Independent trucker Michael Whitaker is getting ready for his next equipment shipment from South Carolina to Arizona. Whitaker has been a truck owner since 1998. His specialty is transporting industrial machinery such as construction and agricultural equipment.
“The diesel oil price. That’s all vans the driver’s main expense, it’s diesel,” Whitaker said of the recent rise in diesel prices.
At the beginning of the year, Whitaker said, it costs $600 or $700 to refill the back of his truck. Now, he is paying about $1,000.
“You notice it in your pocket, oh yeah,” said the Iowa-based trucker.
Diesel prices have skyrocketed since the outbreak of the Russo-Ukrainian war. Average diesel prices hit their highest levels since 1994 in mid-March.
Whitaker said he used to charge about $5/mile on certain routes. Now he’s charging between $7-9 per mile. He also uses a discounted fuel card and the app identifies the most economical stations he can get gas on his routes.
While it’s industry standard to impose a fuel surcharge on freight costs, motorists don’t always see that money is being transferred to them.
“We are assuming that they [drivers] all will be recipients of the fuel surcharge. And that’s not necessarily always the case. “Todd Spencer, President of the Owner-Executives Independent Driver Association told Yahoo Finance.
“Sometimes other people, it’s going to be the middle man, or the like in trucking, they can keep some of it, they can keep it all and not pass it on. Now that happens too. out. Shouldn’t, but it does,” Spencer said.
As of last Monday, diesel prices were $1.94 higher than they were a year ago,” Spencer said.
“For those of us, the majority of truckers will burn between 18,000-20,000 gallons of fuel per year. So looking at those costs, you’re talking about $90,000 – $105,000 a year just for fuel,” he added.
Intermediate West Texas (BZ = F) and Brent International (CL = F) fell on Monday and Tuesday, helping to ease diesel futures prices slightly. But both benchmarks are still above $100/barrel and global fuel inventories used by trucks and the trains are very crowded lately.
Strategist Andy Lipow wrote in a recent email to investors that “most of the goods transported across the country by trucks and rail use diesel fuel to power the engines and prices.” diesel is going up more than gasoline.”
“Fed Ex (FDX) UPS (UPS) and Amazon (AMZN) All delivery services are being affected by higher diesel prices, and eventually they will have to increase their freight rates,” he added.
One Morgan Stanley analyst raised his estimate of Amazon’s shipping costs by $6 billion to account for higher diesel prices.
Whitaker says he recalls the gas crisis of the 1970s and the economic downturn of 2009. He feared that some of the operating owners would not survive the high costs.
“I think we’re going to have a lot of bankruptcies for individual drivers, trucking companies,” Whitaker said.
“If you don’t manage your money, you won’t be in business for long,” he said. “When things get tough, you have to have enough savings to get you through the tough times.”
