Diesel prices rose 10 cents per gallon in one week to just under $6.57 as of Monday, Sept. 28, according to FreightWaves. All-in truckload spot rates over the same period rose only 2 cents per mile, which widened the gap between fuel costs and revenue for carriers.
The National Truckload Index stands 5.2% above its level from a month ago, when it was $3.28 per mile. Diesel is 16.5% higher than it was a month ago. A FreightWaves analyst said fuel is rising faster than spot rates and that pressure on trucking companies will continue.
Fuel surcharges offset higher diesel costs on contracted freight. Carriers absorb the full cost on empty miles, which makes reducing deadhead miles an important factor in margins during a period of elevated fuel prices.
Tender rejections hold near 14%, a level the analyst described as healthy and well above year-ago readings. That gives carriers continued negotiating strength with shippers. Contract rates are rising, intermodal share is growing as shippers convert loads for cost savings, and inbound import volumes remain solid.
Demand remains the main variable. Automotive and housing freight are still soft, and weak consumer sentiment is holding back overall volumes ahead of peak season. The analyst projected an elongated and stable peak in place of a sharp seasonal surge.
The outlook described by FreightWaves points to tight capacity, stable to rising rates and margin pressure concentrated at the fuel line unless automotive or housing demand recovers or consumer sentiment improves.
Source: FreightWaves - https://www.freightwaves.com/news/diesel-up-10-cents-spot-rates-up-2-margin-squeeze