Diesel at $6.53: Why Truckers Are Earning 50% More as Costs Soar
US trucking firms face 40-50% higher operating costs since 2019 as diesel hits an all-time high of $6.53 per gallon.
U.S. trucking companies are navigating an unprecedented cost crisis as diesel prices reach a historic high, squeezing already thin profit margins. According to David Parker, founder and CEO of Covenant Logistics Group, the national average for diesel has climbed to $6.53 per gallon, intensifying financial strain on carriers.
Parker revealed that his company consumes about 45 million gallons of diesel annually, yet recovers only 80% of those fuel expenses through surcharges. The remaining 20%—lost to idle time, unnecessary detours, and empty return trips—wipes out potential profits. “Even without those inefficiencies, breaking even would be difficult,” he stated during a recent interview at FreightWaves’ Chattanooga studio.
Rising Costs Outpace Revenue Growth
The fuel price surge is just one component of a broader financial challenge. Parker noted that non-fuel operating expenses—including driver wages, health insurance, and liability coverage—have jumped 40-50% since 2019. Meanwhile, contract rates have failed to match this increase, creating a widening gap between costs and revenue. “Our rates haven’t risen 50% since 2019,” he emphasized, highlighting the industry’s struggle to maintain profitability.
Driver pay has become a critical factor in securing capacity. Parker confirmed that Covenant Logistics has raised wages to attract drivers, particularly in drayage—a segment he described as one of the tightest in the market. The company’s rates have increased by double digits, a trend expected to continue through the fourth quarter. However, Parker expressed concern about unpredictable insurance costs, calling them a major unresolved risk for carriers.
Market Indicators Point to Persistent Challenges
Freight market data suggests ongoing capacity constraints. Tender rejections, which measure carriers’ willingness to accept loads, currently stand at 13.74%. While down from the 17% peak earlier in the cycle, this figure remains significantly higher than last year’s 5.5% and the 10.4% recorded at the end of 2023. FreightWaves CEO Craig Fuller characterized the market as “still tight,” despite some easing from previous highs.
Spot rates have also risen, reaching approximately $3.50 per mile—an increase of 80-90 cents compared to a year ago. Parker observed that contract rates have recently surpassed spot rates, a development he called a positive sign for market stability. However, he cautioned that mixed demand signals from shippers and potential regulatory changes could introduce new pressures in the coming months.
While higher driver pay offers a rare bright spot, Parker stressed that the industry must address systemic cost challenges to ensure long-term sustainability. “The only thing I don’t feel bullish about is operating costs,” he said. “We’ve got to improve—all of us, the entire industry.”
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