The low price of fuel has helped reduce transportation costs, which grew only 1.3 percent in 2015, and has caused some carriers to shift freight to the nation’s highways, resulting in decreased intermodal traffic last year.
The findings were part of the 27th Annual State of Logistics Report, which was introduced by the Council of Supply Chain Management Professionals (CSCMP) and presented by Penske Logistics.
Global oil prices are at multiyear lows, averaging about $50 per barrel in 2015 compared to around $100 per barrel over the previous four years, the report said. Both the International Monetary Fund and the Department of Energy’s Energy Information Administration predict that the price of oil will average about $35–$36 per barrel throughout 2016.
U.S. on-highway diesel fuel prices declined nearly 30 percent between Jan. 1, 2015 and Dec. 31, 2015, from $3.137 per gallon to $2.237 per gallon according to EIA. While the low price of oil has reduced fuel costs for logistics companies, a large portion of those costs were being passed on to shippers through fuel surcharges, which are INSIGHTStypically based on the cost of on-highway diesel.
Motor carriers continue to make up the largest transportation mode and had $583 billion in revenues in 2015, with lower fuel prices contributing to the growth of on-highway miles. “With lower fuel surcharges and declining base rates in road freight, many shippers may have opted to move their goods by truck rather than rail,” the report said.
That may shift going forward as overcapacity in the trucking sector dissipates and continued investment in rail infrastructure improves intermodal service, the report said.
Overall, trucking saw growth across several segments of the industry in 2015, including a 1 percent increase in dedicated contract carriage. Revenue growth within the truckload segment reached 3 percent, the less-than-truckload segment grew 7 percent, and the parcel and express segment of the logistics industry grew 8 percent.
Total U.S. business logistics costs reached $1.408 trillion in 2015, a 2.6 percent increase. Between 2010 and 2014, U.S. business logistics costs grew by an average of 4.6 percent annually, the report said.