Tough road ahead: Truckers feel brunt of gas prices
Just this past week, AAA announced that the national average for a gallon of regular gas was $5.004, a record high. While the soaring prices at the pump affect everybody who drives, they especially impact the trucking industry. Truckers use diesel, which is at an average of $5.765 a gallon nationally as of June 11, according to AAA.
Diesel costs more than regular gasoline due to the differences in federal excise taxes between the two. The tax on diesel is 24.3 cents per gallon, which is six cents more per gallon than the tax on gasoline. As of January 1, 2022, the average of total state taxes and fees for on-highway diesel fuel was 32.66 cents per gallon according to the U.S. Energy Information Administration.
According to Alix Miller, Ph.D., the president and CEO of the Florida Trucking Association, fuel is the trucking industry’s second largest expense, only behind labor.
“These recent spikes in diesel fuel prices have a real and significant impact on our industry,” Miller said. “Record-high prices have real, direct and direct implications on trucking and the consumer.”
Diesel powers trucks that deliver consumer goods, manufacturing products, agricultural products and so much more. With supply chain issues already facing Americans, the high price of diesel threatens to exacerbate the problem.
While consumers certainly feel the after-effects of diesel price increases, the trucking companies, 97% of which are small businesses, are hit even harder. Miller says that trucking companies do use fuel surcharges to alleviate some of the costs, but they only cover 60-70% of price increases.
The small trucking businesses have less negotiating power than bigger companies for things like freight contracts and purchasing fuel.
While not technically a company that has any truckers, Panhandle Trucking and Logistics in Crestview has been working in the industry since 2012. According to Leah Jarriel, co-owner of Panhandle Trucking and Logistics, her business is a truck broker. In other words, they help facilitate the transfer of goods by acting as a sort of go-between between truckers and customers who need something moved.
Panhandle Trucking and Logistics works with 20 or more regular customers and helps facilitate 250 loads a year. According to Jarriel, they deal with owner/operators and full-scale trucking companies.
Jarriel says that the gas prices impact both sides that she and her business deal with.
“It has been very volatile,” Jarriel said. “Carriers have to know what their costs will be so that they can give a quote to a customer.”
Without truckers and carriers being able to give a quote due to fluctuating prices, the truckers, the customers, and the brokers are all left in a sort of limbo.
“If I give a quote today for freight in six weeks,” Jarriel said, “how do I know what the rates are going to be then?”
Jarriel considers this whole inflation situation surrounding gas prices to be a “trickle down problem.” Gas prices go up, trucker fees go up, the quote for carrying a load goes up, and then those costs at the customer and later, consumer levels, also go up. This leaves everyone having to decide whether it is worth the cost, especially owner/operator truckers.
One of those truckers who is feeling the brunt of inflation at the pump is Paul Coleman. Along with his son, Coleman owns a trucking company called PM Coleman Hauling LLC out of Walnut Hill in Escambia County. PM Coleman Hauling LLC began in June 2021.
“Things are bad, some companies are shutting down,” Coleman said. “These prices have cut into our profit bad.”
According to Coleman, his company is an owner/operator hot shot trucking business, and they travel across the country. Hot Shot trucking, according to truckstop.com, is when truckers haul smaller, more time-sensitive less than truckload (LTL) loads within a specific timeframe and usually to a single customer or location.
Coleman has driven big trucks on and off for 25 years, drives to places across the Southeast, Northeast, Midwest, and out west, but he tries to avoid California because of the high gas prices.
When Coleman spoke by phone on June 10, he was in Smithfield, North Carolina on a hauling trip. He said that diesel cost nearly $6.00 there during the phone call. According to Gasbuddy.com, a website that tells people gas pricing information from across the United States, diesel cost $5.69 in Smithfield on June 10.
According to Coleman, he usually needs 1200 gallons a month for his business. At $6.00 a gallon, that would amount to $7200.
With the added costs of things like food, hotel stays, and other business expenses, truckers have to adjust and haul more. Coleman says that truckers are trying to haul two to three things or more with each load to turn enough of a profit.
“Right now, if you don’t get a good load, then it isn’t worth the trip,” Coleman said. “It really hurts small businesses like us.”
Coleman also says that the trucking industry is hurting due to “team drivers.” These team drivers have “swamped” the industry in recent years, according to Coleman, and do the same loads for cheaper prices than businesses like Coleman’s. They are called “team drivers” because they have a crew who swaps out who is driving, which also saves time.
“If things don’t change, I’ll have to shut down,” Coleman said. “I honestly don’t know what to do.”
Coleman hopes that all those involved in the trucking business, from truck stops to brokers to the truckers themselves, can come together and figure out better prices for all.
“Lots of people wonder why shelves at Walmart and other stores are empty, now you know,” Coleman said. “If it keeps going this way, people are going to see their shelves a lot emptier.”
