Everyone in the country is aware of the gas shortage on the east coast of the United States. However, few in the industry fully understand how it happened and how it will affect costs moving forward. While the problem was resolved rather quickly, it has been costly to the trucking industry and consumers as a whole.
What Caused the Gas Shortage
The Colonial Pipeline Co. is over 5,500 miles long and supplies nearly 3 million barrels of gasoline to the eastern seaboard every day. Unfortunately, hackers overtook the system and installed ransomware on the server. Ransomware is a virus program that shuts down a company’s ability to operate its systems until a fee is paid. In this case, the fee was $4.4 million.
In over 10 states, everyday consumers and truckers ran gas stations dry as they heard the news. Despite the fact that Colonial Pipeline Co. quickly resolved the issue within days, the fear factor of running out of fuel caused mass panic. Many individuals began hoarding gas in whatever containers they could, including plastic bags (which we in the trucking industry know is incredibly unsafe). Toss in there the already known driver shortage and transport of fuel to replenish the pumps became delayed, as trucking companies were forced to pay tanker drivers more money to get the product there asap.
Despite the company’s best efforts, Colonial Pipeline Co. could not pump gas through the pipeline fast enough to meet the panicked demands of the east coast’s population. Unfortunately, the shortage has caused a few long term effects.
How Costs Are Affected
Gas prices surged above $3 a gallon for the first time in over six years due to the shortage. Gas stations were completely out of fuel in many states and many continue to battle with shortages such as as SC, NC, VA, and TN. The increase in gas prices inevitably affects the trucking industry. As prices rise, so does the cost of doing business. With higher fuel costs, freight costs increase. It is up to the trucking company to absorb these costs when contracts are already in place. For new contracts, this means trucking companies must raise their rates in order to minimize the cost of operating their fleets.
Unfortunately, the higher prices of doing business can affect more than just the shipping fees customers pay. Higher costs can affect how many truckers a company can employ. In a time where the demand of truckers is high and many jobs are open, it can be difficult for the trucking industry to complete all of its agreed upon duties in a timely manner. Of course, drivers cannot work overtime to ensure safety on the roadways, which means some trucking companies are struggling to complete deliveries on time as promised.
Despite Shortages, Trucking Companies Continue to Move Forward
While the gas shortage was temporary, it will leave a longer effect on the trucking industry. Fortunately, in time, the higher costs of gas will go back down. This means that freight charges will not be nearly as high.
The attack on Colonial Pipeline Co. did showcase how vulnerable the systems for delivering gasoline are. All we can hope for as an industry is that stronger measures will be in place to prevent a similar attack in the future.
Road Scholar Transport is available to assist anyone who has experienced issues due to the gas shortage and its remaining effects. Please do not hesitate to contact us today to discuss how we can assist you.