“I love this business and this industry ... but we need help.” -Todd Staege, owner of trucking company TW Express Inc., Viroqua, WI.
Got a note from Todd Staege the other day, taking me to task for what he considers my off-base economic outlook where trucking is concerned. From where he sits with his company‘s two trucks, things are bad and getting worse - a complaint echoed by many small carriers all over the U.S. He‘s also of no mind to hear about the “tough times” at larger carriers like Con-way Inc. or Knight Transportation, either, for they are at least profitable and their executives haven‘t been reduced to a hand-to-mouth existence.
“Sorry if that came across harsh. It is just so very frustrating hearing the woes of billion dollar companies when we are have to sell personal items (our car) just to keep fuel in the tanks of my two trucks,” he told me by email. “After paying expenses and the drivers there is nothing left - zero.”
Todd and his wife Wendy (That‘s where the “TW” in TW Express comes from) are also extremely frustrated over diesel fuel prices - because, as the old saying goes, pump prices shoot up like a rocket but fall like a feather. “So if the price on the pump goes up in relation to price per barrel, why didn‘t it drop 25 cents this week since oil dropped?” he asked me.
Freight rates are another huge issue with the price of diesel over $5 a gallon now across much of the U.S. “Check the rates on any of the boards,” Todd told me. “For example outbound to Denver is $1.15 per mile or so average. But it costs $1.60 to $1.70 per mile to run that truck down the road! I could go about this for days.”
According to the Owner-Operator Independent Drivers Association (OOIDA), fuel surcharges have long been the primary mechanism for trucking companies to respond to increased fuel costs - and now shippers are, of course, paying more in fuel surcharges to get their freight moved than they ever have before. But carriers - especially small ones - need that fuel surcharge to cover their most expensive operating costs, and it‘s getting harder to get all of it.
“It‘s all too common for middlemen in the trucking industry to push shippers to pay fuel surcharges, but only pass along a portion of those surcharges, or none at all, to the truckers who are actually transporting the goods and paying the fuel bill,” noted Todd Spencer, OOIDA‘s executive VP, in comments earlier this year.
“Independent, small business truckers seldom deal directly with shipping customers,” he added. “Most of the freight loads they haul are acquired through third-party logistics companies or through larger trucking companies they are leased to as independent contractors. Mid-size trucking firms often have contracts with shippers for ‘front hauls,‘ but depend entirely on brokers for ‘back hauls.‘ That‘s why small and mid-sized trucking firms that comprise the vast majority of the trucking industry have been particularly hard hit by record high diesel prices.”
Eddie Walker, president of Texas-based Best Used Trucks and president of the Used Truck Association, noted that high fuel prices are especially hard on the smaller fleets because they tend to run older, less fuel-efficient trucks.
“Years ago, if you were making $1 a mile, you were making some serious money,” he told me. “Today, if your truck gets around 5 mpg, you‘re paying a $1 a mile in fuel to move that truck down the road. With costs like that, people don‘t think they can make money in this business.”
(Eddie Walker is trying to find shippers that pay well for his used truck customers.)
As a result, Walker has added a new “trick” to has bag for getting folks to buy trucks from him - finding his customers shippers that pass along the full fuel surcharge. “You can still make money in this business if you get the full fuel surcharge, so I am out looking for shippers doing that - basically finding places for my customers to go to work,” he told me.
Back at TW Express, one other thing bothers Todd Staege to no end - the housing crisis. How is it, he contends, that people overextended on their mortgage are getting help, but small business owners like him are getting left out in the cold?
“When I hear of the housing bailout for people not smart enough to realize they can‘t afford a $500,000 house making 40k a year, yet millions of hard working Americans running their businesses are forced out for no real reason except high fuel costs, I know I‘m in the wrong business.”
In the end, Staege wanted me to understand one simple thing: It‘s tough and getting tougher for smaller carriers out there ... and somebody better start thinking of ways to help them survive, and do it soon.