Following Russia’s invasion of Ukraine, fuel costs have spiked at an unprecedented pace, posing further challenges to an already struggling trucking industry. The rapid rise in diesel fuel prices this past month alone has resulted in setting record high averages of over USD$5.00 per gallon in the U.S. and over CAD$2.00 per litre in Canada. The increased price at the pump is adding hundreds of dollars a week to the costs of operating each truck, forcing carriers to add to the already record shattering freight rates via fuel surcharges.
Trucking companies use fuel surcharges to cover swings in diesel prices, and those surcharges have risen on average to 43 cents a mile from 19 cents at the start of the year, according to Truckstop.com.
The ongoing geopolitical crisis and the volatility within the oil markets are expected to maintain the high costs of fuel for the foreseeable future. Potentially worsening the situation is the recent announcement by European nations of cutting or eliminating the purchase of Russian oil altogether, an action already implemented by the Canadian and US governments, which will then increase the fuel supply shortage, further hiking rates.
As we work to manage this continuous situation, some within the trucking industry are asking for both federal and provincial governments to suspend or permanently eliminate some of the taxes levied on gasoline and diesel purchases such as the federal excise tax, federal carbon tax, provincial tax and GST/HST to lower the elevated cost.
Historically, retail fuel prices tend to gradually rise in the spring and peak in late summer when demand is at its highest. This year is no exception as the multitude of factors will continue to drive rising diesel prices while maintaining trucking rates and the accompanying fuel surcharges at record numbers.
For more information, contact William Sanchez, Manager – Truck Services.
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