Truckers Face Profit Squeeze as Diesel Soars 10¢ While Rates Lag
Diesel prices jumped 10 cents in a week to $6.57/gallon, outpacing spot rate gains of just 2 cents per mile.
Trucking companies are caught in a financial vise as diesel prices surge while spot freight rates fail to keep pace. In the past week alone, diesel jumped $0.10 per gallon to nearly $6.57, outpacing the mere $0.02 per mile gain in truckload spot rates, a gap that is squeezing carrier margins and forcing operational adjustments across the sector.
The disparity is stark: while the National Truckload Index (NTI) sits 5.2% above last month’s level of $3.28 per mile, diesel has soared 16.5% over the same period. The widening spread between fuel costs and revenue leaves carriers absorbing the brunt of the increase, particularly on empty backhauls where fuel surcharges don’t apply. Julie Van de Kamp, a freight market analyst, warned that the trend shows no signs of reversing soon.
“Fuel is rising more quickly than spot rates. So we’ll continue to see that pressure on trucking companies.”
Julie Van de Kamp·freight market analyst
Why Fuel Costs Are Outpacing Freight Rates: While
Meanwhile, truckload spot rates, while elevated, have plateaued, held back by soft demand in key sectors like automotive and housing. The Sonar Truckload Volume Index, a measure of freight demand, has remained flat through 2024, offering little relief for carriers hoping for a seasonal surge.
Natural Gas
Regulatory pressures are further tightening the screws. Jim Filter, CEO of Schneider, recently highlighted how crackdowns on non-domiciled commercial driver’s licenses (CDLs) and the shutdown of substandard driving schools are reducing the pool of available drivers. These measures, while aimed at improving safety, are raising barriers to entry and constraining capacity, a double-edged sword for an industry already grappling with thin margins. The regulatory landscape extends beyond driver qualifications.
“There are so many reasons that there’s still pressure on trucking companies and pulling demand capacity out of the market while demand has remained weak.”
Julie Van de Kamp·freight market analyst
What This Means for Shippers and Carriers
For carriers, the margin squeeze is forcing a renewed focus on operational efficiency. Reducing deadhead miles, where trucks run empty between loads, has become critical, as these trips offer no revenue to offset rising fuel costs. Fuel surcharges on contracted freight provide some relief, but the benefits are uneven, leaving smaller operators particularly vulnerable. The current environment also favours larger fleets with the scale to negotiate better rates and optimise routes, further consolidating the industry.
Shippers, meanwhile, are adapting by shifting more freight to intermodal rail, which offers cost savings and greater fuel efficiency. However, this shift comes with its own challenges, including capacity constraints on rail networks and longer transit times for certain routes.
For smaller carriers and owner-operators, the current market conditions are particularly challenging. Many lack the negotiating power to pass fuel costs onto shippers, leaving them to absorb the losses. Industry groups, such as the Owner-Operator Independent Drivers Association (OOIDA), have called for greater transparency in fuel surcharge programmes and regulatory relief to ease the burden on independent truckers. Without intervention, the risk of further consolidation, or even exits from the market, remains high.
Looking ahead, analysts project an elongated and stable peak season rather than a sharp surge in demand. Contract rates are expected to continue climbing, but without a meaningful recovery in automotive or housing markets, or a shift in consumer sentiment, carriers will remain under pressure. Tender rejections, currently holding at 14%, suggest carriers still hold negotiating leverage, but the window may narrow if fuel costs continue to outpace rate growth.
For shippers, the implications are equally significant. Rising freight costs are likely to be passed on to consumers, potentially fuelling inflationary pressures. Retailers and manufacturers are already revising their logistics strategies, with some opting to build inventory earlier to avoid peak-season rate spikes. Others are exploring alternative modes of transport, such as short-sea shipping or air freight, though these come with their own cost and capacity trade-offs.
The diesel-spot rate gap is more than a financial inconvenience, it’s a structural challenge that could reshape operations for months to come. Carriers that fail to adapt risk falling behind, while those that optimise load utilisation and embrace cost-saving measures like intermodal conversions may find a path to sustainability in an increasingly volatile market.
One key strategy is the adoption of fuel-efficient technologies. Many fleets are investing in aerodynamic trailers, low-rolling-resistance tyres, and telematics systems to monitor driver behaviour and reduce fuel consumption. North American Council for Freight Efficiency for Freight Efficiency (NACFE) estimates that these measures can improve fuel economy by up to 10%, a significant saving in an era of high diesel prices. Additionally, some carriers are exploring alternative fuels, such as compressed natural gas (CNG) or electric vehicles, though infrastructure limitations remain a hurdle.
Route optimisation is another critical lever. Advanced logistics software can help carriers minimise deadhead miles and maximise load efficiency. Companies like Schneider have invested heavily in predictive analytics to match loads with available capacity, reducing empty miles and improving profitability. For smaller operators, third-party logistics providers (3PLs) offer similar tools, though at a cost that may be prohibitive for some.
Collaboration between carriers and shippers is also essential. Many shippers are open to longer-term contracts that provide stability for both parties, particularly in exchange for guaranteed capacity or rate adjustments tied to fuel indices. The American Trucking Associations (ATA) has encouraged shippers to adopt more flexible pricing models, such as fuel surcharges that adjust in real time to reflect market conditions. Such arrangements can help mitigate the impact of volatility and ensure a more equitable distribution of risk.
The outlook for the trucking industry remains uncertain. While diesel prices may stabilise if refinery utilisation improves or geopolitical tensions ease, the underlying structural challenges, regulatory pressures, driver shortages, and weak demand in key sectors, are likely to persist. The National Truckload Index (NTI) is expected to remain elevated, but without a corresponding increase in spot rates, carriers will continue to face margin compression.
For shippers, the focus will be on cost management and supply chain resilience. Intermodal conversions are likely to accelerate, particularly as railroads invest in capacity expansions. However, shippers must also prepare for potential disruptions, including port congestion and labour disputes, which could further strain the freight network. The International Longshoremen’s Association (ILA) and the Pacific Maritime Association (PMA) are currently negotiating a new labour contract, with the potential for strikes or slowdowns if an agreement is not reached.
Industry stakeholders are calling for a coordinated response to the challenges facing the trucking sector. The ATA has urged policymakers to address regulatory barriers, such as the patchwork of state-level CDL requirements, and to invest in infrastructure improvements to reduce congestion and improve efficiency. Meanwhile, carriers are pushing for greater transparency in fuel pricing and surcharge programmes, arguing that hidden costs are exacerbating the margin squeeze.
For now, the diesel-spot rate gap serves as a stark reminder of the fragility of the freight market. While carriers and shippers alike are adapting to the new reality, the path forward remains fraught with uncertainty. Those that can navigate the challenges, whether through technological innovation, operational efficiency, or strategic partnerships, will be best positioned to weather the storm. For the rest, the road ahead may be far more difficult.
Sign up free to ask CAMAL AI for a summary, the key points or anything else about this story.
Related stories
CAMAL AI
Financial Ports Newsletter
The maritime economy, every morning
Ports, shipping and freight markets in one short email. Free.
