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How Diesel Prices are changing and how to control your transport cost?

Viktor Rudiuk 04/02/2019

Diesel is a big part of transportation cost and today when many truck owners looked at world spot or Platts crude oil market prices they concern why crude oil prices dropping or raising but there are hardly any changes on retail diesel prices.

 

Interesting statistics — during October — November Crude Oil prices on Platts went down for almost 25% when diesel retail prices went down only for 5 to 7%.

There are many reasons why it looks so, but shortly it explains also as following: all Refiners trying to protect itself from increasing their major product prices (diesel, gasoil, and so on) and decreasing crude oil prices via different hedge strategies. If the refiners will make an unplanned entry into the spot market prices it might move against them and destroy their business.

For transport companies it looks very similar as increasing price for diesel will impact on their financial results and create risks of not fulfilling their obligations.

 

How to control it:

  • Use hedge strategy in your contracts with customers — recalculate your freight invoice impacted by diesel prices.
  • Optimize customer shipping and delivering points and «do less empty km»
  • Do your customers’ diversification in order to have more available loads.
  • Grow and provide to your customers non-assets services:
  • Make a contract with Diesel suppliers which price is linked to any Market Benchmark like:
    • spot
    • platts
    • official state indicative prices.
    • etc…
  • Manage your trucks and drivers using the latest available products on the market:
  • Take control over your risk factors and do not allow risks to control over your business.

For sure there are more strategies which transport owners can use. You can always contact us if you need any further information.

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