The price of a gallon of diesel has risen two bucks in a year, from $2.50 to $4.50. The escalation threatens to decimate the U.S. trucking industry. The New York Times tells the tale: "More than 45,000 vehicles, or 3 percent of the tractor fleet, have disappeared from the highways since early last year, according to America’s Commercial Transportation Research in Columbus, Ind." And we're not just talking about the small independents, neither. "In the first quarter, 935 of these larger operators [five trucks or more] shut down, the American Trucking Association reports, up from 385 a year earlier and the highest quarterly failure rate since the 2001 recession." The knock-on effect: the used truck market is glutted with abandoned rigs. "There are so many used trucks in dealer lots now that some of the larger dealers have stopped buying them,” said salesman James McCormack of www.truckertotrucker.com. “From what dealers tell me, exports have become their best outlet, particularly to Russia.” High diesel prices, a weak dollar and thousands of U.S. trucks are shipped to our former Communist enemy. Ain't capitalism grand?
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A friend of mine suffered just what the title says. He was up to three trucks and gradually trimmed down to just his own, and one breakdown did push his finances over the edge with the fuel prices.
A “hybrid” diesel electric locomotive towing a mile and a half of flatbeds loaded with containers is so much more efficient than 150 18 wheelers doing the same thing. JIT is a nice concept, but it may now be too expensive. And wouldn’t we all just love to get the left lane back from these boys on the Interstates? Plus ca change!
While trains are much more efficient the reality is that many trucks are taking freight from the train depot to a more localized distribution center or possibly manufacturing center. Our train network/infrastructure simply will not allow them to go the way of the dodo bird.
I live in SC where I-85 is something I travel on every day and until I moved here I didn’t think that many 18 wheelers could be on one road…it’s brutal. So while I’d like to see as many of them off the road as possible for my own personal readsons I can’t imagine it will happen anytime soon.
I would also love to have a train system/public transportation system that was usable as well but alas that won’t happen until we’re in a complete state of panic and then it will be many years while those systems are built.
Oh, and my father farms full-time so I’m no stranger to the moaning about high diesel prices.
Let’s see them pull 60000 lbs up a hill using ethanol for fuel. Don’t get mad at the oil companies , blame the politicians and the environmental lobbies that could care less what the cost is as long as they get what they think is a pollution free planet; something that ain’t gonna happen.
Quite true, GS650G, because if the enviro-nazis get their way, we’ll all be living in caves (except for the richest of course).
Except that even when the native Americans lived in the LA basin and used wood for campires, it was a highly polluted place.
Wood fires pollute a lot.
A few years ago, a truck owning friend of mine told me that there was more freight to move then drivers, which is why my local newspaper always has a lot of help wanted ads for drivers.
If as much freight still needs to be moved, then the end users (us!) will just have to pay more for the goods. The law of supply and demand will fix the situation as with everything.
What we certainly do not need is bureaucrats getting involved, as I’m sure they would end up subsidizing truckers at even more costs, fraud and abuse to taxpayers (again… us!).
philbailey :
How would you suggest goods actually get to where they’ll be sold? Highways go to a lot more places than railroad tracks do. The truckers aren’t out there just joyriding (and the ones speeding at this point are just hastening their own demise).
BTW, when I lived in CT, trucks were already prohibited from the left lane on major highways. There’s no reason this couldn’t be done elsewhere as well.
RF- “High diesel prices, a weak dollar and thousands of U.S. trucks are shipped to our former Communist enemy. Ain’t capitalism grand?”
actually, yes, capitalism is grand. the problem is that we aren’t capitalists in the US–we suffer under an interventionist government. spend trillions on a war, and who pays? we do. how? through inflation. there’s your high diesel prices and weak dollar. in our confiscate-and-redistribute welfare state, you’ll eventually see the same failures as in any centrally-planned economy. ain’t communism grand?
NICKNICK:
I wasn’t being ironic.
A little background: My father drove, many of my friends fathers’ drove and some of my contemporaries do too. I drove for a short time, but I don’t have the temperament to do it. My wife works for a trucking and logistics company, so we have a feel for what’s going on in the industry.
Analogous to the period in time where the railroads didn’t realize they were in the transportation business and lost it to trucking (along with other issues with no space to discuss here) I think that this period of time will be a rude wake up call to the trucking industry. If fuel continues to increase in price at their current rate, the trucking industry as a whole will be forced to consolidate greatly and there will be much pain to be shared.
We as regular consumers are already starting to feel the pain, and I believe we’re still on the upswing of the pain to come. You think stuff is expensive now? Wait a few more months when all of the fuel increases have worked their way through manufacturers and retailer’s price structures.
As it is now, my wife’s company has stopped hiring, sold off thousands of trailers (although part of that is normal attrition, but not to this level), and several hundred power units (tractors to the rest of you.). They’re not the only ones doing this. They have instituted numerous fuel surcharges (I forget what it is right now, it seems like it increases every week), and they are closing service centers throughout the country. This is going to be a long year for us personally…
philbailey is right IMO. As much as we depend upon the trucking industry for all of our stuff, trains are way more efficient. I can’t even hazard a guess as to how high fuel will go before all of the dust settles, but our distribution model may have to change…
“The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” — President Ronald Reagan.
XCSC :
May 27th, 2008 at 8:59 am
While trains are much more efficient the reality is that many trucks are taking freight from the train depot to a more localized distribution center or possibly manufacturing center. Our train network/infrastructure simply will not allow them to go the way of the dodo bird.
Rebuilding our rail infrastructure would go a long way towards reducing trucking needs, although they would certainly never be eliminated since rail networks will never be as fine-grained as roads.
