Teetering on failure: Diesel costs driving many independent truckers out of business
"You've got to get real; it's just not working," Julia Tadehara recalls telling herself. Their 10-vehicle car-hauler is in a repair shop for maintenance before the Tadeharas sell it to recover some money.
Business became difficult for them beginning this past December, when the price of diesel fuel began to spike. Complicating the problem was the fact that fewer cars are being transported across the United States in the current economic downturn.
"We were making enough to pay for fuel, but not enough for the driver, and nothing came to us," she said.
A year ago, the national average price for a gallon of diesel fuel was $3 per gallon. Diesel is now about $4.78 a gallon, and in some states, it's past $5 a gallon. The result is that at least 935 truckers nationwide have gone out of business in the first part of this year, according to a recent study, and the numbers could rise.
Independent drivers and small companies cannot easily absorb the rising cost of fuel, because they can't buy fuel in bulk at wholesale rates or afford trucks with better technology to control speed and other functions, like the large companies do, said David Creer, executive director for the Utah Trucking Association, which represents about 400 national and local trucking companies, such as C.R. England and FedEx Freight.
Some companies have tacked on fuel surcharges — which become noticeable to consumers when prices for food and clothing rise.
About 70 percent of the goods Americans use are delivered by trucks, Creer said. In some communities in the West, it's nearly 100 percent, because of isolation and fewer rail lines.
"I think there's plenty of capacity to move the goods we need," Creer said. "The bigger issue right now is the cost of moving those goods. And that's going to be the tough one for everyone to swallow. The increase in freight charges increases costs of all goods. It won't be as competitive of a market, of course, if you have less (trucks) out there."
Dwindling profits
The Tadeharas started their business with high hopes. They began in 2003, shortly after Lari Tadehara became disabled and could no longer work. They hired a driver and hoped the car-hauling business would provide extra income. The business did so well that they purchased a second truck, later selling it because of the high loan payments.
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