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From haulers to loggers to landscapers, soaring fuel costs hit the bottom line but cutthroat competition keep price hikes at bay. (http://money.cnn.com/2008/03/27/news/economy/diesel_impact/index.htm?cnn=yes)

http://www.cleanmpg.com/photos/data/501/Big_Rigs.jpgSteve Hargreaves - CNNMoney - March 27, 2008

Eventually the drivers will drive more efficiently, figure out a way to pass along the increase or go out of business. -- Ed.

NEW YORK -- The kid who delivers your pizza may be charging you an extra buck for gas, but for the guy that trucked the tomatoes, hauled the dough or milked the cows, passing along the fuel increase isn't as easy as pie.

From truckers and farmers to loggers, construction workers and fishermen, skyrocketing diesel prices are pushing what many consider the backbone of the American economy right up to the breaking point.

"I'm in debt," says Jim Gossett, an owner/operator truck driver with a wife and daughter in Chapel Hill, N.C. "Do I turn in all my equipment, potentially lose my home?"

For the last nine years Gossett has driven a truck. For the last few he's been running a specialized carrier, delivering boats to marinas and dealers across the country.

He says his profit margin used to be around 25%. But with the near-tripling of diesel prices over the last few years, he now says that has been cut to 5%.

He says cutthroat competition in the industry means he's unable to pass along the increased cost.

Others who use huge amounts of diesel for a living say the same thing.

"You can't get any work if you raise your prices," said Tyson Clay, filling up the tank for his bulldozer at a gas station in Camden, Ala. "You just grin and bear it, people are only going to pay so much to get their land cleared." … http://money.cnn.com/2008/03/27/news/economy/diesel_impact/index.htm?cnn=yes

Its funny, my friend who owns a farm with his brothers paid 3x as much for diesel on the farm, seed was up, fertilizer was up huge, and......and.....he made the most money in his 10 year history owning the farm. I guess maybe truckers need to stop screwing each other and start screwing the consumer. Corn, Soy, Wheat, all up huge from 2006 to 2007. People are still eating food, not much you can do about it. So pass on the costs or screw yourselves out of a job. We all need crap that is trucked, its not like we are going to fly to japan to get our sony tvs, or meet up in Kansas for wheat to make bread.

"The consumer impact is limited," said Faucher. "Transportation costs are a pretty small share of overall consumer prices."

About time. Add 2 cents per lb of freight for diesel only, no brokers cuts, problem solved.


P.S. this guy is an idiot

"We're limited in our options," he says. "It's not like you can go down the street and pick up a six-figure office job just because the cost of fuel is high."

I cant go down the street either and get a 6 figure office job, and i live in a large metro area. Maybe we can both go get MBAs, or other higher education, then we will be able to get 6 figures. Its going to require us to move out of our comfort zone though....i know its rough, but keep complaining about how you have no opportunity because you wont try.

Funny, I stopped into a Shell Truck stop off I-39 to pick up a cup of brutal coffee and about 1/2 of the trucks parked there were running with no one in them.

These prices can't be hurting them too bad, I guess?

Toastblows-
Ask your friend why he made so much more money. Perhaps because the commodity he raises happens to be one of those that have increased in price? Ask him if he sets the price.

Keith

Railroads are set to make a comeback I would say.

OK, so there are things owner operators/small contractors can do to help their situation. But it has been nearly a perfect storm, with fuel going through the roof and freight dropping off. I do feel for the guys, some good business men, that have huge investments in equipment and have to take anything to help make the payments.

There are a lot of people with their backs against the wall- call them misguided, say they had poor judgement, explain how they need to learn the lesson. Please don't pass them off as idiots.

Keith

I haven't seen much evidence of trucks slowing down on the interstates. An occasional independent trucker, but that's about it.

kngkeith is hinting that 2008 to trucker is what 9/11 was to the airline industry:

people afraid to fly
a recession was starting, so business passengers were dropping off
internet made travel agencies redundant and added more cost pressure
rise of low-cost carriers like Southwest

OK, so there are things owner operators/small contractors can do to help their situation. But it has been nearly a perfect storm, with fuel going through the roof and freight dropping off. I do feel for the guys, some good business men, that have huge investments in equipment and have to take anything to help make the payments.

There are a lot of people with their backs against the wall- call them misguided, say they had poor judgement, explain how they need to learn the lesson. Please don't pass them off as idiots.

Keith

I am glad you spoke up. It is so easy to judge another without having to walk a mile in his shoes. As the saying goes, farming looks mighty easy when your plow is a pencil and you are a thousand miles from the nearest cornfield.

Railroads are set to make a comeback I would say.

I saw a story somewhere that said that Warren Buffet is buying railroad stock, so you may be onto something.

An article on the subject:

http://money.cnn.com/magazines/fortune/fortune_archive/2006/11/13/8393079/index.htm

Maybe we should invest in railroads right about now...

Harry

I haven't seen much evidence of trucks slowing down on the interstates. An occasional independent trucker, but that's about it.

I have seen some speed decrease in my travels. Tuesday/Wednesday of this week I drove about 300 miles on mostly rural I80 in eastern Iowa. Just like always I set the cruise control in the company truck to the speed limit of 65/70 (not hypermiling because I don't want to be accused of milking the clock.) Only two semi's passed me; I passed dozens. A year ago dozens would've passed me and I would've only passed a few. On that stretch of I-80 the average speed of semi's seems to have decreased by 5-10 mph in the past year (from averaging about 73 to about 66 if I had to guess).

Different trucking practices in different regions maybe?

