Driven to Desperation
Published by Florida Times-Union on April 16, 2005.
Joe Knowles has been hauling long-distance loads for years, but never, the grey-haired trucker said, has he seen diesel prices reach the levels they have in recent weeks.
"It's about to break us," he said while wiping his truck windows at a truck stop in Baldwin. "We've about quit making money."
As oil prices hover around $50 a barrel -- 35 percent higher than a year ago -- diesel prices have also hit record levels, posting a national average of $2.31 per gallon this week, after record-setting increases for each of the past three weeks.
Such high prices affect everyone who drives -- but when you're pumping 300 or so gallons into a truck before heading off on a thousand-mile trip, the situation is especially dire.
Companies are taking extraordinary measures to conserve fuel, said driver Octavia Morris, who isn't allowed to keep her truck running, as drivers typically do, even when parked overnight sleeping. "I have lots and lots of blankets. I wear a coat, and long johns and gloves," said Morris, who recently slept in the truck in 38 degree weather in New Jersey.
The high prices have hit the bottom lines of everyone in the transportation industry but fall especially hard on owner-operators, truck drivers who own their own rigs and are paid per mile they drive.
"I have a few more months to pay off my truck, then I'm out," said Mike Burkshard, a third-generation trucker who has been driving for about six years. "The last few years it's been eating into my net profits."
For the most part, owner-operators have been able to stay afloat because of surcharges, additional fees that transportation companies charge the customers who are shipping goods and then pass on to the drivers.
As the price of fuel goes up, the amount of surcharges increases: In 2004, Landstar, a Jacksonville-based company that serves as a middleman between shippers and drivers, collected $60 million in fuel surcharges that were passed on to its drivers. In the first quarter of 2005, Landstar President and Chief Executive Officer Henry Gerkens said, the company collected $21 million in surcharges, up from $8.2 million in the same period a year ago.
Jacksonville-based TNT Logistics North America has similar deals, but Rick Thomas, the company's director of managed transportation services, said smaller companies might not be in such a good position. "In extreme rising prices like this," he said, "you see some smaller companies going bankrupt. They're not as aggressive about getting on fuel surcharge programs."
To help drivers who work for such companies, Congress is considering making fuel surcharges mandatory.
Drivers need such protection, said Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, because some companies either don't collect surcharges or don't pass all the money on to the truckers who pay for the fuel.
"The customary way to offset higher fuel costs is through surcharges," Spencer said. "It's always been haphazard, with rampant opportunity for abuse of the smaller operator."
The proposal is opposed by trucking industry and business groups, including the U.S. Chamber of Commerce.
Even some truckers aren't sure if mandated surcharges are the way to go. "It's going to hurt the economy," said Burkshard, an owner-operator. "The difference is going to be passed on to consumers. I'm a consumer, too."
Others say they'll wait and see how much the proposal will net them. "Will it help?" mused trucker Knowles. "Reckon it depends on how much they give us."
The highway bill still has to be voted on by the Senate, where it is expected to come out of committee in the next few weeks.
Whether or not the federal government steps in, truckers say the problem of high fuel costs won't go away until prices go down, and nobody expects significant drops anytime soon.
As prices continue to rise, drivers will have to keep tightening their belts -- or get out of the business altogether.
"Prices are just crazy," said Russell Cherry, who sold his dump trucks, because of fuel costs. "People are just going to get out of the business," he said. "It's going to get bad."