Revenues, fuel prices reach record levels
Last year, trucks in the United States hauled a record-breaking 10.7 billion tons of freight, or 21.4 trillion pounds, nearly 69 percent of all domestic tonnage. Gross freight trucking revenues amounted to a whopping $622.9 billion, which was about 84 percent of the nation’s total freight bill.
“Trucking is the driving force behind our great economy,” says Bill Graves, president and CEO of the American Trucking Associations (ATA). An economist for the ATA predicts that there will be a slight increase in intermodal transportation this year and that the industry will spend around $100 billion on diesel fuel, compared to about $87.7 billion in 2005.
About 8.6 million people are associated with the trucking industry, with the heaviest concentration of motor carriers in the Midwest and in the southeastern states. About 87 percent of U.S. carriers operate six or fewer trucks.
While freight revenues have reached record levels, so have diesel fuel prices. While most of the large carriers are able to negotiate deals that neutralize the problem via fuel surcharges, the run-up in fuel costs has cut into the profits of countless owner-operators and small fleet owners, who aren’t so lucky. Many have gone out of business.
Despite record-high gasoline and diesel prices, Americans show no sign of reducing their fuel consumption. One economist explained that “consumption is essentially fixed,” because motorists cannot immediately change their lifestyles (i.e., the vehicle they drive, the distance they drive to work). The fact that sales of SUVs and light trucks continue to be strong suggests that Americans aren’t concerned about prices— or they’re just getting used to them.
Gasoline sales at stations continue to increase. Retailers, however, note that sales of food and drinks, which contribute significantly to profits, have dropped since May.
Pump prices are around $3 a gallon in many parts of the country, and diesel prices are hovering close to that amount. The world uses roughly 85 million barrels a day—25 percent of which is consumed by the United States.
One expert noted that if demand were lower, prices would drop. Also, because of various concerns—Tehran’s nuclear program, possible U.S. hurricanes and the war in Iraq—most experts do not foresee a correction in oil prices anytime soon. Still, one economist believes fuel prices could drop somewhat this fall, provided there are no hurricanes and provided Iran “tones down the rhetoric” over its nuclear ambitions.
Sources: Roemer Report (used with permission), ATA