Trucking's Compelling Story

Last month I stated here that diesel had spiked to $4.60 a gallon in some areas - and all-time high. Over Memorial Day weekend as we went to press with this special issue dedicated to helping truckers cope - I saw signs at service stations in Southern California with Number 2 diesel at $5.20 a gallon. And there appears to be no immediate relief in sight.

The industry has been working tenaciously to find solutions to the skyrocketing price of fuel as the casualty list of trucking companies put out of business grows.

In late April, 50 trucking industry executives visited Capitol Hill to meet with their respective Congressional delegations. State associations represented included Kentucky, Wisconsin, California, Tennessee, and Illinois. Following are some of the issues that truckers discussed with their Congressional representatives

1) How the fuel crisis is negatively affecting the trucking industry and the importance of responsible oil exploration, expanding refining capacity, continued federal funding of EPA's Smartway Program which encourages fuel savings strategies by corporations, reducing the national speed limit to 65 and establishing a national fuel standard.

2) Tax incentives for idling reduction devices. The main focus of discussion was on eliminating the 12 percent excise tax on auxiliary power units.

3) Supporting pending legislation which would make it easier for a veteran to enter the trucking industry.

4) Explained to Congress everything the trucking industry is doing to reduce fuel consumption, such as reducing speeds, installing auxiliary power units, investing in new technologies and all the other operational procedures that affect fuel consumption.

Truckers were also in attendance at Congressional hearings on fuel and infrastructure.

Dave Berry, vice president, Swift Transportation, was among several truckers to testify before Congress. His evidence on the crisis and its impact on trucking was compelling.

Berry used the following points to drive trucking's message home:

Trucks haul 70 percent of all freight tonnage, and 80 percent of communities receive their goods exclusively by truck. Rising fuel costs have the potential to increase the cost of everything that is transported by truck - extremely significant since trucks haul virtually all consumer goods.

The trucking industry is extremely competitive and operates on very low profit margins. Higher fuel prices have greatly suppressed profits, if truckers are making a profit at all. Truckers cannot absorb these dramatic fuel price increases, and these costs ultimately show up on grocery and store shelves.

Trucking spent over $112 billion on fuel in 2007 and is on a pace to spend $141.5 billion in 2008 - a record high and up $106 billion from 2006. In 2007, U.S. trucking's expenditures were about equal to the entire New Zealand economy. The industry's diesel bill was 9 percent larger than the entire Kuwaiti economy, the sixth largest oil exporter in the world.

The current fuel crisis already has record casualties. In the first quarter of 2008, 935 trucking companies were forced to close their doors. And those statistics only include companies with five or more trucks. The toll on independent owner-operators is likely much higher since they are more susceptible to failure.

Berry told Congress that out-of-control energy prices will greatly magnify the current economic slowdown and delay economic recovery. "If households have to spend their forthcoming tax rebate checks on energy, the stimulus will be significantly limited. Undoubtedly, higher energy prices act as a tax on households," he said.

Truckers were influential in halting additions to the Strategic Petroleum Reserve. The "Strategic Petroleum Reserve Fill Suspension and Consumer Protection Act of 2008," was signed by President Bush on May 19. That bill suspends additions to the SPR through the end of the year, unless the price of oil drops below $75 per barrel.

Stopping the addition of oil to the SPR was meant to reduce demand pressures on oil, but if it has had any impact on oil prices, it is not yet apparent.

The pony in this pile is that it gives truckers the opportunity to get their message out to the general public. The fuel crisis not only devastates truckers, but ultimately the consumer, as well. Good stuff, trucks bring it, but at a much higher price without help.

E-mail Deb Whistler at dwhistler@truckinginfo.com, or write P.O. Box W, Newport Beach, CA 92658.