The average on-highway diesel price dropped 0.5 cents this week following six consecutive weekly increases, according to the U.S. Energy Department. Although the price had been increasing as of late, the average U.S. cost of on-highway diesel is now $2.909 per gallon which is still $1.009 less per gallon compared to this week a year ago.
How does lower diesel price affect the industry?
- With the lower year-over-year diesel prices, some shippers in certain lanes could see the cost gap between rail and trucks reduce. This has the potential to encourage shippers in some lanes to opt for trucks instead of rail in 2015.
- Part of the way carriers make money is through fuel surcharges. With lower fuel prices some contract carriers may raise prices in other areas to compensate.
- Driver shortage and fluctuating capacity in certain parts of the country remain a significant factor when it comes to overall freight charges and could mitigate the effect of the fuel price decreases.
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