Lagging rates, skyrocketing fuel makes it hard to cope

| Friday, April 15, 2005

Mississippi owner-operator Jay W. Hosty couldn’t take it any more.

Hosty, who does business as Jaybird Express in Lakeshore, MS, had been leased with the same carrier for more than five years. A few months ago, he realized it was time for a change.

“I can sum it up in two words: too high,” Hosty said. “I’ve been an owner-operator for 24 years, and fuel has never been this high.”

Hosty said LandStar System Inc., the company he recently leased with, allows him the opportunity to refuse loads with cheap freight rates.

“I was with my last carrier for 5½ years and the reason I left is because of fuel hitting more than $2 per gallon and customers not wanting to compensate for it,” he said.

According to ProMiles, diesel prices in Mississippi on April 14 averaged $2.156 per gallon. Though that is lower than the national average of $2.315 per gallon, but more than 60 cents higher than what prices were at this time in 2004.

For truckers like Hosty, that 60 cents adds up to more than just pennies.

Hosty said he has receipts from as recent as three years ago showing diesel prices right at about $1 per gallon. In that short time, prices have more than doubled.

What’s more, Hosty said freight rates have not increased enough to keep up with rising fuel costs.

“Since the fuel has gone up, rates haven’t stayed with it,” he said. “They’re nowhere near where they should be.”

Hosty said he has always hauled a lot of containers, because those shippers pay for the round trip – he would often go out with a loaded container and come back with an empty one – which allowed him more time at home.

Hosty said the downside is that freight rates for those containers haven’t changed in years.

“We were hauling for a port close to our house, and the owner increased rates maybe 10-cents per mile,” he said. “That was maybe half of what it needed to be.”

But Hosty said that 10-cent increase was only part of the story.

“A few years ago, before (prices) really started going up, he had cut our rates a nickel a mile,” he said. “He gave us that nickel back when fuel got up around $1.60, and he increased it 10 more cents in November of last year.”

Hosty said he thinks the trucking industry is being taken advantage of by the oil companies because of its dependence on diesel. Oil companies can raise the price to whatever they want and truckers will still have to pay because their livelihood depends on it.

Even for truckers like Hosty, whose rig is paid for, things are still tough all over.

“My truck is paid for, but that’s not the point,” he said. “Whether it’s paid for or whether I’m carrying a note, I still want my business to make a reasonable profit.”

One thing that could help drivers like Hosty is the fuel surcharge provision currently making its way through Congress. Hosty said he supports the provision, but it’s going to take truckers to actually make it work once it is implemented.

“I’m totally for it,” he said. “It’s something we need. But it’s still going to come down to the driver challenging companies or carriers. It’s going to take one of the drivers to actually challenge it, and take them to task on it.”

The provision was recently approved by the U.S. House as part of its version of the highway bill. Another version is currently making its way through the Senate.

The 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 charges to the person who actually pays for the fuel.

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

If truckers are uncertain who their senators are, they can contact OOIDA’s Membership Department, and they will 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 be directly connected to their senator’s office.

– By Terry Scruton, senior writer
terry_scruton@landlinemag.com

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