Impact Of Fuel Rising To Transportation Industry

FUEL RISING AND THE IMPACT TO TRANSPORTATION INDUSTRY

After our group make some research on the impact of fuel rising to transportation industry, the finding comes out with several impact.
A recent study by Experian notes that when consumers are faced with higher fuel prices they are most likely to alter their spending habits. Many will respond by buying cheaper, more fuel-efficient vehicles.
While higher fuel prices tend to get people talking, actual consumer behavior is affected primarily at the vehicle segment level. What this means for dealers is not necessarily a change in number of vehicles sold, but rather a shift in which vehicles people are buying, Erik Hjermstad, lead analytic consultant for Experian Automotive said in a statement.

Higher fuel costs influence shipping decisions.For heavy haul or flatbed trucking companies higher fuel prices can be difficult to absorb, as smaller trucks are unable to carry as much freight creating new problems. Companies are currently dealing with higher fuel prices as several refineries along the East Coast are shutting down and a major facility in California was recently damaged by a large fire. There are already fuel shortages in California, causing businesses to alter their transportation strategies to avoid paying high prices on deliveries to the West Coast



In addition to shortages, truckers and consumers may need to deal with increased taxes on fuel. The Daily Item reports that Pennsylvania governor Tom Corbett has proposed a 30 cent a gallon fuel tax for his state which could cost truckers thousands of dollars a year."Diesel fuel is our number one expense,” Chris Patton, general manager of Watsontown Trucking, told the source. “We have a fleet of 250 trucks and they're mostly on the road at any one time. We buy about 3,500 gallons of diesel fuel a day. Raise the current price of $3.94 a gallon by 30 cents and we take a big hit. If we pass along that price to our clients, it will eventually trickle down to the consumer."

Higher fuel costs could be offset slightly by improving truck capacity. Asset-based transportation providers have the resources and experience to help firms maximize their shipments. For many organizations a mix of load-to-delivery solutions may the key to controlling transportation expenses, as this eliminates unnecessary third parties.
According to data published by the Census Bureau of the Department of Commerce, the prices of petroleum products over the past year had risen considerably faster than the change in demand for those products. As a result, the price increases of imported energy related petroleum products worsened the U.S. trade deficit in 2005 and likely will do so again in 2006. An energy-related petroleum product was a term used by the Census Bureau that includes crude oil, petroleum preparations, and liquefied propane and butane gas. Crude oil comprised the largest share by far within this broad category of energy-related imports. The increase in the trade deficit was expected to have a slightly negative impact on U.S. gross domestic product (GDP) and could place further downward pressure on the dollar against a broad range of other currencies. To the extent that the additions to the merchandise trade deficit are returned to the U.S. economy as payment for additional U.S.

The conclusion of this issue is the fuel rising impact the transportation cost and the company have to find another way to save the cost.Basicly the fuel rising really give a real impact to every industry not just in logistics industry.