Like I said, I've been keeping tabs on the trucker forums lately
and yes, those guys are hurtin'. But some of them are taking
the quite sensible approach that they're running a business,
and what they charge for their services must in some way reflect
what it costs to provide those services. Fuel surcharges are
going to become the reality, no two ways about it, and everyone
will adjust to a different way of doing business. I think the
point that the truckers with all their whining on the forums and
the CB are missing is this: it's not about lowering diesel prices,
because that won't last. What they need to impress upon the
public is that the infrastructure they provide is going to
start costing sharply more, period. A lot of them aren't seeing
the long-view picture and just think that the chimp can magically
change the price of their tank-up with a wave of his hand.
.
_H*

Hey Hobbit, that makes a lot of sense. Ultimately, we will all be paying more for our goods. Is there any incentive for the trucks to be driven more efficiently? What can truckers do to get better MPG? You'd think by now they'd be about MPG maxed out, because of competition. I've seen some interesting boat tail trucks, are they more efficient? Just wondering.

Found some interesting things while looking at truck aerodynamics:

http://www.youtube.com/watch?v=gHFFZ1ru0Pk

http://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/19990047711_1999074877.pdf

http://www1.eere.energy.gov/vehiclesandfuels/pdfs/hvso_2006/02_mccallen.pdf


Wayne

It will be nice to get the railways going and the trucks off the roads. Trucks should be on grve yard shift as well. The fewer the better!!! H

Toastblows-
Ask your friend why he made so much more money. Perhaps because the commodity he raises happens to be one of those that have increased in price? Ask him if he sets the price.

Keith

I think i was clear that he doesnt set prices, yet raising the commodity price industry wide resulted in record profits. My example was pointing out that transport is not a commodity this country can live without. If you jack up the prices, there will be cheating of course by scabs....but the industry will not disappear. We cannot function in modern society without trucking....and raisings your load rates by the lb 1, 2 cents....or $500/day for a trailer load....is clearly not going to stop demand for trucking.

It will be nice to get the railways going and the trucks off the roads. Trucks should be on grve yard shift as well. The fewer the better!!! H

On our cross-country drive, we were following along a railroad. We passed a train and I counted ~125 cars, all double-stacked with semi trailers. 250 trucks vs 1 train. Which is more efficient?

On our cross-country drive, we were following along a railroad. We passed a train and I counted ~125 cars, all double-stacked with semi trailers. 250 trucks vs 1 train. Which is more efficient?


I talked to a freight train operator on a plane one time. He said the locos he runs are about 1 mile long and burn 300 gallons per loco in an hour (hauling goods shipping from china, not coal or petrol or other heavy freight). I read that a 5 passenger car length train with 1 loco will burn 1.5 gallons of diesel per mile. So its hard to average it out based on weight of freight and length of train and how many locos are working.

I would just take 300 gallons/hr = 60 miles lets say x number of locos...maybe 2 or 3 for 125 cars....so 900 gallons to go 60 miles.

125 semis at 6mpg going 60 miles is 10 gallons x 125 loads = 1250 gallons. So you are saving 350 gallons every 60 miles. Ship it 3000 miles and you save 17500 gallons. Just a rough calculation, not sure on weights and crap.

Hi Toastblows-
Yes, my point was that he doesn't set the price, in fact the industry didn't set the price. Demand primarily sets the price with commodities. The particular commodity your friend is involved with probably increased in price significantly, hence his profits.
Trucking is a commodity, and demand is low. Thus no room to move rates. Truckers have to find niches where they can set the price, or they have to find ways to reduce expenses.
But it's cyclical, soon enough demand will be back.

Keith

Hi Toastblows-
Yes, my point was that he doesn't set the price, in fact the industry didn't set the price. Demand primarily sets the price with commodities. The particular commodity your friend is involved with probably increased in price significantly, hence his profits.
Trucking is a commodity, and demand is low. Thus no room to move rates. Truckers have to find niches where they can set the price, or they have to find ways to reduce expenses.
But it's cyclical, soon enough demand will be back.

Keith

Cool, i figured we were on the same page. FYI he farms corn, wheat, soy beans. corn and wheat are up over 2x in 1 year. Personally im pissed off that truckers demand a suspension of the gas/diesel tax. that is going to make demand worse. Im all for business tax breaks if you are a business in need. That way it can be controlled better than just a free break for everyone who uses X fuel.

I dont understand as an industry of brokers who control loads, why the broker cant keep his same (rediculous) cut of the profit, and tack on fuel surcharges. The guy in the article even says in large cargo transport, fuel represents minimal price of the product. If you raised you load 1 cent/lb shipping.....a 65 lb tv would cost you 65 cents more. a 10lb ham, 10 cents more. Jesus, that doesnt seem like a deal breaker to me. what do i know though.

I dont understand as an industry of brokers who control loads, why the broker cant keep his same (rediculous) cut of the profit, and tack on fuel surcharges. The guy in the article even says in large cargo transport, fuel represents minimal price of the product. If you raised you load 1 cent/lb shipping.....a 65 lb tv would cost you 65 cents more. a 10lb ham, 10 cents more. Jesus, that doesnt seem like a deal breaker to me. what do i know though.

Because imagine adding on that $0.01 every time something gets shipped. For example, a gallon of milk weighs ~8-8.5 lb. That's an extra $0.08 everytime it gets trucked. Farm to Dairy to Central distribution to store. That's an extra $0.24 added to every gallon of milk people buy. Out by me, that's equivalent to a 6-8% price hike. Same with canned goods, juices, gasoline, anything that that moves by truck. The 10lb ham would cost an extra $0.30 or more. Meat on average would jump 10-20%.

People can't afford it. Truckers can't demand it because 1) somebody's always willing to forgo the extra penny so they can get paid and eat next week 2) If they stopped trucking or started charging more than people could afford they'd be the villains in a PR battle.