{"id":42755,"date":"2021-05-24T15:44:00","date_gmt":"2021-05-24T19:44:00","guid":{"rendered":"http:\/\/sticky-highjinx.flywheelsites.com\/?p=42755"},"modified":"2025-03-04T05:22:45","modified_gmt":"2025-03-04T10:22:45","slug":"how-fuel-surcharges-will-impact-shippers-in-2021","status":"publish","type":"post","link":"https:\/\/envistacorp.com\/en-au\/2021\/05\/24\/how-fuel-surcharges-will-impact-shippers-in-2021\/","title":{"rendered":"How Fuel Surcharges Will Impact Shippers in 2021"},"content":{"rendered":"Reading Time: <\/span> 4<\/span> minutes<\/span><\/span>\n

When shippers are investigating root causes of transportation cost increases over time, fuel can often be overlooked. This does not mean fuel costs are left out of cost models or projections, but that they can be viewed as static or non-strategic costs. While shippers may not have needed to pay as much attention to fuel costs in 2020 due to low fuel prices resulting from COVID-19, 2021 has brought them back to the forefront.<\/p>\n\n\n\n

According to the U.S. Energy Information Administration (EIA), U.S. gasoline\/diesel prices, as of March 30 2021, increased for 17 consecutive weeks<\/a> (the longest consecutive price increase since 1994). While the rate at which both gasoline and diesel prices are increasing may have flattened out<\/a>, with prices respectively hitting $2.89\/gallon (gasoline) and $3.14\/gallon (diesel) in week 18 (5\/3\/21 \u2013 5\/9\/21), significant declines are not in the forecast. Jet fuel has followed a comparable trend line, with prices hitting record lows in 2020, spiking at the beginning of 2021 and generally flattening out<\/a> in April and the beginning of May.<\/p>\n\n\n\n

One caveat to the flattening out of gasoline and diesel prices is the recent cyberattack on the Colonial Pipeline<\/a>, which provides 45 percent of the fuel consumed on the east coast of the United States. As of May 13, 2021, Colonial Pipeline has resumed operations but not without notably impacting fuel prices. \u201cThat\u2019s still significant enough to make a difference,\u201d said Bob Yawger<\/a>, Director of the Futures Divisions at Mizuho Securities. \u201cThis just shows how fragile the situation is.\u201d<\/p>\n\n\n\n

What Do These Price Increases Mean for Shippers?<\/strong><\/h2>\n\n\n\n

Fuel price projections are dependent upon consumer demand patterns and OPEC+ production strategy\/restraints, both of which are unknown coming out of COVID-19. However, the EIA projects a slight decline in gasoline prices for peak summer travel to $2.78\/gallon (diesel at $2.96\/ gallon) and, if prices follow historic patterns, its projections show the overall 2021 fuel price averaging out to be around $2.66\/gallon. These projections<\/a>, if realized, would put shippers in a comparable position to 2019, where the price of fuel averaged out around $2.69\/gallon (gasoline) and $3.05\/gallon (diesel).<\/p>\n\n\n\n

Assuming 2021 fuel prices will generally reflect 2019 trends, some modal projections can be made:<\/p>\n\n\n\n