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Supply Chain News: Soaring Diesel Prices Hammering US Truck Drivers

 

All-Time High Reached in US Diesel Prices; will Trucker Bankruptcies Soon Follow?

May 3, 2022
 

On the road prices for diesel fuel used by US truckers reach an all-time high Sunday, with the average price of a gallon of diesel hitting $5.29, up about 4.3% from one week ago and nearly twice as much as the same date in 2021, according the daily survey from AAA.

Supply Chain Digest Says...

 

In an interview with CNBC, Tom Kloza, head of global energy research at OPIS added that “I’ve started to use the term diesel ‘crisis’. It clearly is a crisis that’s happening before our eyes.

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During the last super spike in gas and diesel prices in 2008, diesel prices topped out at about $4.80 per gallon.

The soaring costs are have been punishing all truckers, but especially smaller ones, including independent truckers, a group which has long said freight brokers and carriers that bring them loads do not fully share the fuel surcharge fees they are paid by shippers.

In a report from North Carolina local television station WNCN, Michal Agboire of Maitland Trucking said "The prices are skyrocketing, and we still don’t get good prices for the loads. If it goes any higher than this, and the price of the load not coming up, then maybe we just call it quits."

Agboire said it costs around $800 to fill up his truck tank. With diesel trucks today still getting maybe 6-7 miles to the gallon, it means at a price of over $5 per gallon of diesel it is costing truckers roughly 80 cents to travel each mile in fuel costs alone.

Julia Frazier, another truck driver, told another TV station in North Carolina that “I want to go and try to find somewhere cheaper. See if we have enough gas to make it to a different state and it may be a little lower.”

Since those trucks are bringing goods and merchandise to businesses and retail stores, rising costs for trucking is a key factor in overall US price inflation. And remember that it’s not just truckers relying on diesel fuel. Ships and barges, trains, even some airplanes also run on diesel fuel.

“While gasoline prices get much of the attention, diesel, which broadly is the fuel that moves the economy, has quietly surpassed its recent record high as distillate inventories, which include diesel and jet fuel, have plummeted to their lowest level in years,” said Patrick De Haan, head of petroleum analysis at GasBuddy.

In an interview with CNBC, Tom Kloza, head of global energy research at OPIS added that “I’ve started to use the term diesel ‘crisis’. It clearly is a crisis that’s happening before our eyes. I wouldn’t rule out lines, shortages or $6 [price] in places beyond California.”


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Some truckers won’t make it. “We see when fuel surges as much as it has over the past couple of months, that’s usually when we see a lot of trucking bankruptcies follow,” Craig Fuller, founder and CEO of Freightwaves, an industry data tracker, also told CNBC.

Managing their cash flow in this diesel pricing situation can be beyond the financial means of some carriers.

Any thoughts on the impact of record diesel prices? Let us know your at the Feedback section below.


 
 
 
 
 

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