Diesel prices hit truckers, railroads

Surge hits as trucking companies deal with freight recession

A surge in diesel fuel prices, which pushed them to about $6 a gallon in the last week has hammered the ledger books of trucking companies and railroads.

Companies say they have no choice but to pass the costs onto the shippers who use their services. Eventually, those costs get pushed down to consumers shopping at the supermarkets and other stores.

"Everybody got whacked very hard by fuel," said Dale Decker, chief executive officer of Decker Truck Line Inc. in Fort Dodge.

Decker said the price of diesel fuel started going up in June and went up very quickly.

He said the trucking industry experienced a 14-cent increase in the price per gallon, which he described as "one of the largest swings we've ever seen."

He said Decker Truck Line Inc. has a fuel surcharge matrix based on U. S. Department of Energy figures. He added that there is always a little bit of a delay between a fuel price hike and when the matrix can be adjusted to match that increase.

The run-up in fuel prices is happening at a time when the trucking industry is still stuck in what industry insiders call the Great Freight Recession.

According to Decker, after several good years for the trucking industry a lot of what he called "nefarious" companies got into the business. These companies, he said, use poorly trained drivers and skirt all kinds of rules and regulations.

These companies, he said, "undermined legitimate carriers."

"The freight market absolutely crashed," he said.

Decker said these fly-by-night companies use drivers who came from "CDL mills" -- schools that don't properly train people to have commercial drivers licenses.

"These are completely fraudulent schools that push them out into the motoring public," he said.

The federal government is beginning to crack down on these schools, according to Decker.

He added that there are also "chameleon carriers" that carry minimum insurance and change just a few numbers on their documents in order to stay in business if there is an accident or other problem.

Freight railroads may have avoided any nefarious competition, but they still have to face the rising cost of fuel.

"Like all transportation companies, CN is affected by fluctuations in fuel prices," said Michelle Hannan, a spokeswoman for Canadian National Railway. "To account for this variability, CN applies a fuel surcharge to freight shipments, which is adjusted monthly based on market fuel prices and published on our website."

"This is a longstanding standard industry practice that helps ensure rates reflect changes in operating costs," she added.

Jill Micek, manager of communications for Union Pacific Railroad, said rail remains one of the safest and most efficient ways to move freight over land.

"Union Pacific continues to focus on improving fuel efficiency, reducing emissions and operating a safe, reliable network that delivers the goods our nation depends on," she said.