‘UNPRECEDENTED TERRITORY’

For Wilson Brothers Trucking, soaring diesel costs make freight surcharges a necessity

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‘UNPRECEDENTED TERRITORY’

BEAR CREEK — His company’s trucks travel about 4 million miles each year, and with fuel efficiency at between 5 or 6 miles per gallon, slight variations in fuel prices get Jeff Wilson’s attention.

So what does the president of Chatham County’s Wilson Brothers Trucking think about diesel prices these days, which have jumped 64% since Jan. 1?

“It’s unprecedented territory,” he said.

Wilson Brothers, known officially as Wilson Brothers Milling and Trucking Company, has 60 or so trucks on the road or preparing to hit the road at any given time. The company provides transport primarily in the animal agriculture and wood products industries, and like most transportation and freight companies, uses a fuel surcharge — referred to in the industry as an “FSC” — to help calculate freight rates it charges its customers.

The FSC is tied to a weekly “escalator” index (which can be seen here ); it shows average national and regional retail fuel costs per gallon as calculated by the U.S. Energy Information Administration (EIA) and is updated each Monday.

Escalating prices mean higher costs, of course, and they’re typically passed on by transportation companies to consumers — one of the reasons inflation has reached an all-time high.

About 75% of all consumer goods, at some point between manufacturer and consumer, “are rolled on a truck,” Wilson said. High demand and supply chain issues add to the surge, creating what he called “a huge impact” for retail goods and food costs.

“Every which way you look at it, the transportation costs, the shipping costs, have been impacted heavily by all this,” he said.

Two years ago, during COVID lockdowns, regular gasoline prices were under $2/gallon. A year ago, the price jumped up to just below $3 per gallon. Today? A whopping $4.59/gallon — according to EIA, the highest inflation-adjusted price since 2012 and the highest all-time price since the agency began providing updates in 1990.

The price increases have been driven by several factors, the EIA says, including the high price of crude oil, the effects of Russia’s invasion of Ukraine and rising U.S. demand, which is outpacing refinery production. And that’s not all: European Union leaders agreed Monday to ban most imports of Russian oil; that, and China’s tentative lift of COVID-19 shutdowns in Shanghai will only increase worldwide demand.

Historically, diesel prices have been lower than conventional gas prices, but that’s no longer the case. Wilson points to the high demand for diesel related to the construction boom’s impact on the economy as a whole as part of the reason. Nationwide, the average diesel price was $3.24 per gallon one year ago; today, it’s around $5.90 — an 82% jump, despite a slight drop in the last week or two — with some areas of the country seeing diesel prices in excess of $6/gallon.

That means annual fuel costs at Wilson Brothers may have jumped well in excess of $1.5 million from last year to this year. And that’s not all: Wilson points out that increases in fuel prices means higher expenses in other areas for the company — including tires (which are petroleum-based) and parts deliveries. And even though the company purchases diesel fuel in bulk, that doesn’t always provide much protection given rapid price fluctuations.

Not an easy journey

If there’s a silver lining, though, record inflation and prices mean everyone — including Wilson Brothers’ customers — are dealing with the same, or similar, circumstances, he said, meaning everyone’s navigating the rough road together.

“I won’t say it’s anywhere near an easy journey,” he said.

And if history is any indicator, Wilson has some insight into what’ll happen when fuel prices finally begin to fall: It won’t happen quickly.

“It seems that when the fuel price changes, it never rescinds as quickly as it does when it increases,” he said.

Farmers keep a close watch on the weather forecast. In the transportation business, those in Wilson’s position must react to price changes and hope — for his sake and his customers’ — for the best.

But he won’t venture a guess about a solution.

“If I had the answer to that, I probably would be doing something different,” he laughed. “Yeah, I don’t really have the solution for that. You know, so many commodities, such as fuel and other things … I mean, they’re so volatile. The least interruption and, whatever circumstances there are, whether there’s conflict in areas of the world, it has such a quick impact. There has to be some resolution of some of these circumstances we’re seeing overseas.”

Bill Horner III can be reached at bhorner3@chathamnr.com or @billthethird.

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