Dive Brief:
- The national average of diesel has jumped in back-to-back weeks, rising nearly 69 cents as of Sept. 14 compared to Aug. 31, according to a Tuesday update by the Energy Information Administration.
- Ahead of the update, DAT iQ Principal Analyst Dean Croke said Monday that prices have risen amid the Iran war, pressured further by escalating hostilities last week.
- “Higher diesel prices are putting the squeeze on some carriers,” Croke said on a weekly market update, noting parts of the industry are deciding to park their trucks given concerns over operating feasibility.
Dive Insight:
Diesel is a pass-through cost for carriers, but that doesn’t mean money is immediately or fully recaptured.
The pass-through costs are covered by fuel surcharges, which allow for automatic adjustments in a rate based on inflation. Fuel surcharges are typically pegged to EIA data, serving as an objective benchmark, but shippers and carriers can negotiate their own rates, broker RJ Logistics notes.
“EIA’s weekly process is built for consistency: it collects retail on‑highway diesel prices every Monday from a sample of outlets across the contiguous U.S., capturing prices as of 8:00 a.m.,” RJ Logistics said in an April blog post.
The EIA data is released on Tuesdays and provides region-specific breakouts. But the updates can still lag behind real-time costs, Croke has previously noted to Trucking Dive. That can mean contract rates can take time to capture the increased operating expenses.
Even if fuel surcharges help carriers make trips worthwhile, a route can still be a burdern for a carrier. Potential deadhead miles can make return trips incur too high of a cost to justify the route.
Costs concerns like these are creating worry for many carriers, Croke said in the update. “We’re starting to see carriers become very concerned and quite restless about where things are going,” he said.
Other factors adding pressure to carriers, particularly this year, include sluggish consumer demand across broad sectors and federal regulatory pressures over immigrant driver credentials and driving school safety compliance. Collectively, these forces are leaving the industry with less freight and fewer carriers to haul it.
