As diesel prices soar, small trucking businesses struggle to stay afloat

Posted 54 days ago

From WWW.WASHINGTONEXAMINER.COM

Talk to a trucker if you think you’ve got it bad at the gas pump.

Drivers with smaller trucking companies, which transport key goods and supplies across the country, say it’s getting harder for them to fill their tanks as the price of diesel soars higher by the day.

The added financial woes for independent truckers risk worsening the supply chain crisis because some consider parking their big rigs for good.

Though all drivers have faced higher fuel prices at the pump since the Russian invasion of Ukraine disrupted the energy industry earlier this year, diesel prices have been growing at an even faster rate than regular gasoline, surpassing $6 per gallon in some places.

“Fuel is the single largest expense for a small business trucker,” Norita Taylor, spokeswoman for the Owner-Operator Independent Drivers Association, said in an email. “Sudden jumps in price can be challenging to deal with. Some are able to mitigate with fuel surcharges but not all, such as independent truckers that work with brokers.”

The average price of diesel nationwide was $5.43 per gallon on Wednesday, more than $2 higher than last year, according to AAA, and beating the previous day’s record-setting price of $5.37. Unlike drivers who work for larger corporations, owner-operators must often absorb the jump in fuel costs themselves.

“Independent truckers and small trucking companies are particularly hurt by this crisis,” Ron Faulkner, president of the California Trucking Association, wrote recently in the Fresno Bee. “These companies operate in markets which do not always compensate for the increased cost of fuel."

"The impact to small fleets is especially concerning because more than 95% of the trucking companies in the country operate 20 or fewer trucks," Faulkner added. "These companies are the backbone of the industry and are struggling to keep up with out-of-control costs.”

Rapidly growing fuel expenses risk putting small trucking companies out of business and taking trucks off the road at a time when labor shortages in the industry are already wreaking havoc on the global supply chain, which has struggled to keep pace with demand since the start of the COVID-19 pandemic. Store shelves have been left bare in some places, and access to crucial building materials has been limited, among other things.

“Look around your house or your office. Everything in it, from the food in your fridge to the chair you are sitting in, to the phone or tablet on which you may be reading this article, was brought by a trucker,” Faulkner wrote. “And despite much progress on alternative fuels, diesel still fuels 97% of the big rigs on the road today.”

The growing costs of running a trucking business are also linked to the sky-high inflation levels consumers have seen across a range of goods and services.

“To cover the increased cost of diesel, truckers must increase the rates charged to haul freight,” Faulkner said. “These increased rates are then passed on to consumers via higher costs at the retail level. So, you are paying for high prices of fuel both at the pump and at the grocery checkout line.”

The U. S. Department of Labor has reported record-high inflation rates in recent months, both in costs to producers and consumers. In the last year, the consumer price index has risen 8.5% before seasonal adjustment — “the largest 12-month increase since the period ending December 1981,” the Bureau of Labor Statistics said last month.

Meanwhile, the producer price index “moved up 11.2 percent for the 12 months ended in March, the largest increase since 12-month data were first calculated in November 2010,” the bureau said.

“The index for final demand goods rose 2.3 percent in March, the same as in February,” the bureau wrote. “Over half of the broad-based advance in March can be traced to a 5.7-percent jump in prices for final demand energy.”

“Leading the March increase in the index for final demand goods, diesel fuel prices jumped 20.4 percent,” the bureau added.

Since many goods in the U. S. are transported by truck at least once before arriving at their final destination, a wide range of items could become even more costly as diesel prices continue to surge.

“America's trucking industry is the lifeblood of the U. S. economy,” the American Trucking Association said. “In fact, nearly every good consumed in the U.S. is put on a truck at some point. As a result, the trucking industry hauled 72.5% of all freight transporte... (Read more)