In The News

High fuel prices hurting independent truckers

FLORENCE, Ala. — Charles Scott doesn’t know how some of his fellow independent truckers can afford to stay in business.

Scott has been a trucker for about 50 years and has seen many changes. What he sees today frightens him.

“A lot of truckers talk about getting out of the business,” Scott said. “If I had some of the bills I know some of the boys got — I truly don’t know how they make it.”

Independent truckers are struggling with steadily increasing diesel prices.

They’re also dealing with shippers that are not willing to pay the truckers a fuel surcharge, which supplements the amount of money shippers pay the driver to haul the freight.

Truck drivers are normally paid by the mile, Scott said.

Scott said as a rule of thumb, an independent truck driver must earn the same rate per mile as he pays for a gallon of fuel.

If the trucker is paying $3.91 for a gallon of diesel, he should be earning $3.91 per mile for the freight he’s hauling, Scott said.

A big rig is not known for fuel economy. Scott said the rigs normally get five to six miles per gallon, which equals out to about 60 cents per mile or so, depending on the cost of fuel and the rig’s actual fuel economy.

Truckers have to add the cost of maintenance, the wear on tires — which can run $400 each — licenses, permits and insurance.

In many instances, independent truckers are not earning enough to meet basic expenses.

At 69, Scott said he is in good shape financially. He is a niche hauler who specializes in overweight and oversized loads. He owns his own tractor and trailer.

He recently paid $3.97 per gallon for diesel in South Carolina, but has seen it priced at over $4 per gallon in other areas.

Larry Daniel, president of America’s Independent Truckers’ Association, said high fuel prices hurt the trucker more than the consumer.

While the higher cost of fuel might raise the cost of some goods “a few cents,” it could cause the independent trucker to lose his livelihood, Daniel said.

Daniel said freight rates are based on a benchmark diesel fuel cost of $1.10 a gallon. The fuel surcharge is based on the actual cost of diesel and is supposed to make up the difference in cost.

He said independent truckers normally don’t have the means to assess the fuel surcharge like larger trucking companies do.

Daniel said large trucking companies will not haul freight without a surcharge. He said shippers will try their best to avoid it. The end result could spell the end of many small trucking companies and independent truckers, Daniel said.

Tavio Headley, a spokesman for the American Trucking Association, said truckers spent $112.6 billion on diesel fuel in 2007. The latest forecast by the U.S. Department of Energy predicts truckers will spend $135 billion on fuel this year, a record amount, Headley said.

In 2007, diesel prices were 7 percent higher than the average price in 2006.

“Prices have already jumped 18 percent this year,” Headley said, adding that the U.S. Department of Energy’s information administration sees “no end in sight.”

He pointed out that 80 percent of American communities receive their goods exclusively by truck.

“We deliver the economy,” Headley said. “Seventy percent of all domestic cartage is shipped on a truck. You do not see rail cars pulling up to your grocery store.”

In 2007, trucking company failures hit a nine-quarter high of 625, Headley said. That figure only included companies with at least five trucks.

“Based on that, it’s likely many more carriers have gone under since smaller carriers are more susceptible to failures,” he said.

Headley said truckers cannot continue absorbing the cost of diesel fuel and expect to make a living since the profit margins are already low.

“Historically, the cost of labor used to be the highest expense in the trucking industry,” Headley said. “For many carriers, fuel is now equal to labor as the highest expense. For some, fuel has surpassed labor as the highest expense for the trucking industry.”

This time a year ago, diesel fuel averaged $2.79 per gallon nationally. Today it’s running close to $4 per gallon.

“It’s a significant increase in a short period of time,” Headley said.

Bruce Harris, who operates Harris Express, in Muscle Shoals, has been in trucking for 50 years.

He employs 18 drivers who primarily transport mail for the U.S. Postal service, but also hauls some general freight.

Harris said some companies will pay the fuel surcharge, but others will not.

“In some cases, they’re starving the independents out,” Harris said. “They want you to haul for nothing. Fortunately, I get reimbursed for my fuel. It’s hurting the general public as much as it’s hurting the truck driver.”

Harris said he also sells big rigs, but his business has decreased significantly.

“I’d always sold them pretty good until the last few months,” he said. “It’s hard to sell a truck. People who drove trucks are getting out of the business.”

Some truckers are dropping their speed down to 65 mph to conserve fuel.

“Truck parts are sky high,” he said. “A good tire right now is about $400.”

Daniel said trucking is no different from other businesses.

“I don’t care what industry you pick; you have people going into it and people going broke,” Daniel said. “It’s no different in trucking, until you take the extraordinary condition of increased fuel prices and no means to recover.”