Could the Driver Shortage Cause Fuel Outages?

Downstream fuel markets have been abuzz following a recent CNN report that warned of gasoline shortages this summer. The cause, though, has nothing to do with gasoline supplies. Refiners are continuing to keep up with demand and inventories – though below COVID levels – are healthy. Supply and demand are both on the rise, but the trucking companies connecting fuel terminals to fuel stations and bulk fuel buyers may struggle to keep up with rising demand.

CNN’s analysis points out that some areas, like Florida and Arizona, already experienced some outages earlier this year due to Spring Break. Following the winter storms earlier this year, these areas experienced prolonged catch-up times, as Mansfield noted in several Supply Alerts to customers in March. While CNN’s article focuses on retail gasoline, the same outages are impacting bulk diesel markets as well. The National Tank Truck Carriers estimates that 20-25% of FTL transport trucks will be parked due to the driver shortage, nearly double 2019’s rates.

The driver shortage is nothing new. For years, analysts have warned that driver capacity is growing tighter, with the industry short 60,000 drivers in 2019. Back then, the industry was concerned about rising freight costs, but the impending economic slowdown helped to keep rates moderated. When demand collapsed last year, some fuel companies laid off their driver workforce. Rather than returning when the economy improved, those drivers have either moved to other fields or taken the opportunity to retire. Enticing drivers back to the field requires raising pay competitiveness, resulting in industry-wide carrier rate increases.

Summer is a particularly tough time for carrier capacity. Retail gasoline demand generally rises from around 8.6 MMbpd to around 9.6 MMbpd, with some weeks peaking near 10 MMbpd. That 1 million barrel per day difference equates to an extra 5,000 truckloads per day needed during the summer, on top of the existing 42,00 truckloads per day during the winter. In an industry that’s already facing pressure, the driver shortage can create tension throughout the supply chain, impacting both gasoline and diesel buyers.

For customers seeking a supply contract to control their freight rate, click here to learn more about FTL fuel buying and contact a representative who can help. Mansfield works with 1,500 fuel partners across North America, providing freight insights to help you manage your business and keep costs low.

Market Condition Report - Disclaimer
The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures or options contracts.

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