The point is this sort of thing needs to be started now, before diesel is $10/gallon and the economic pain is really high. Don’t hold your breath that Washington will be that forward looking.
Had this up in April, 2007, concerning Warren Buffett going into trains – there’s a reason why he’s the world’s richest man. :-)
So – there are 1 million 500 thousand trucks in the US?
Incredible.
In the meanwhile, truckers in England are doing this…. (yeah, I know, a few American truckers tried a similar thing a few weeks back and it did not work).
http://www.dailymail.co.uk/news/article-1021946/Angry-lorry-drivers-bring-traffic-chaos-London-roads-capitals-largest-fuel-protest.html
The US economy shifted over the past several decades to longer and longer supply lines between producer and consumer for both manufactured and farmed goods. This was enabled by low transport costs. Now that transportation costs are skyrocketing the weakness of that system is exposed. For example, thirty years ago there were multiple west coast automotive factories and networks of suppliers supplying them but now those vehicles and parts are made thousands of miles away and trucked in. Ditto for food. Small dairy farms scattered across the country are out, fewer, bigger, more dispersed dairy farms and processing plants are in. All the stuff made in China lands by ship at a coastal port and then has to be sent by truck or train to distribution centers which then truck the stuff to your local Tar-Mart. Levi used to make jeans in multiple factories across the country and around the world, but now it doesn’t operate a single US factory. With high fuel costs this is now all a much less attractive economic proposition than it was when the current system evolved.
And you think it’s just the distribution system that is going to change. Not at all. It’s your whole “american way life” that’s going to change. And not for the better. And listen to your politicians and their campaign speaches. What do you hear. Nothing, except Hillary’s a B and Osama is a M. The future is going to smack us hard in the face.
jl1280, you’re right. We’re in for change alright. Politicians don’t want to talk about it because they feel they are more electable if they sweep reality under the rug and pretend it doesn’t exist. In the midst of major recessionary pressure, and on the verge of a possible economic meltdown, Joe Average doesn’t want to hear that the way of life he has taken for granted may be done for good.
The broke trucker argument comes up frequently in my neck of the woods. A few years ago local truckers set off on a huge convoy to protest freight rates for hauling containers to/from the ports. You get all these truckers looking for sympathy because they can’t make a living driving for what they are getting paid. My response of course, is why the hell are you doing it then? Come up with a business plan, find out what you need for revenue to make an acceptable living, and if you can’t get the revenue get the f*ck out of the business. Don’t come crying to me. The reason they are paying you so poorly is because you are still hauling for what they are willing to pay. Trust me, if enough truckers leave the business, and containers are backing up on the docks waiting for a truck to haul them away, you’ll see the rates correct.
/rant off
There’s only a few kinds of semi trucks I want to see on the road: UPS, Fedex, DHL and USPS carrying overnight shipments from the airport, and those of local farmers and business owners taking their goods to/from the train depot!!
I just gotta ask again.
Why don’t the truckers raise their rates to cover the added fuel costs? Are there big players using the opportunity to squeeze out the competition? Are there really that many fewer shipments? Or, did we simply have a glut of trucks that were being subsidized by the stupid cheap oil from the turn of the century?
“Or, did we simply have a glut of trucks that were being subsidized by the stupid cheap oil from the turn of the century?”
It’s not just cheap oil that made trucking as profitiable as it was. It was the fact that the government maintained the roads and highways, thereby tacitly subsidizing the entire industry.
They are taxed and tolled, but not nearly to the level of the railroads, who had to purchase the land under each mile of track, and are still paying to maintain the track, depot, intermodal ports, switch yards, etc.
The rails are currently at or near-as-dammit at 100% utilization. How much more freight do you want them to be shipping to/fro? And I’m of course assuming that you won’t mind a bit when they want to put tracks in through your back yard to accomodate the increased load?
I briefly worked in shipping. There is not. one. thing. that you have in your house that wasn’t on a truck. Trucking isn’t going to have an acceptable substitue industry. But it will have to change to survive. The days of the owner/operator are probably done.
“Most truckers are one major breakdown away from bankruptcy”
Alternatively, one angry shot inbound or outbound from Iran. You think price increases have been steep so far…
As a truck driver in a different segment I am amazed at the willingness of independent owner operators to take on all sorts of risk for minimal reward.
The only way you can earn a decent living as an O/O is to get away from the commodity hell of most segments and get into something specialized with higher barriers to entry.
In a good year if everything goes right you get to drive a somewhat nicer truck and earn the same as a company driver. In a bad year you can end up working for free and flirt with bankruptcy.
$5/gal diesel is going to dramatically change how supply chains operate. Longer lengths of haul are going to continue to ride the rails.
There will be pressure on Congress to allow longer and heavier trucks.
With few exceptions we have not built any new rail infrastructure in the US in post WW2. This could change soon.
Drove to the next town yesterday. Most truckers were running below the speed limit a little. A few in a rush but not like before… Alot more private vehicles at the speed limit too. Still examples of the 80 mph crowd but not “most” of them like before.
So is the news falling fuel prices in the near term going to change anything? Maybe I am supposed to begin planning big vacation trips again now… Really feels like we’re a bunch of puppets on a string. Every little problem around the world is an excuse to run up the price of oil.
Even if prices do fall soon I think America ought to take this as a warning shot and start really consider how we choose to live and consume in the future. I still maintain in the long term China, India and other countries like them will drive prices ever higher.
We are seriously looking at how we can change how we do business – who we buy from and how it gets here. I’d like to do more of what we’ve been doing all along and that is buy more locally produced food and goods but alot of the local business is long gone. At least the farmer’s market is still here.
Any word on how the European truckers operate with the higher cost of fuel there? Higher economy? Higher shipping prices? Lighter equipment?