High Gas Prices Squeeze Shipping Professionals

Posted in March 14th, 2011
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2011 was supposed to be the year when Americans – financially battered, underemployed and demoralized by the impossibly long crisis – finally found their livelihoods improving. In February of this year, unemployment dipped under 9% for the first time since April 2009. Private sector hiring is up, jobless benefit filings are the lowest in 3 years, and the Dow Jones Industrial Average is back to 12,000 from the devastating low of 6,000 in the pit of the crisis.

There are always the stern finger-wags who number the ways in which the nation’s economic corpus is still struggling to rise from the sick-bed. Many commentators point to the numbers of Americans who have jobs, but are unable to work full-time; large and growing deficits that will require interest payments in the future; a national transport and communications infrastructure that grows shabbier and more decrepit by the day.

Nonetheless, the nation was ready for a recovery, and for several months, it seemed that an increasing number of figures on financial sites would be highlighted in green. Then, a desperate street vendor in Tunisia lit himself on fire, and the flames have been burning hotter every day. The result was the only kind to be expected when political strife overtakes major oil producing nations – in the past quarter, the Brent crude oil index went up by 30 dollars, from $90 to $115, and every business that depends on what’s driven and flown stands to take a cut.

Memories are still fresh of the summer of 2008, when speculation and political instability drove gas prices to record highs. The national average broke $4 per gallon in June and July of that year, hitting businesses and consumers hard just as the financial crisis was about to hit our shores like a money-draining tsunami. The prices crested and dipped as low as $1.64 per gallon as people stopped driving during the worst of the crash, before stabilizing at $2.7-2.8 for the next couple of years.

A wave of revolutions and civil wars in the Arab world has upset the balance. While global oil supplies haven’t seen major disruptions so far, gas prices nationwide have shot up by half a dollar since the year turned. California is setting dubious records again, with last week’s average at $3.87, and many stations posting prices well over $4.

Diesel prices are even more ruinous – the Golden State average was $4.285 for a gallon of the liquid gold. Our industry consists entirely of putting things on trucks, driving them for a while and dropping them off someplace else, and for reasons of efficiency and emissions control, all those trucks are powered by diesel. While alternative fuels like biodiesel may become a more popular option if fossil fuel prices keep rising, large-scale adoption will only occur if current price trends become permanent and if prices of alternatives are driven down by the economy of scale. As things stand now, all transport professionals, including automobile transport companies, are seeing their margins evaporate and are struggling to find ways to preserve their business while protecting the customers from the impact of the price increases.

The situation in the auto transportation industry is as follows: due to rising gas prices, the cost of an average California transport job has gone up by $100 in the last 30 days. This is bad enough for customers who have waited before scheduling a transport job, but brokers are in an especially tight spot, since the quotes they have given customers 45 days ago may eliminate any chance of making a profit. This will be reflected in all prices across every transport industry, including international shipping rates for cargo leaving West Coast ports, but many brokers will be reluctant to suddenly change the deal on their clients. The only way to manage the new situation is to be upfront with clients and tell them that they’ll have to pay extra, but we know of many situations where auto transport brokers attempt to obfuscate the issue and avoid uncomfortable conversations, and since they cannot charge the original price and still make money, they may try to delay the job with spurious reasons. Some auto transport brokers even go as far as taking down job listings from shipping brokerage boards without telling the customer; as a result, your car may be stranded for months at its point of origin without a specific shipment date.

In these difficult times, we at Universal Auto Transport promise to be forthright with our customers and give them a full account of the situation. We’ll make sure that the changing economic landscape won’t leave you without your vehicle; we will immediately let you know when rising fuel costs force us to increase our prices, and let you decide if you are still willing to commission our services. Price-conscious consumers will try all the harder to find the lowest estimates, but we urge you to deal with reliable and honest brokers who will give you realistic prices that will get your car delivered on time, instead of artificially-lowered estimates that won’t get picked up by shippers.

In a changing landscape, Universal Auto Transport will be your reliable and honest partner that will make sure your property is delivered on time and for the lowest possible price.