Smaller Trucking Companies Are Getting Squeezed by The Soaring Diesel Prices Across The Nation
In the past weeks fuel costs have steadily been increasing. In recent days prices they have spiked at an unprecedented pace after Russia’s invasion of Ukraine. This poses challenges for many truckers who are currently operating on tight margins and low capital.
Freight transportation companies as well as their customers are being squeezed due to the rapid rise in fuel prices. This has resulted in the smaller trucking operations being forced to play catch up, as they struggle with the escalating costs of diesel fuel.
Independent operators typically have a lot less leverage with shippers. This generally speaking, is the biggest reason for why independent operators are the most exposed to rising diesel prices. This leads to their increased difficulty with matching fuel surcharges to the rates at the pump.
“It’s been difficult…We have had to find ourselves diving into our margins to support operations, to keep the wheels turning, quite literally.”Derek Crusenberry, the Director of Business Development at JSG Trucking Co.
The shippers that JSG work with have forced the company to delay repairs and other expenses due to how slow negotiations have been and the shipper’s reluctance to accept prices increases. (that match those in diesel)
With the average national diesel price at $5.25 per gallon back during the week of March 14. The U.S Energy Information Administration reported that these prices are the highest on record, dating all the way back to 1994. These increased prices seen at the pump are leading to the costs of operating each truck to skyrocket by adding hundreds of dollars a week, leading to carriers scrambling to even keep up.
Research shows that fuel surcharges on average lag behind increases in diesel prices by about a week. On the other hand, when prices decline before the surcharge can catch back up, carriers benefit.
Small operators are having to make dramatic changes in order to stay competitive. They are adjusting operations in order to save on fuel, by doing things like limiting idling and even cutting speeds. In extreme cases others are even turning down longer-haul loads in order to focus on shorter runs, which help them keep their expenses down.
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