Archive for April, 2012

High Gas Price Forces Trucks Drivers to Sell Rigs

Jesse Henley went into trucking as expansion of his logging business and acquired seven tractor-trailers to haul his timber to the mills in the South. He charges the mills for delivery. Now although seven of his rigs still on his yard, the high gas price is making his hauling business unprofitable. He plans to sell all of his rigs. 

High gas price has hurt people like Mr. Hendley and if diesel prices do not go down, people like Mr. Hendley will have to sell their trucks just to beat down their losses. This is happening to thousands of truckers who are forced to sell or resell and the situation is the worst things has ever happen to trucking industry since 1980 when the industry was deregulated.

Mr. Hendley commented that truckers are now experiencing major breakdown and made comparison of the ailing industry to broken axle or damaged engines, which is just a few yards away from bankruptcy. He added that he had laid off his regular driver and now turns to independent operators to carry his logs.

Observers have blamed the rising fuel costs for the big cut from truckers’ profit plus the fact that the economy is in its slowest that have resulted to reduced freight traffic. Truckers account the problem on their failure to impose fuel surcharges that will further hurt the consumers. They added that the industry has been suffering for years from over-capacity. They blamed the over-capacity to the deregulation, which attracted thousands of small rig operators into trucking.

Analysts at the Owner-Operator Independent Drivers Association like John Seibert explained the condition as something like company cost-reduction scheme where a company put the load on the dock and have truckers to pick them at company’s rate. This agreement hurt many fleet owners thus some are forced to get out from the business.

Similar to truckers’ dilemma, air freight operators are also hurt by high gas price. Many companies now turn to railroad to move trailers from the highway to cut cost. Dan England, chairman of C.R. England, has turned to the railroad and move only as less than 350 of their 3,600 tractors on the highway for the reason of fuel economy.

The statistic show that 3 percent of the tractor fleet or more than 45,000 trucks have disappeared from the highway since last year. The record shows that this is worse than the 1980 shakeout as results of deregulation and recession coupled with high interest and the second Arab embargo.

Moreover, carriers with less than five trucks are heading to bow out from the business with noted increased pace. With foreseen accelerating gas price, The American Trucking Association predicts that more fleet owners would take their trucks off the highways.