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The couple has used all of their savings on diesel and heating fuel as the price of filling up the tank of the truck has risen by $700 over seven years. (http://www.nytimes.com/2007/12/03/us/03truckers.html)

http://www.cleanmpg.com/photos/data/501/MI_Logging_Truck.jpgKatie Zezima – NY Times – Dec. 2, 2007

If the trucking industry thinks fuel costs are high now, just wait another few years. -- Ed.

DAMARISCOTTA, Me. — Truckers across Maine are mobilizing against the rising price of diesel fuel, lobbying politicians to provide relief from high costs they say are crippling their businesses and causing some to stop driving.

Hundreds of truckers, many of them who haul timber, pulp and other products from the state’s logging industry, have signed petitions and attended meetings urging state and federal officials to suspend taxes on diesel fuel, lift road weight restrictions to allow for easier hauling to and from logging plants, and re-evaluate other aspects of the trucking industry.

The effort has been led by the Coalition to Lower Fuel Prices in Maine, which was formed last month to help combat the rising cost of diesel, which is about $3.60 a gallon. Dozens of truckers, most of whom are independent operators, attended a meeting here Saturday morning to tell federal and state representatives how prices are affecting them.

“The cost of diesel is putting us out of business one day at a time, one truck at a time,” said Larry Sidelinger, the owner of Yankee Pride Transport here in Damariscotta.

Gov. John Baldacci on Friday signed a civil emergency declaration granting some relief to logging truckers.

The declaration expedites weekly reimbursements of the state’s 10-cent off-road diesel tax to logging truckers and urges the federal government to waive weight limits on roads leading to Bangor. Logging truckers must currently drive back roads to the mills, adding miles to their trips… http://www.nytimes.com/2007/12/03/us/03truckers.html

Wow, I bet that 10c per gallon rebate will suddenly make life easy for truckers. :rolleyes:

How about adding 10c to the gas tax (which would effectively increase the price 4-7 cents, not 10 cents) and targeting the additional funds to improving the roads and bridges to handle increased truck weights?

Can someone please explain to me why the trucking industry can't just increase per-mile charges to cover the increased cost? I certainly don't understand how trucking works so this is a serious question.

Probably because it's almost impossible for all truckers to do it all at once and it's very competitive.

This illustrates another point: everyone out there driving SUV's and big pickup trucks, with their shameful fuel economy, are raising fuel prices for everyone, including these truckers.

Trucking is called by economists a "perfect business" or something like that because all anyone needs to start a trucking business is a loan to purchase or lease a truck.

Harry

Can someone please explain to me why the trucking industry can't just increase per-mile charges to cover the increased cost? I certainly don't understand how trucking works so this is a serious question.Because unless you have an infinitely inelastic market, you can't pass 100% of a cost along to your customers. A cost to a supplier is always split between the supplier and the consumer based on the relative elasticities of demand and supply. The higher the elasticity of demand, the more the level of demand drops in response to price increases: consumers cut back on purchase or find alternatives. That puts downward pressure on the price. The higher the elasticity of supply, the more the level of supply drops in response to increased costs: some suppliers drop out, reducing the level of supply at a given price poitn and putting upward pressure on the price.

Lately I have noticed a few semis starting to go at the speed limit to 5mph over and letting their speed drop on the uphills. So far they have mainly been trucks driven by private operators rather than those belonging to the big trucking companies. But the vast bulk of the semis are still flying by at 10 to 15mph over the speed limit.

I like the idea of lowering taxes and reducing regulations.

Truckers generally have allowed themselves to become commodity priced. Since it is fairly easy to get started, companies will differentiate themselves on price to generate new business. And shippers are like typical consumers- get the cheapest price no matter what it will eventually cost. Logging truckers have the added disadvantage in that their freight is a commodity also. Commodity service plus commodity freight equals commodity compensation.

Add to that, many truckers go on their own because they want to drive their own truck, NOT run a business. Pricing, Cost-analyses and ROI are vague concepts. The guy that quotes freight for me gets an earful if he offers a flat rate, because fuel is too volatile to get locked into a long-term rate. How these logging truckers could get locked into a 12 month contract with no provision for fuel surcharge is a mystery to me... Actually, I'm sure they were afraid the paper company or whoever they haul into would just go with the next naive soul that didn't know his costs. To expect the gov't to pick up the slack irritates me. The governor should let this run its course, let the foreclosures and bankruptcies happen. If he just has to get involved, then he should force the 2 parties to renegotiate, and make provision for an adjusting fuel surcharge rate like most of the trucking industry.

Getting back to the business of trucking. Ever notice the number of large trucking companies advertising for owner-operators? By using owner operators the companies eliminate a large capital cost and the operational costs associated with semi tractors. Trucking margins compared to capital purchase are poor. And when the industry experiences downturns, these companies don't have their money tied up in assets sitting around not making money. On the plus side- theoretically owner operators will use less fuel, treat the equipment better, not abuse worker's comp- so they should be able to manage costs better.

Regarding fuel costs, there is little if any cost sharing. Those that pay for the freight know the margins are thin so they are picking up the tab on fuel. The baseline is usually around $1.20 gallon, 6 mpg. So if fuel is $3.00 gal, a truck gets $3.00-$1.20= $1.80/6 mpg= $.30/mile fuel surcharge. The risk is that the fuel surcharge only covers the outbound load miles. The backhaul load may disappear or never materialize, or the truck may have to deadhead many miles to go get it. The outbound rates were originally set to cover these backhaul risks, but did not include the price of fuel, so the stakes are even higher. The one advantage a trucker has is fuel economy. If he can get 7 mpg, then he is keeping more per mile when the price of fuel goes up. This can help offset the higher losses he now incurs chasing down loads to get the truck back home.

So why don't we see more owner operators running 60 mph in aerodynamic, mid hp small block engined, single screw with air tag, super-singles tire, 10 speed tractors? Well, depreciation is horrible for something spec'd for economy. As for the speed, all I can guess is there is still a mindset that more miles equals more profit- which used to be true before losses related to lower FE were greater than the gains realized in lower capital costs per mile.

I don't run over the road anymore unless it is a paid round trip. This rarely happens, which is fine, because I like my family too much to be gone all the time.

I wouldn't worry too much about how bad truckers have it. How often have you gone to the grocery store and seen empty shelves because no one would haul the product in? But I do worry about the safety aspect. Since trucking and truckers are treated like a commodity quality doesn't matter. The basic skills are fairly easy to master so if you are fully ambulatory, you eventually could qualify. Character and integrity (important because the operation is unsupervised) are not a priority for many companies.

My pamphlet "25 businesses to try before purchasing a truck" is available at a fine convenience store near you.:)

Keith