“Fuel prices recently went down. Doesn’t that mean that the cost to ship my car should be lower today?”
This question is probably one of the most common price related questions that we hear at Executive Auto Shippers. And based on the conversations that we have, the actual relationship between diesel fuel prices and the cost to ship a car is somewhat confusing to most consumers. So we will do our best to shed some light on this without going too in depth.
How Fuel Prices Affect The Cost To Ship A Car
Believe it or not, there is not much of a direct correlation between the price of diesel fuel at the pump and the cost to ship your car. I know that this is contrary to what most customers believe and possibly even goes against common sense, but it’s true. However, that does not exactly mean that there is no connection between these two factors.
Supply vs. Demand Drives Costs
In a free market economy, the cost of most goods and services are influenced by their supply and demand, and the cost to ship a car is no different. If you are looking for factors that do have a direct and immediate impact on the cost to ship a car, then look no further. One perfect example of this cause and effect is how the cost to ship a car is different when shipping your vehicle in opposite directions but on the same route.
Fuel Costs Have An Indirect Effect
It’s not possible to say that how much the driver pays to fill up his tanks at the diesel pumps have no impact on what you will pay to ship your car. After all, this is one of the most significant business expenses that a transportation carrier incurs. So this is where the relationship between fuel costs and the cost to ship your car gets a little bit more complicated. Because costs typically do not have a direct and immediate impact on the price of the service being provided, it does impact the supply of the service providers.
Simply put, the less a transportation carrier can make in profit, the fewer transportation carriers there are. So when there are significant changes in the cost of diesel fuel, either up or down, it will translate into more or less profit and in many cases losses for the transportation carriers. In general, when profit margins are higher, more transportation carriers enter the market, and the supply of trucks goes up.
This fluctuation of available truck space does immediately change the cost to ship your car. As you can guess, if more people want to ship their vehicle then there are open spaces on trucks, the rates go up.
So as you can see the price of diesel fuel doesn’t really directly affect the cost to ship your car. However, there is definitely still an indirect correlation.