Diesel cost is heavy load for truck drivers
Rising prices shrink thin profit margins further
After 32 years as an independent trucker, Bud Smith of Ventura would like to move on.
If only he could.
"I'm 60. What else am I going to do?" he said. "It's hard to get a normal job, so you go to work and hope it gets better."
Bill Bartzack, 58, a fellow truck owner-operator from Ventura, feels the same way. "Who wants to hire an old man?" he asked.
They are among many independent truckers who feel stuck struggling to pay their bills after shelling out more and more of their earnings for diesel fuel.
Ventura County's average price for diesel hit a record $4.11 a gallon Friday, up about $1 from a year ago and about 50 cents ahead of regular unleaded today, according to the Automobile Club of Southern California.
Diesel is the lifeblood for tractor-trailer rigs, which average 5 or 6 miles per gallon. A fill-up can be as expensive as a $700 20-inch LCD TV.
Drivers are watching nervously, wondering how much higher pump prices can climb.
Diesel could retreat to less than $4 if investment speculators back off oil in the next few weeks, said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp.
Diesel's spike is partly seasonal; it tends to be more expensive during the winter months because it's similar to heating oil, industry analysts say.
Diesel and heating oil are essentially the same product, except that in diesel fuel, more sulfur has been removed, said Doug MacIntyre, senior oil market analyst for the Energy Information Administration.
The high prices have been fueled by global demand, especially in Europe to power diesel vehicles and in China to run backup generators for businesses during electrical outages, experts say.
Average motorists might be unaware of the diesel crunch, but they soon might realize it when shopping at the grocery store and other places. Rising costs to operate diesel-powered farm equipment and tractor-trailers, which, according to the American Trucking Associations, transport an estimated 70 percent of all goods, are being passed on to consumers.
Look at how much prices have increased at the supermarket, said Craig Underwood, owner of Underwood Farms in Moorpark and Somis.
"(We) don't have a choice," Underwood said of raising food prices. "We can't continue to absorb costs or obviously we'll be out of business."
Independents more affected
Unlike truckers who work for companies that tack on fuel surcharges to clients, independent truckers have little leverage to pass on their extra costs. They typically operate as a one-person business that has to negotiate fees with customers.
Smith said he feels sick every time he sees prices go up a couple cents. "You're out here working very hard; nobody wants to give you a raise," he said. "There's so many people going out of business."
Drivers in the past have described trucking as a good job, which makes up for predawn hours and sometimes spending days on the road away from family.
Wages vary widely. In May 2006, the U.S. Department of Labor estimated truck drivers' pay ranged from $10.80 an hour to $25.39 an hour.
Smith's bottom line has been hurt by the jump in diesel fuel prices. It used to burn 10 percent of his take-home, but now consumes 35 percent — and the total is climbing. The increased cost has shaved roughly $275 off $800 in his daily earnings.
That can add up over a year.
In 2006, Bartzack spent $63,000 on fuel, and though he hasn't added up the figures, he expects the total to be much higher for 2007. Since diesel has risen to more than $3 a gallon, filling up can run him $1,500 more a month.
Many other rising costs
On top of that, many independent drivers have to pay about 5 percent of their earnings to a broker for finding them work, plus 25 percent more for renting a trailer. And thousands of dollars are spent annually on maintenance and insurance for a truck rig. Soaring energy costs are pushing everything higher, from oil changes to having tires recapped.
The only way for the trucking industry to survive is to add a fuel surcharge, said Julie Sauls, vice president of external affairs for the California Trucking Association.
The association is researching ideas that could help companies with fuel purchasing, Sauls said.
"We understand that it's really going to impact the way people do business," she said. "It is very painful to see the rise in prices. It's painful for every individual."
Rising fuel costs are destroying the bottom line for drivers, Bartzack said.
"In our industry, we don't have that word — profit," he said. "In 12 years, I've never had profit."
But truckers say they can't complain because there are people "lined up to take your spot" willing to work for less.
Construction truckers see the surge in diesel as the latest blow, since they already have been slammed by the housing downturn, which has halted or slowed new development.
In Ventura County, there were 1,849 permits issued for new housing units last year, compared with 2,461 in 2006 and 4,516 in 2005, Kyser said. He projects it will take another 12 months for the housing market to recover. That means another year of bad news for construction truckers.
Dennis Biggs of Ventura can't take another bad year. New-home construction accounted for about 70 percent of his work. The independent trucker's monthly gross income has tumbled from $12,500 to $5,000. Last week, he took the CB radio and lucky penny out of his cab and put his truck up for sale.
"It's killing us," said Biggs, who says most of the truck drivers he knows are struggling. "It's killing me ... I don't have any money left after paying all my bills. I don't even have money to purchase fuel."
Biggs thinks he and his wife will lose their home unless he can land a good job in the next few weeks.
"We're all being punched in the mouth right now. No new houses means no work."
He and other truckers who haul construction material say they recently have been working from a handful to 15 days per month.
Tapping their reserves
"You use what money you have saved to get through months of working five or 10 days," Smith said. "I have nothing to put in my retirement at this point. There's nothing left. You're just hoping you can pay your bills. You have to work until you die."
Many truckers seem to be facing the same bleak reality. They're already stretched, and don't know what they'll do if diesel goes much higher.
Bartzack was planning to retire at 62. Now he's figuring he'll work until he's 68 or 70. To survive, he and his wife have curbed their spending and refinanced their home, from a 15-year to 30-year mortgage that reduced their monthly payment $1,500.
Bartzack and Smith actually are in a more comfortable spot than many drivers because they don't have truck payments. In December, Bartzack paid his last installment of $2,000.
"Hopefully, I'll be able to survive," Bartzack said, "but for how long, I don't know."
