The Great Fuel Price Folly

So fuel prices are still high, but falling fast. Diesel prices aren't falling as fast as gas prices, but they are falling at a steady pace. Thank God, huh? Yeah, you better wait a minute before you start thanking anybody. If you think the trucking industry is going to be saved by falling fuel prices, they won't. Why?

Simple. As fuel prices fall, so do freight rates.

Any owner-operators who have been in the business for any length of time don't participate too much in the fuel discussions at the truckstop dinner counters. If they are still in business, it's because they belong to a large company that is supplying them with a fuel surcharge to cover their costs. So does that mean they're making money even with high fuel prices? Hardly.

Trucking is a commodity business and everyone is fighting to stay alive while keeping their rates as low as possible. When the economy gets tight, larger companies are able to absorb the losses and takeover smaller companies that run out of cash. Then when the economy gets better, the larger trucking companies are larger, and there are less of the smaller ones around. Is this bad? Only if you're a smaller company that is now part of a larger one.

So if falling fuel prices won't help trucking companies make more money, who does it help? The great peoples of the United States! Lower freight prices mean lower transportation costs, which translates to lower prices for goods that get transported by truck, train, and ship. But lower fuel prices simply means lower freight rates, which simply doesn't do a damn bit of good for the trucking companies.