later if you deal with an unreliable provider.
- Does the company specialize in the kind of services provided or is it more a secondary service? It’s a good idea to find a company that specializes in the services you need.
- Does the company only have employees or do they also work with independent contractors? Employees are wonderful but also cause more overhead costs that are probably translated into the overall cost of operations. That cost is then passed on to the consumer.
What plans do you have for the summer? How will you be enjoying the lower gas prices? Don’t waste time transporting your own documents and making other last mile deliveries. We’re experts at that and can offer you competitive rates that won’t fluctuate like the gas prices.