Increasing Fuel Costs Continue
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From high tech companies like Apple and Samsung to local mom and pop shops, everyone continues to struggle with sourcing product. The COVID-19 pandemic started it and the conflicts between Ukraine and Russia only made things more difficult. Things like increased shipping costs and freight shortages play a role in the global supply chain struggle.
We have all seen the gas prices recently and unfortunately it is not looking like they will be going down any time soon. The national average for a gallon of gas is now over $4.25 according to AAA. Some experts say that we might see a slight decline after May but the national average is still expected to remain over $4 until the end of the year. Not only is it more expensive to fill up your car’s gas tank but that also means it is more expensive to fill up freight trucks and air cargo jets.
Climbing oil prices translate directly to higher diesel prices. The United States diesel prices are up significantly from last year and are expected to go higher as sanctions are mounted against Russia, the third-largest oil producer in the world. Higher fuel costs from climbing oil prices caused by the hostilities will continue to be felt by shippers across the globe. Ocean carriers who continue to serve ports in the region have introduced War Risk Surcharges for these shipments. This translates to an additional $40-$50/TEU. Similar to gasoline prices, while a temporary dip in available supply of exports could explain the slight easing in freight costs, all signs point to continued elevated volumes in the coming months.
Expect prices to continue to increase and when they do decrease it will be very minimal. Hopefully by the beginning of next year we will see prices return back to what they once were.