Diesel Prices Up Another 1.5 Cents

The price of diesel rose 1.5 cents through the week leading up to the Fourth of July holiday, hitting $1.102 a gallon. The national average reported July 5 marked the fourth consecutive week of increases and took fuel to a 17-month high, nearing the $1.109 average posted Jan. 19, 1998.

Most of the 6.6-cent rise in the fuel price from this time last year has come in just a month’s time. The 4.3-cent cumulative increase of last four weeks translates into a $15.5 million cost to the trucking industry, according to American Trucking Associations.

This has prompted some observers to suggest that rate surcharges, which trucking companies have been reluctant to implement, have become a serious possibility. Others disagree.

Surcharges tied to the cost of fuel have been the object of some misunderstanding since prices began to rise from their historic low of 95.3 cents a gallon on Feb. 22. While many truckload carriers’ contracts establish a national average price of $1.06 a gallon as the threshold for surcharges, the fees may not be triggered, in most cases, until the price reaches $1.12 a gallon. Once implemented, however, they can remain in effect as long as the price stays higher than $1.06.

Transportation analyst Bob Delaney of Cass Information Systems and Prologis said carriers could invoke surcharges and shippers would not resist them.

“Capacity is tight right now, with yearly growth of 4%,” he said. “I think the companies could successfully collect surcharges.”

“All it will take is somebody to lead, [and] the rest will follow,” Delaney said.

For the full story, see the July 12 print edition of Transport Topics. Subscribe today.