While shippers ultimately pay the price, the rapidly escalating price of oil and diesel fuel costs have created what the American Trucking Association, an industry trade group, calls a “fuel price crisis,” with calls to Congress for a multi-pronged program to move fuel costs the other direction.
Last week, Mike Card, State Vice President for the ATA and also President of Combined Transport, a small trucking company in Oregon, testified before the U.S. House of Representatives Subcommittee on Highways and Transit about the impact of rising fuel on truckers and shippers and what can be done about it.
We all understand the impact these wildly increasing costs are having on the entire logistics industry, but sometimes it’s good to take a pause to really consider the numbers.
“The trucking industry is on pace to spend an incredible $141.5 billion on fuel this year. This is $29 billion more than we spent in 2007, and more than double the amount we spent just four years ago,” Card told the sub-committee.
The costs are not only adding tremendously to the cost of transportation, but taking a toll on trucking operators themselves. Card said that in the first quarter of 2008, 935 trucking companies with at least five trucks failed - the largest number of trucking-related failures since the third quarter of 2001. He also said that it is very likely that a large number of companies that operate fewer than 5 trucks also failed during the first quarter of this year.
While some of these failures are also attributable to the slowdown in freight movement, the punishing costs of fuel, for which fuel surcharges can no longer seem to keep up, is certainly a factor. Amazing to many, for most truckers, fuel now exceeds labor costs as the top operating expense.
(Transportation Management Article - Continued Below)