New ultra-low-sulfur diesel is adding more pressure to the already spiraling cost of fuel, but the big hit will come after January, as fleets replace old trucks with new low-emissions models. The good news: cleaner air for all.
Diesel fuel is on the minds of a lot of trucking company executives these days and not only because of the spiraling cost of oil. On June 1, new EPA requirements went into effect mandating that 80 percent of all diesel fuel in the U.S. market be practically sulfur free (15 parts per million). This ultra-low-sulfur diesel (ULSD) is expected to deliver a double whammy to carriers-higher refining and distribution costs that will be passed on as price increases and a 1 percent to 2 percent drop in fuel efficiency. There also is a likelihood of spot shortages around the country as the new fuel makes its way into the distribution channel.
With fuel costs already at historical highs and showing no signs of moderation, this is a bitter pill for trucking companies. This year the industry is on pace to spend more than $93bn on diesel, an increase of $5.5bn from 2005, which was then a record high. For a typical trucking company today, fuel expenditures represent 20 percent to 25 percent of total operating costs.
Ultimately, these costs are passed on to shippers and consumers. "To the extent that fuel changes increase a trucking company's operating costs, users can expect that those costs, over time, will largely be passed on," says Rich Moskowitz, assistant general counsel and regulatory counsel at The American Trucking Associations. "How soon and the degree to which that will happen is up to the market."
While these changes may be hard to swallow in the short term, few argue with the clean air goals that are behind them. "It's really incredible the progress that this industry has made," says Moskowitz. "It has gone from uncontrolled emissions 20 years ago to 2007 trucks that will be nearly emissions free. But clean air comes at a price."
|"It's really incredible progress that this industry has made. But clean air comes at a price."|
- Rich Moskowitz of The American Trucking Associations
|Trucking Demonstrates Economic Muscle|
|The U.S. trucking industry continued to flex its economic muscle in 2005, increasing its share of the nation's freight pool to 68.9 percent. This equates to an all-time high volume of 10.7 billion tons and represents $623bn in revenue or 84.3 percent of the nation's freight bill.|
"These numbers show clearly that trucking is the driving force behind our great economy and a vital transportation link for domestic and international products," says ATA President and CEO Bill Graves. "Nearly every good consumed in the United States is put on a truck at some point," he says.
American Trucking Trends, an annual state of the industry report published by The American Trucking Associations, reports that more than 26 million trucks of all classes played a part in reaching the volume and revenue milestones. Of this number, 2.7 million were typical Class 8 tractor-trailer combinations operated by 565,000 interstate motor carriers.
Class 8 trucks drove 117.8 billion miles of the total 388 billion miles of all weight classes used for business purposes in 2004. The nation's truck fleet consumed 51.4 billion gallons of fuel, both diesel and gasoline. The trucking industry is on pace to spend nearly $100bn on diesel fuel alone this year, up from $87.7bn in 2005. Commercial trucks paid $32.8bn in federal and state highway-user taxes in 2004.
The trucking industry continues as a major employer in the United States, with more than 8.6 million people employed in trucking-related jobs in 2004. Of these, 3.28 million are professional truck drivers.
Trucking also played an important role in trade exchanged between the United States and our largest trading partners, Canada and Mexico. Trucks transported 81.9 percent of the value of trade between the United States and Mexico in 2004 and 65.7 percent of the value of trade between the United States and Canada.
American Trucking Trends 2005-2006, provides information on U.S. truck tonnage, employment, freight revenues, shipment value, engine sales, modal share and international trucking. Topics explored also include safety statistics, cost-per-mile analysis, top trailer manufacturers, highway-user taxes, U.S. motor carrier size and distribution, trucking employment by state, international trucking, fuel consumption and emissions data.
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