Keys to understand the rise in fuel prices

The large rise in fuel prices is a fact, as it is present in our day to day life, as well as worrying. Most people are commenting on its great impact on both individuals and companies.

But what are the main causes that have brought us to this point? What consequences will the logistics sector have to assume with respect to inflation? And, above all, what actions can be taken to overcome this obstacle as far as possible?

If you want to know all these points, take a look!

Main causes 

Production stoppage due to covid-19 

At the onset of the pandemic, mobility and all transportation involved that was not considered essential was drastically reduced. Therefore, the demand for oil decreased in equal measure and gasoline manufacturers took action to reduce their production as well.

Then, in the summer of 2021, the "new normal" returned, reactivating mobility and thus demand. However, production did not, so it can no longer supply the current need at the previous rate.

Ongoing Ukraine-Russia conflict

Another trigger for this rise is that Russia is one of the main European oil importing countries. It also supplies a large part of other European nations, accounting for 27% of imports.

However, its decision to attack Ukraine has caused the EU to enter into a gradual process to begin to wean itself off its dependence on Russian gas and fuel. Therefore, such a delicate situation has further fueled the increase in fuel costs by affecting the production of these raw materials.

Increase in the price of fuel alternatives

Another major drawback is that other energies can be alternatives to fuel such as electricity. Gas has also not been spared from the increasing price increase.

One of the reasons is because Spain does not store as much gas as other European countries and depends more on supply by ship. In addition to the fact that the cessation of economic activity due to the pandemic has had the same effects on energy supply-demand.

Logistic consequences 

Very high transportation costs

It should be noted that fuel is one of the main operating expenses of any vehicle used for transportation. Therefore, its increase causes the economic margin for companies to be very low, and they may even stop offering services that are no longer profitable.

This is especially true in particular cases where fuel is wasted through dispensable actions such as not choosing the most optimal routes or driving empty kilometers. The latter proves to be more damaging both economically and sustainably.

Making the situation more difficult due to the lack of carriers

If it is already difficult today to get a new generation of carriers to meet the current demand from logistics and transport companies, the rising cost of fuel is going to be even less attractive.

Reasons for the lack of interest in the trucking profession include training, personnel and low compensation, along with the difficulty of acquiring a new truck. And, if you add the price of gasoline, the lack of profitability of being a self-employed trucker becomes even more obvious.

Fuel saving tips

Search for lowcost gas stations

You may have already heard about low-cost gas stations. Given the rising price of fuel, more than ever they have become a great attraction when it is already difficult to trust our usual gas stations.

One of the points that differentiates it from conventional gas stations is that its price is reduced based on the services and expenses that it has dispensed with, such as personnel, food store, cafeterias, car washes, etc. In this way, their prices are very competitive within the possible margin.

Investing in route optimization

Given the current circumstances and challenges facing the logistics industry, it seems difficult to adapt to rising fuel prices. However, one of the best ways to get used to it and reduce costs as much as possible is to apply a route optimizer to your regular orders.

Previous directions may no longer be cost-effective and alternative routes may be needed to save fuel while meeting customer demand. A route optimizer will at least allow you to save as much of the higher costs as possible while still meeting demand.

Tracking routes and avoiding incidents

Another method that can help to save on fuel is to efficiently track deliveries or pickups along the established routes. In this way, it is possible to maintain transparent communication with both staff and the end customer.

Of course, it is not possible to predict all the incidents that may occur during the course of the carrier's shift. It is therefore advisable that the tracking application also has a real-time communication system to keep you informed and make the best decisions about issues such as missed deliveries.

Updating the vehicle fleet

Whether by acquiring a new vehicle that uses less fuel or by performing fleet maintenance, gasoline consumption can be reduced to some extent.

La clave está en acciones de mantenimiento como conservar en buen estado la presión de los neumáticos o buenas prácticas como conducir a una velocidad uniforme. Si se aplican dichos pasos pueden marcar la diferencia en el ahorro de combustible.

Conclusion

The situation is very tricky in the face of the inevitable rise in the price of fuel and other raw materials, which is violently shaking such essential sectors as logistics and transport. However, with these tips, fuel costs can be reduced slightly.

At Hedyla we are aware of the current landscape of the logistics and transportation industry, so we seek to help you save both time and costs with our services.