Fuel prices are rising. As these costs rise, how are semi-trucking companies handling these high costs? There are several different ways a company can finance those costs.
The old school, or more traditional way, to pay for fuel is with cash flow. But if clients don’t pay on time cash flow can suffer, and companies are stuck trying to figure out how to raise the cash to pay for fuel. They may need to liquidize capital or take on more debt to cover those fuel costs.
Or, trucking companies may choose to cover their fuel expenses is by adding on a fuel surcharge. The added surcharge can help pay for fuel, but there are some drawbacks to this idea.
Passing Fuel Costs to the Customer
First and foremost, clients know the charges are being passed on to them and could decide to go elsewhere, to a company that does not charge them extra.
Additionally, even though the added surcharge is being passed on to the customer, this does not alleviate the problem of clients paying on time.
While customers are paying extra, if they don’t pay on time, companies will still be stuck trying to figure out how to pay their fuel bills.
One of the best ways semi-truck companies are dealing with fuel costs is by being a part of a fueling network. This allows them to get cheaper fuel without going into debt or selling off assets for liquidity. These companies and independent operators have formed a network with several truck stops along their travel routes.
These companies come up with an agreed upon price with these truck stops, which is usually a “retail minus” or a “cost plus” price. In a “retail minus” agreement, when fueling, truckers will pay the normal retail price for gas minus a few cents per gallon.
In a “cost plus” agreement, when fueling is up, truckers pay what the truck stop’s cost for fuel, plus a few cents extra.
Many trucking companies use a combination of these tactics. Because fuel costs are continuing to rise, it is even important for trucking companies to cut costs. Fuel networks are a great choice and help companies stay in business in today’s economy.