BY MARK B. SOLOMON, SENIOR EDITOR EGIONAL MOTOR FREIGHT
transportationreport
Fighting back
As fuel prices rise and truck capacity shrinks,
shippers face the battle of their professional lives.
They won’t go down easily.
THE NATION’S LEADING SHIPPER EXECUTIVES DIDn’t rise to the top of their profession by accident. It took
resourcefulness and determination, honed by decades of
experience and results, to get to where they are.
They will need all of those qualities, and then some, to
cope with what is coming at them. However, underestimating their cat-skinning abilities could be a mistake.
To be sure, the obstacles are daunting. To begin with,
there’s the run-up in fuel costs. The average national price
of diesel fuel stood at just over $4.06 a gallon as of May 16,
according to the Department of Energy’s Energy
Information Administration. As this story went to press, the
per-gallon price of diesel had risen by nearly $0.97 from
mid-May 2010 levels. Earlier in the month, the national
average hit $4.12 a gallon, the highest point since August
2008, when diesel reached a monthly average of $4.30 a gallon. As of mid-April, fuel had surpassed labor as the largest
expense for many truckers.
At the same time, tractor counts continue to shrink at a
rate that has alarmed even the most seasoned shipper exec-
utives. A spate of bankruptcies and a weak
economy that forced rigs and trailers off the
road have led to a 16-percent decline in truckload capacity
from the industry’s 2006 peak, according to Transport
Capital Partners, a transport mergers and acquisitions advisory firm.
A monthly Shippers’ Condition Index (SCI) published by
the Nashville, Ind.-based consultancy FTR Associates
declined in April and May to levels not seen since 2004,
according to the firm. The index, which sums up all “
market influences” affecting shippers, came in at - 7. 7 in April
and - 11. 4 in May, FTR said. A reading below zero reflects an
unfavorable climate for shippers.
“Shippers are being hit in two ways as ... base rates are
moving higher for all major modes and fuel surcharges are
surging,” said Larry Gross, senior consultant for FTR.
“While there might be some relief later in the year on fuel
surcharges, we expect base rates to continue to increase.”
Although estimates vary, consultancy IHS Global Insight
says the average fuel surcharge today is equal to one-fourth
