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Truckers Bemoan Burden of High Diesel Costs

Higher transport costs get passed on to consumers, truckers warn

May 7, 2008

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Truckers want Congress to put a cap on diesel prices.

Testifying on behalf of the American Trucking Associations before the House Subcommittee on Highways and Transit of the House Transportation and Infrastructure Committee, American Trucking Associations State Vice President Mike Card said the dramatic increase in the price of diesel combined with a downturn in the economy and softening demand for freight transportation has many trucking companies struggling to survive.

Card asked Congress to create incentives to speed the introduction of auxiliary power units to reduce main engine idling, establish a 65-mile-per-hour national speed limit and support the Environmental Protection Agency's SmartWay program.

"Our industry can't simply absorb this rapid increase in fuel costs," Card said. "We must pass some of these costs through to our customers, which ultimately translate into higher prices on the store shelves."

Card, whose Oregon-based family-owned trucking company -- Combined Transport -- operates more than 400 trucks, expects to spend more than $21.7 million on diesel fuel this year, a 26 percent increase from 2007. The trucking industry overall is on pace to spend $141.5 billion on fuel in 2008, $29 billion more than a year earlier.

Because trucking is a highly competitive industry with low profit margins, many trucking companies are reporting that higher fuel prices are greatly suppressing profits. In the 2008 first quarter, 935 trucking companies with at least five trucks failed. This represents the largest number of trucking-related failures since the 2001 third quarter.

Subcommittee Chairman Peter DeFazio (D-Ore.) testified at the hearing that while every American driver is affected by the dramatic gas price increases, the rise in fuel costs has had a particularly significant impact on the trucking industry.

"Each time the price of fuel increases by 5 cents per gallon, a trucker's annual costs increase by $1,000," DeFazio said. "When the average trucker feels the pinch of gas prices, the increased cost of transporting goods to market significantly affects the price of many consumer goods."

Similarly, Congressman James Oberstar (D-Minn.) submitted a prepared statement that said because the price of gasoline and diesel are at an all-time high they are increasing the cost of everything delivered by truck.

"Consumers, who are having to pay $3.61 per gallon at the pump, are hit again with escalating costs for food and other basic consumer goods, in part due to the rising costs of getting these goods to market."

ATA said it believes that balancing the need for an efficient petroleum market with the desire to limit petroleum speculation could help burst the bubble that has formed in the petroleum markets. The trucking industry also said it is making every effort to limit fuel consumption, including lowering speed limits and utilizing equipment to reduce idling.

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