Fuel prices and Auto Transport

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Recently, I have been questioned by returning customers why auto shipping prices have been going up. The answer is; fuel is the largest single fixed cost in the car shipping business so when fuel prices go up car shipping prices go up. Most Carriers claim their fuel economy to be 5-7 miles per gallon. Those who operate around major cities will usually get a little less. From Sacramento to Boston is 3021 miles according to Yahoo Maps. 3021 divided by 6 is 503 gallons per cross country trip.  According to the U.S. Energy Information Association, as of March 7, 2011 the price of diesel fuel in the United States ranged from an average of $3.81 per gallon in the Gulf Coast States to $4.12 per gallon in California with a national average selling price of $3.87 per gallon. That may not seem like a lot if you are spending $30 a week for fuel for your Toyota Camry when last year it was only $23 a week. However for these carriers the prices increase from one year ago, when the average price was 97 cents less a gallon is enormous. One year ago the seven day trip across country would use the same 503 gallons but those gallons would cost $1,459 today that same trip would cost $1,947 each way. That difference of $488 is more than most carriers spends per week on groceries or housing and is probably very close to exactly what that carrier spends each week on shelter and food combined. Carriers are forced to raise their prices so they can eat and have a place to live. If the carriers average 8 vehicles per load then $488 divided by 8 is a $61 increase per vehicle per trip. The actual price increases have been higher. This is because if fuel is 40% of a carriers fixed cost, and its price rises 33.4% from $2.90 a gallon to $3.87 a gallon then his fixed costs rise 13.36%. This predicts a price increase of about 13%, so if it cost $825 to ship your car last year across the country, then this year an identical vehicle shipment will cost around $932.25.

Mike Price

Auto Shippers Express

General Manager

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