from Your News:
A rapid spike in diesel prices tied to global tensions is intensifying financial pressure on owner-operators already struggling through years of weak freight demand.
By yourNEWS Media Newsroom
Independent truck drivers across the United States say a sudden surge in diesel prices is threatening the survival of thousands of small trucking businesses, compounding a freight downturn that has persisted for years and pushed many carriers toward insolvency.
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According to reporting by the Daily Caller News Foundation, diesel prices rose sharply following the launch of Operation Epic Fury on Feb. 28, when President Donald Trump ordered a military operation targeting Iranian leadership. The action triggered turmoil in energy markets and disruptions in shipping routes connected to the Strait of Hormuz.
In the week after the operation, diesel prices jumped more than 85 cents per gallon to roughly $4.59, according to fuel market data cited by GasBuddy. The increase struck an industry that had already been attempting to recover from a prolonged freight recession.
Jamie Hagen, president of Hell Bent Xpress and an independent truck driver, said the rapid escalation in fuel costs could eliminate many owner-operator businesses if prices remain elevated.
“For us to absorb this cost for much more than a few months means extinction,” Hagen told the Daily Caller News Foundation. “Fuel was the death blow to an already beaten up industry.”
The trucking industry’s difficulties extend beyond the latest fuel surge. During the COVID-19 lockdowns, a dramatic increase in online purchasing caused freight demand to surge as consumers ordered goods from home. Logistics industry analysis shows freight activity expanding rapidly as e-commerce grew significantly.
Once restrictions ended, however, consumer behavior shifted again. Spending moved away from physical goods toward services such as travel, entertainment, and restaurants. Federal economic data tracking consumer expenditures shows households increasingly redirecting spending toward services, reducing demand for trucked merchandise.
That shift left the industry with far more trucks on the road than freight available to move. Analysts tracking logistics markets report that the imbalance triggered waves of bankruptcies among carriers and freight brokers as companies struggled to remain solvent.
Major shipping corporations such as UPS and FedEx have the ability to offset increased expenses by adjusting rates or adding surcharges. Independent truckers often operate under short-term or spot market arrangements that do not allow quick adjustments to freight prices.
“Our members often work load to load and can’t simply raise their rates when fuel spikes the way their larger competitors can,” the Owner-Operator Independent Drivers Association told the Daily Caller News Foundation. “With freight rates already low, a sharp increase in diesel can quickly eat up what little margin a small trucking business has left.”
Another challenge for the industry has been a surplus of drivers competing for fewer loads. Market research shows truckers have increasingly been chasing limited shipments as freight demand softened.
Demographic changes have also contributed to a larger labor pool. Industry data indicates the number of foreign-born drivers has expanded significantly over the past two decades. Federal labor statistics show foreign-born workers now make up nearly one-fifth of truck drivers in the United States, according to Bureau of Labor Statistics data cited by industry analysis and policy groups.
