Owner-operators' bottom lines sinking as diesel costs soar

| Tuesday, March 22, 2005

With diesel prices hitting all-time highs and industry analysts predicting the trend to continue, owner-operators are facing one of the toughest challenges in decades to their profitability.

For many, profit isn’t even in the picture at this point; they’re just trying to break even. The cost of diesel has increased from a nationwide average of $1.64 per gallon a year ago to $2.24 this week, according to the Department of Energy.

Gary Green, manager of member assistance for OOIDA, said that calls have been flooding into the association’s headquarters from truckers seeking suggestions on how to make ends meet.

“The first thing owner-operators should do is make sure they know how much they are spending on fuel per mile. Then subtract that from their revenue per mile to get a close look at their fuel costs,” Green said.

That may sound like obvious advice, but the cost of diesel has gone up so much that many truckers haven’t been able to keep up with the impact it is having on their business.

One call that Green took this week was from an owner-operator who is leased to a company for a dollar per mile. Based on his average fuel price this week – $2.40 – Green did the math and it turns out the trucker is spending 48 cents of every dollar he receives on fuel.

“That only leaves 52 cents for all of his other costs and taxes,” Green said. “And that means he probably isn’t putting much money in his own pocket when all is said and done.”

One thing that could help owner-operators cope with the cost of diesel is the fuel surcharge provision that the U.S. House approved as part of its version of the highway bill. The surcharge language in the House bill at Section 4139 requires all motor carriers, brokers and freight forwarders running truckload freight to implement fuel surcharges and pass on 100 percent of those surcharges to the person who actually pays for the fuel.

The Owner-Operator Independent Drivers Association is urging truckers across the country to write, fax and call their U.S. senators and ask them to include the same fuel surcharge language in the Senate’s version of the highway bill.

Congress is in recess until April 4, but the Senate Commerce Committee is scheduled to take up its portion of the highway bill as soon as it reconvenes the first week of April.

If truckers are not sure who their senators are, they may phone the OOIDA Membership Department and they’ll look up the information. The toll-free OOIDA number is 1-800-444-5791. Truckers can also call the U.S. Capitol switchboard at (202) 224-3121, give the operator their ZIP code and then be connected directly to their senators’ offices.

– By Coral Beach, Land Line staff
coral_beach@landlinemag.com

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