From the Wall Street Journal, March 25:
Fuel costs have spiked at an unprecedented pace following Russia’s invasion of Ukraine, posing a challenge for freight haulers operating on tight margins and light capital
The rapid rise in diesel fuel prices this month is squeezing freight transportation companies and their customers, and leaving small trucking operators struggling to catch up with the escalating costs.
Independent operators and smaller fleets are most exposed to diesel prices that have hit record highs because they have less leverage with shippers and are having a harder time matching fuel surcharges to the rising rates at the pump.
“It’s been difficult,” said Derek Crusenberry, director of business development at JSG Trucking Co. in Acampo, Calif., which has 20 trucks hauling lumber, steel, canned food and other goods in Northern California. “We have had to find ourselves diving into our margins to support operations, to keep the wheels turning, quite literally.”
In negotiations over freight rates, the shippers JSG works with have been slow to accept price increases that match those in diesel, forcing the company to delay repairs and other expenses, he said.
The dramatic increases are outpacing their ability to pass on added costs.
Prices for diesel, the fuel used by truckers and in a swath of industrial operations, shot up by more than $1.10 a gallon in the two weeks immediately following Russia’s invasion of Ukraine. The invasion has plunged global energy markets into turmoil and sent the price of crude surging.
The average national price of $5.25 a gallon the week of March 14 was the highest in U.S. Energy Information Administration records dating to 1994, and the jump of nearly 75 cents a gallon earlier in the month was the steepest one-week gain ever. Even a pullback to $5.13 a gallon for the week of March 21 left the national average price up more than $1.50 since the start of the year.
The increased pump prices are adding hundreds of dollars a week to the costs of operating each truck, and carriers are scrambling to keep up.
Trucking companies use fuel surcharges to cover swings in diesel prices, and those surcharges have risen on average to 43 cents a mile from 19 cents at the start of the year, according to Truckstop.com.
Fuel surcharges typically lag diesel prices by a week as they rise, executives said, but carriers can benefit as prices decline before the surcharge catches up....
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