From the Los Angeles Times, April 9:
- California’s diesel prices hit record highs near $7.75 per gallon — up 50% in one month and 35% above the national average — crushing trucking operations statewide.
- Smaller trucking companies struggle most, as standard fuel surcharges cannot keep pace with volatile price swings that major carriers better absorb through long-term contracts.
- Major shippers including FedEx, UPS and Amazon are passing fuel costs to consumers through surcharges, signaling inevitable price increases on goods and services.
Record diesel prices are crushing California’s truckers, forcing them to adjust to avoid losses as they grapple with the most expensive pump prices in the country.
Greg Dubuque’s 40 drivers are in a constant diesel-devouring loop. Their big rigs pick up loads of electronics, office furniture and other goods around Los Angeles. They drive close to 1,000 miles through the Mojave Desert and over the Rocky Mountains to Denver. They bring back containers full of everything from pinto beans to home remodeling products.
One tank of gas for his vehicles cost $600 a couple of months ago. Today it costs $1,000. That’s a record high and more than 35% above the country’s average.
“California sets itself apart from the rest of the country when it comes to pricing,” said Dubuque, a third-generation trucker and general manager of Liberty Linehaul West. “Now it’s really out of control.”
The average price of a gallon of diesel in California got close to $7.75 this week, up 50% from a month ago, according to the American Automobile Assn. The national average of diesel is closer to $5.65 at recent peaks.
The trucking industry was already reeling from a prolonged freight recession, a crackdown on immigrant drivers, and the adverse impacts of tariffs, all of which contributed to a significant increase in bankruptcy filings in the industry.
Now, the price shock from the war with Iran has become yet another headache for the beleaguered industry that hauls 70% of all freight in America.
“It’s got a tremendous impact on the industry,” said Eric Sauer, the chief executive of California Trucking Assn.
And it is not just truckers being affected. The rising prices of ground and air transportation will eventually be paid for by consumers.
The biggest companies are already passing the extra transportation costs on to consumers. FedEx, United Parcel Service, the U.S. Postal Service and Amazon said they will all start charging an extra fee. Amazon said it would apply a 3.5% charge to merchants for its fulfillment service. USPS will charge an 8% delivery fee for certain packages.
“The longer energy prices remain elevated, the more households will need to confront tradeoffs,” said Philip N. Jefferson, vice chairman of the Federal Reserve, at a recent lecture.....
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