There was one topic that dominated the Ohio Trucking Association's annual conference in September.
Diesel fuel prices.
National diesel prices hit a record-high average of $6.53 per gallon Sept. 21, and they remain near the historic peak. Diesel prices in Ohio average even higher, currently sitting at around $6.65 per gallon, almost $3 more expensive than the same time last year, when it was $3.66 a gallon.
The Ohio Legislature has passed and Gov. Mike DeWine has signed a gas tax holiday bill that cuts the state tax on diesel fuel by 47 cents for 90 days officially beginning Sunday, Oct. 4. But the United States' war with Iran, which sparked rising fuel and diesel fuel costs beginning in February, shows no immediate signs of ending.
Several Ohio
trucking company leaders and industry experts interviewed by The Dispatch said their businesses – and the trucking industry as a whole – are facing an ongoing cash flow crisis brought on by soaring fuel costs.
"It is very dire. We have seen trucking companies go out of business," said Thomas Balzer, president and CEO of the Ohio Trucking Association.
Fuel costs for trucking company Continental Express in Sidney are up 75% compared to last year, said Kiera Sullivan, general counsel and shareholder for Continental Express. And her company can't just immediately charge customers more to make up for these costs, she said.
Trucking rates are set by contracts, sometimes spanning multiple years. Continental uses fuel surcharges, which pass some fuel costs onto its customers, but it doesn't get reimbursed for these surcharges immediately, Sullivan said.
"We're paying for that fuel right now because our trucks need to deliver that freight right now and put diesel in the vehicles. And so, we're paying for that now and we don't get reimbursed on fuel surcharge for 30 to 120 days, sometimes up to 3 to 4 months, which is a big, big, cash flow problem. That's super hard," she said.
Plus, fuel surcharge rates are set every Wednesday, so trucking companies have to eat any price increases that occur after that day but before the next Wednesday, Balzer said.
Trucking companies have already started making cuts to their businesses or looking for ways to increase efficiency. Sherri Garner Brumbaugh, president and CEO of Garner Trucking Inc. in Findlay, said her company has cut down on hiring for administrators and support staff, and has made its raises more conservative.
"If you haven't made cuts already, you're behind. We've definitely made cuts, all the wants have gone away and it's been needs," she said.
Once the trucking industry's fuel surcharges catch up to fuel prices, everyday consumers will start seeing increased prices on their shopping receipts, according to the Transportation Energy Institute. Trucking companies pass their fuel costs onto their customers, like grocery stores, who then pass the costs onto everyday consumers.
"The trucking industry delivers more than 80% of the finished products in this country. And so everything that they come into contact with on a daily basis has been on a truck, any day. So, anything you get in a grocery store or a retail store or at a restaurant or anything you basically come into contact with at a hospital, has been on a truck at some point," Balzer said.
The fuel price crisis comes after a four-year trucking recession. The trucking business boomed after the COVID-19 pandemic, when many companies were over-ordering their stock to avoid supply chain disruptions. When shipping demand began to return to normal, it left a lot of freight carriers willing to work for lower rates, driving the industry's rates down. Some members of the Ohio Trucking Association have been losing millions, year over year, during this recession, Balzer said.
And just when trucking rates were starting to tick back up, the cost of diesel fuel began rising, Balzer said.
"There is definitely this point, this kind of tipping point that we're at right now with the industry that people are really, really struggling to be able to weather all this and make it out the other side," he said.
Reporter Nathan Hart can be reached at NHart@dispatch.com, @NathanRHart on X and nathanhart.dispatch.com on Bluesky.
This article originally appeared on The Columbus Dispatch: Ohio trucking companies face crisis amid soaring diesel costs
