State Truckers Feeling Crunch

The hefty increases in gasoline prices are shocking family budgets for most Americans, but truckers’ families are getting hit on a second front because of the meteoric rise in diesel fuel costs.

The fuel is up even more than gasoline.

But last week the price of diesel fuel in Connecticut averaged $4.24 a gallon, up from $2.82 in March 2007, $2.80 in March 2006, $2.38 in March 2005, and $1.83 in March 2004.

For the nation’s truckers, including the 1,000 members of the Motor Transport Association of Connecticut — most of whom are small outfits with five or fewer trucks, including movers, construction companies, landscapers, oil deliverers, food transporters, and other freight haulers — higher diesel prices threaten their existence and raise prices for everything that truckers carry.

Diesel used to be the second highest expense for truckers. Now it’s the highest.

Trouble Brewing

“This is putting more stress on the trucking industry than anything I’ve seen in 20 years,” said Mike Riley, president of the association. “It’s affecting the bottom line, and if truckers can’t make a profit, they can’t run, and if they don’t run, we’re in trouble.”

Indeed, according to the American Trucking Associations, “Because trucks haul 70 percent of all freight tonnage, and 80 percent of communities receive their goods exclusively by truck, rising fuel costs have the potential to increase the cost of everything that Americans consume that comes by truck.”

But to date, price hikes on the goods that truckers carry have not been automatic, Riley said.

“The price of diesel has gone completely crazy, but shippers are not very understanding,” he said. “A lot of the independent guys are not going to run, because they can’t get the price they need to make a profit. We cannot absorb it. We have to pass it through, because it’s just killing us.”

Diesel prices have been rising for three reasons.

First, in 2006 the federal government required all commercial vehicles to use a cleaner diesel — ultra-low sulfur diesel fuel. As a result, diesel is now much more expensive to make.

Second, global competition for diesel is at its highest level.

And third, because diesel is made from crude oil, the price of diesel fuel follows the price of crude oil, which was $110 a barrel a few days ago. A barrel of crude, when refined, yields about 20 gallons of gasoline and seven gallons of diesel, as well as other petroleum products, like heating oil and jet fuel.

“Truckers have to be smarter and more efficient as to how they set up their runs,” Riley said.

Another way to survive is the surcharge. “Now all trucking companies basically have fuel surcharges.”

Can the small trucker last long-term? “At this stage I’m not aware of anybody folding it up,” Riley said, “but I have heard of others that have, and we’ll count the bodies later.”