Fuel prices, freight trends and consumer behavior are all playing a role in shaping how businesses may operate in the months ahead, according to guests on the latest episode of the Iowa Economy Podcast, hosted by BPC President Chris Conetzkey.

Jeff Lenard, vice president of media and strategic communications at the National Association of Convenience Stores, and Brenda Neville, president and CEO of the Iowa Motor Truck Association, shared perspectives from both the consumer and supply chain sides of the economy as uncertainty around global oil markets continues.

Here are six takeaways from the discussion.

Higher gas prices influence both spending and sentiment

Lenard said rising gas prices shape how consumers feel and behave.

“At $4 a gallon, it’s lower in Iowa now, but that’s a psychological point that really affects people,” he said. “They start to change their behavior at the gas pump, they’re less likely to go inside the store.”

Lenard added that even when people aren’t filling up, they’re still reacting to what they see.

“People buy gas about every six days, but on those other five days you’re driving down the street, you’re seeing gas prices … and what we see from consumers is generally the bad mood when gas prices are rising or they’re high,” he said.

Fuel costs ripple through the economy via trucking

Neville said fuel remains one of the largest expenses for trucking companies, making the industry especially sensitive to price swings.

“Having this stabilized fuel market over the last three years was something that was very welcome because the rates had really dropped off, the capacity had dropped off, and so companies were able to protect their bottom line a bit because of the fuel prices,” she said.

While trucking companies often use fuel surcharges to offset rising costs, those increases ultimately move through the supply chain.

“It does impact them,” Neville said. “It’s not like they’re able to totally pass that on to the companies, but at the end of the day, we’re all impacted, and it starts with the trucking companies. Their prices go up, and so do the prices of consumer goods that we enjoy every day.”

After a prolonged slowdown, trucking is showing signs of life

Neville said the trucking industry has spent roughly three years in a freight recession driven by excess capacity and weak demand, but recent months have shown improvement.

“In November, there was some real optimism that things were starting to turn around,” she said.

Freight demand, capacity levels and warehouse activity are all key indicators the industry is watching. Neville said improvements in those areas suggested the downturn could be easing, though uncertainty around fuel prices remains a concern.

“And so the folks that I represent were cautiously optimistic that the economy was starting to turn around with a big but,” she said.

Consumers are shifting toward value and
convenience

Lenard pointed to growing demand for private-label products as one signal of changing consumer behavior.

“We are seeing people are trading to private labels because they find a better value there,” he said.

He added that ease and convenience are becoming increasingly important factors in where people choose to shop.

“How are you making their lives easy? Because the competition is also the internet and that enables you to just sit on the couch and have people bring things to you, so find a way to be easy,” Lenard said. “Fifty-three percent consider it very important. Ninety percent overall say it’s important.”

Lenard said businesses should evaluate whether their operations, including new technologies, are actually simplifying the customer experience.

Longer-term fuel pressures could change behavior across industries

Lenard said early impacts from rising fuel prices tend to show up among cash-paying customers, who feel the cost increase most immediately.

If higher prices persist, broader behavior changes could follow, including shifts in travel, purchasing decisions and even vehicle choices. For now, he said, most adjustments are incremental.

“If this does go on for a longer period of time, people will start looking, ‘Do I want to get a more fuel efficient car? Do I want to make some of those bigger decisions?’ But right now it’s day to day,” Lenard said. “‘How can I save a little bit of money? How can I make my money go a little further?’”

Neville said trucking companies are already highly focused on fuel efficiency and would likely intensify those efforts if fuel volatility continues.

“If you’re going a certain speed, 65 to 70, that’s not going to be as efficient if you’re going 60 to 65,” she said. “What you’ll see is trucking companies, if this conflict goes on longer than they would like, you’re going to see a tightening up of that.”

Despite uncertainty, optimism ticks up 

Neville said trucking companies are increasingly seeing positive signals in sectors such as housing and manufacturing, even if recovery is gradual.

“Even with the conflict that’s going on in Iran, they’re feeling good about the overall economy,” she said. “They think it’s moving in the right direction, not as fast, of course, as we would like it, but it’s still moving in the right direction. And given the last three years, that’s a refreshing change.”

Lenard said longer-term trends, including the balance between technology and human interaction, could also shape future business strategies.

“We have to use AI or technology to take away issues that people don’t need to do, so people can be people,” he said.

He added that a renewed emphasis on customer experience could benefit businesses across industries.

“When people want to do things together, and people want to be together and be human beings, I think that’s super positive for any industry you’re in and any community you’re in,” Lenard said.