Diesel Up 10 Cents, Spot Rates Up 2: Margin Squeeze

Diesel prices surged 10 cents per gallon in a week, reaching just under $6.57 as of Monday, Sept. 28, while truckload spot rates increased only 2 cents per mile over the same period. This significant gap between fuel costs and spot rates is compressing margins for trucking companies, making load utilization a top priority for freight operators.

The National Truckload Index has risen 5.2% since last month, while diesel costs have jumped 16.5%. Fuel surcharges help offset higher diesel expenses on contracted freight, but carriers bear the full cost of rising fuel prices on empty miles, making deadhead reduction crucial. Regulatory pressures, such as non-domiciled CDL restrictions and the shutdown of inadequate driving schools, are further limiting available capacity.

Weak demand in automotive and housing sectors, coupled with consumer sentiment, continues to limit freight demand despite the pressure on margins. Carriers report tender rejections at 14%, a healthy rate above year-ago levels, giving them negotiating power with shippers. Looking ahead, the freight market is expected to maintain tight capacity, stable-to-rising rates, and sustained margin pressure at the fuel line, barring significant improvements in automotive or housing demand or shifts in consumer sentiment.