Editorial: Fuel Prices Weigh Heavily on Trucking
he seemingly endless rise of fuel prices is beginning to take a serious toll on the nation’s economy and the outlook for the trucking industry.
The latest example occurred late last week, when FedEx Corp. reported that higher fuel costs would dampen the company’s fiscal 2006 profits.
Despite a strong showing in its quarterly earnings, which were in line with its earlier forecast, FedEx’s stock took a pounding on June 23 — the same day it announced the earnings. The stock fell 8.3% and dragged down most transportation stocks in the process.
“The $60 barrel [of oil] is one thing, but jet fuel has accelerated way faster,” said Alan Graf, FedEx’s chief financial officer. “That is having a big [effect]” on company finances, “and we expect that to remain high in ’06,” he said in a conference call with stock analysts.
FedEx, No. 2 on the Transport Topics 100 list of the largest for-hire carriers in the United States and Canada, reported it is having the same trouble many of its smaller competitors are saddled with: the time lag between when fuel prices rise and when the company is able to adjust surcharges and reclaim some of the added costs from shippers.
The new worry over fuel costs came as the national average retail price for diesel fuel inched within 0.3 cent of its all-time high of $2.316 in the Department of Energy’s latest weekly survey of filling stations June 20.
Diesel was 63.1 cents a gallon higher than it was a year earlier, meaning truckers spent almost $420 million more to fuel their Class 8 tractors last week than they paid for their diesel in June 2004.
And with crude oil prices continuing to rise, new record high prices are a certainty.
The strain higher fuel prices are putting on the nation’s economy are becoming more obvious, with signs that various sectors are slowing down from the strong growth that has marked much of the past 18 months.
And still we sit, with no clear national policy for managing fuel prices, other than reaching deeper and deeper into our pockets.
Isn’t it time we had a clear national energy policy?
This editorial appeared in the June 27 print edition of Transport Topics. Subscribe today.
