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High price of diesel makes truckers rethink their work

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Posted Mar 12th 2008 3:37AM

RALEIGH, N.C. — Harold E. Funderburk has noticed more and more big rigs parked on the side of the road with “For sale” signs in their windows.

“They are just giving it up, selling their stuff and going to work for some big (trucking) company,” the Raleigh trucker said.

The high price of regular gasoline usually gets all the attention, but the price of diesel has been steadily climbing.

If prices keep climbing, Funderburk said, he’ll park his semi, too.

“I’m going to make one more trip,” Funderburk, 58, said Tuesday. “When I get back, I’ll make my decision.”

The average tractor-trailer gets just 5 to 6 miles per gallon, and, at current prices, it can cost more than $700 to fill the empty tanks on most long-haul trucks. Those kinds of prices are making it too expensive for many truckers to keep hauling goods.

Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association in Grain Valley, Mo., estimates as much as 10 percent of the association’s 161,293 members have parked their trucks.

“Right now they are likely spending $70,000 to $100,000 a year just for fuel,” Spencer said. “We are talking about losing half of their net income for the year. They simply cannot survive.”

The ramifications go far beyond the trucking industry. With most of this country’s goods transported by truck, fewer drivers can lead to strained supplies while higher fuel costs can be passed along to consumers who are already paying more for food and other goods.

The high cost of fuel is a relatively new problem for trucking companies. Until a few years ago, diesel fuel — a byproduct of oil — was generally less expensive than regular gas. For instance, when Funderburk started driving his truck in 2002, diesel fuel in the Triangle averaged about $1.40 a gallon. But government mandates to make diesel fuel cleaner along with higher oil prices have steadily pushed up the price of diesel. The higher costs coupled with a slowing economy have been hard on the entire trucking industry, but especially so on small companies and independent drivers.

And it doesn’t look as if there is going to be relief in price any time soon, said Tom Crosby, a spokesman for AAA Carolinas.

Crosby said that the United States’ already-strained oil supply has been worsened by a temporary refinery shutdown in Texas and minor glitches at other production sites. On Monday, the price of a barrel of light, sweet crude oil was a record $103.

Although most drivers receive a fuel surcharge from the customers, the amount rarely covers the entire fuel bill.

For example, on a recent trip, Funderburk’s fuel allowance was $2,200. But his total fuel bill for the trip was $2,500, because the price kept rising. As he drove back to Raleigh, he noticed the cost per gallon had jumped 15 cents in almost every state he passed through. “I had to go into my pocket for the extra $300,” he said.

“In theory, the fuel surcharge is supposed to cover the fuel cost,” said Charlie Diehl, president of the N.C. Trucking Association. “But when (diesel costs) go up rapidly, it’s unlikely that the fuel surcharge will keep up with the rate.”

The weak economy isn’t helping truckers, either.

With the downturn in the housing market, there are fewer construction supplies to ship. And consumers are starting to put the brakes on spending, which means less cargo to move across the country. Fewer shipments have meant that many drivers have longer layovers while they wait to get a load to drive back home. Layovers also add to their travel costs since drivers have to run their truck engines throughout the night to keep warm.

Tom V. Lancaster, an independent trucker from Cumberland, Md., said he usually tries to do hauls close to home in case he has to wait for a load. But on a recent weekday, he was at a truck stop in Dunn, near Interstate 40 and I-95, preparing for an overnight stay.

He used the down time to do some light maintenance on his truck — one way he saves money — while he waited to hear whether he’d get another load. He had to get a load that would cover the $315 in gas he figured it would cost to spend the night and make the drive.

Some truckers have invested in auxiliary power units that they use at night to heat their trucks. But Lancaster hasn’t been able to afford one; they range in price from $1,500 to $7,000.

With fewer jobs, some small companies are finding it hard to keep their drivers busy.

Kerry Ramsey, owner of K&M Ramsey Trucking in Fayetteville, parked one of his five trucks when a driver left. He doesn’t plan to replace him until business picks up.

“I’ve got five families depending on me for income,” Ramsey said. “You try to save as much as you can because the trucking expenses have gone plumb crazy.”

Ramsey said that in the past three years, most of his expenses have doubled, particularly those related to petroleum, such as tires.

Ramsey now pays $11 a gallon for motor oil. He used to pay $6. The cost of antifreeze is about $14 a gallon, compared with about half that amount a few years ago. He pays about $4,000 a year for insurance on each truck.

Funderburk, too, has seen prices rise. He said it costs him $475 to change one tire. And if he has a major repair, he pays $80 an hour, plus parts.

And Lancaster said his annual fuel costs have more than doubled in the past couple of years to $50,000. He’s also getting hit as a consumer as the high fuel costs are being passed down to the retail level, he said.

Lancaster said that if it weren’t for his wife’s income, there would have been weeks when his family of four had nothing to eat.

“Her paycheck is critical to our survival,” Lancaster said. “It shouldn’t be like this.”

But Lancaster, who has been driving trucks for 39 years, said he has no intention of stopping now.

As for Funderburk, he said that while he may hang up his keys for a bit, Ariell Transportation Service (named after his granddaughter) won’t go out of business. Nor will he sell his two trucks, which he bought after being laid off from Nortel.

“I worked too hard to buy those trucks,” he said.

Besides, he said, when enough truckers stop driving, customers will have to pay higher rates. When that happens, Funderburk said, he’d get his trucks back on the road.

“This can’t last, because everything moves by trucks.”


Information from: The News & Observer of Raleigh, www.newsobserver.com

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