Greg Dubuque, a third-generation truck driver who operates 40 trucks, is feeling the pain of high fuel prices. (Gina Ferrazzi/Los Angeles Times)
Record diesel prices are crushing California truckers, forcing them to adjust to avoid losses as they battle the nation’s most expensive pump prices.
Greg Dubuque’s 40 drivers are in a constant diesel-eating loop. Their big rigs pick up electronics, office furniture and other goods around Los Angeles. They drive close to 1,000 miles through the Mojave Desert and over the Rocky Mountains to Denver. They bring back containers filled with everything from pinto beans to home remodeling products.
A tank of gas for his car cost $600 a few months ago. Today it costs $1,000. That’s a record 35% higher than the national average.
“California sets itself apart from the rest of the country when it comes to pricing,” said Dubuque, third-generation trucker and general manager of Liberty Linehaul West. “Now it’s really out of control.”
Read more: How rising gas prices are hurting California’s vast economy
The average price of a gallon of diesel in California this week was close to $7.75, up 50% from a month ago, according to American Automobile Assn. The national average for diesel is close to $5.65 at recent peaks.
Dubuque, general manager of Liberty Linehaul West, says small trucks are suffering because of out-of-control gas prices. (Gina Ferrazzi/Los Angeles Times)
The trucking industry was already going through a prolonged period of freight depression, a crackdown on immigrant drivers, and the adverse effects of tariffs, all of which contributed significantly to price increases. Bankruptcy filings in the industry.
Now, the price shock of a war with Iran has become another headache for the beleaguered industry 70% All goods in the US.
“It has a huge impact on the industry,” said Eric Sauer, chief executive of the California Trucking Assn.
And it’s not just trucks that are affected. Rising prices for ground and air transportation will ultimately be paid by consumers.
Read more: As oil prices rise, airfares rise and some airlines cannot survive
Large companies are already passing the extra shipping cost on to consumers. FedEx, United Parcel Service, the U.S. Postal Service and Amazon all said they would begin charging additional fees. Amazon said it will charge merchants a 3.5% fee for its fulfillment service. USPS will charge an 8% delivery fee for certain packages.
“The longer energy prices remain high, the more households will face tradeoffs,” said Federal Reserve Vice Chairman Philip N. Jefferson. A recent lecture.
Liberty Linehaul West Trucking Company maintains a daily list of fuel prices to help its truckers on April 3 in Montebello, California. (Gina Ferrazzi/Los Angeles Times)
This could ultimately reduce demand for other products and further hurt the economy, Jefferson noted.
“Families that rely on petroleum products will need to cut back on more prudent forms of spending to travel to work and school and to heat their homes,” he said. “This could potentially result in less spending at restaurants or retailers. It could also leave households carrying higher levels of debt.”
Read more: As gas prices rise, California gets hit harder at the pump than other states
Truck drivers often rely on fuel surcharges to cover rising fuel costs. It is industry practice for customers to pay a fuel surcharge on top of the base fare to offset unexpected increases in fuel prices. Charges are calculated based on the weekly diesel price index.
Sukhdeep Singh, owner of Merced County-based Cali Bros. Truck Lines, said standard surcharge policies are inadequate when fuel prices soar.
“It kills everybody,” he said.
Singh’s business faced challenges earlier this year when a Crackdown on immigrant drivers Abruptly departed, shrinking the available labor pool and leaving 15 of its trucks unused. Despite the reduced fleet, his weekly fuel expenses increased from $80,000 to $130,000.
Read more: Why do Indian truck drivers in California disappear during the holiday rush?
Small trucking companies are the first to be hit.
Major carriers with thousands of trucks have various methods of hedging against price fluctuations that insulate them from temporary volatility. They have long-term shipping contracts and more flexibility on surcharges.
Smaller carriers are often paid flat rates and there is no certainty as to whether they will recoup higher fuel costs.
On a recent trip to Denver, a truck from Dubuque had to consider returning empty, because the going rate barely covered the gas to get back to Los Angeles.
“I can’t afford it,” he said.
He advises drivers to save fuel by planning their routes, finding truck stops with the best rates, and avoiding California if possible.
“Where we’re trying to avoid buying fuel is here in the state of California,” he said.
He’s also asking his regular customers to pitch in.
Roadies Inc. The truck, right, leaves for a delivery in Bakersfield on Nov. 29. (Myung J. Chun/Los Angeles Times)
Liberty Linhaul West’s fleet also works with LA’s entertainment and event industries, transporting staging, lighting and other equipment for events such as the Oscars, Grammys and Country Music Awards. He began calling customers with whom he had flat rates to renegotiate prices.
“We started calling customers saying, ‘OK, we need some emergency help here,'” Dubuque said.
While he appreciates that fuel surcharges and restrictions help build roads and protect the environment in California, he wants to see more support from the state.
“I think the government needs to interact with the oil and fuel world and they need to talk about how they can take this pain away from us, or at least try to lessen the blow,” he said.
Without an end to high oil prices or some help from the government, customers can expect the same sticker shock the trucking industry is struggling with.
“Whether you’re a grocer, a meatpacking plant, a vegetable grower, that cost has to be taken into account, because it doesn’t matter who you are, you’re dealing with it,” Dubuque said. “The impact was so strong and so fast, I think we’re going to start seeing another increase in the cost of goods for people.”
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This story originally appeared in the Los Angeles Times.
