Is diesel falling below regular gas prices? Hard to believe that scenario would ever become commonplace. However, that is what we see on a regular basis as diesel continues to drop in price to $4.08 per gallon in April. The question before us is whether lower shipment volume across the U.S. is the only reason behind the drop in diesel.
We know Russia and China have made inroads into satisfying the global demand for diesel. This has created less demand for U.S. diesel production, resulting in greater availability of diesel on the domestic market. Couple this with the lack of global demand and the result is the continued decrease in diesel costs here in the U.S.
As we move into May, the Rockfarm cost per mile index continues to decline driven by lower fuel expenses and fewer available loads to haul. April’s $2.58 per gallon takes us back to 2018 and leaves 2021 and 2022 as the only other years in which the Rockfarm average cost per mile was higher than April’s $2.58. Hard to visualize the average cost per mile through the first six months of 2016, 2017, 2018, 2019 and 2020 was equal to or lower than April’s $2.58 cost per mile.
A recent article by Bryce Paschal and published in Transport Topics titled, “Global Trade Data Shows Early Signs of ‘Reglobalization,’” clearly illustrates the changing dynamics of global and U.S. domestic supply chains. The author outlines eight key indicators that are beginning to reflect the change in the global supply chain. The change reflected illustrates several dynamic shifts. The first centers on risk mitigation. Since Covid, shortening the supply chain has been top of mind for many supply chain owners as evidenced by the transition to nearshoring. The direct benefactor has been Mexico with large industrial and warehouse real estate growth reaching a 97.5% occupancy rate in 2022.
The second shift has been largely driven by the trade war with China. As a result of tariffs and export restrictions, U.S. imports are now being sourced from other Asian nations including Vietnam, India, Malaysia and Thailand. In addition, U.S. trade with Europe has grown over 13% over the past year growing traditional trade lanes into the east coast.
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Brad’s journey into logistics began as a Marine Officer and transitioned from the LTL docks to the non-asset side within the logistics service provider arena. As a co-founder of Rockfarm, Brad drives our business development efforts and delivery of our promise. An Arizona native, Brad enjoys spending time outdoors in his home state with his wife and family.
“Our approach to the market allowed us an opportunity to push forward in 2008 and enable our mission, lower the cost to serve to stand as a cornerstone to our company today.”
