Diesel prices have surged over the past several weeks, and motor carriers across the country are feeling the impact.
The national average for on-highway diesel reached $5.40 per gallon for the week ending March 30, according to the U.S. Energy Information Administration. That’s more than 50% higher than this time last year and closing in on the all-time high of $5.81, which was set in June 2022 during the early months of the Russia-Ukraine conflict. Some analysts have warned prices could surpass that record within weeks if current global supply disruptions continue.
The most recent weekly data showed the pace of increases slowing at the national level, but the picture varies widely by region. While the Midwest and Gulf Coast saw small price declines, the West Coast continued to climb. In California, diesel now exceeds $7.00 per gallon, nearly $2.00 above the national average.
The spike in diesel prices is tied to disruptions in global oil markets stemming from the conflict involving Iran and the Strait of Hormuz, a narrow waterway through which roughly one-fifth of the world’s oil supply normally passes. Although the U.S. has adequate domestic diesel supply, oil trades on a global market, so carriers here absorb the price increases just the same.
A Disproportionate Impact on Small Carriers
FTR Transportation Intelligence, a freight transportation research and forecasting firm, estimates that fuel costs per mile have increased by 21 to 24 cents over just three weeks, the largest increase over that timeframe on record. Fuel typically accounts for a significant share of carriers’ operating costs, often exceeding 20% and rising sharply during price spikes. At this pace, fuel price increases have an almost immediate impact on their bottom line.
The burden falls hardest on owner-operators and small fleets. Unlike large carriers, independent operators often pay for fuel out of pocket and don’t have the ability to hedge prices or negotiate bulk discounts. Many are also operating in a freight market where rates haven’t increased enough to keep pace. The result is a widening gap between what it costs to run a truck and what the market is willing to pay.
That gap is already changing behavior across the industry. Some owner-operators have parked their trucks, unable to make current loads profitable. Others are moving into company driver roles to reduce their personal exposure to fuel costs. Those still running are cutting deadhead miles, turning down unprofitable freight, and slowing down to conserve fuel. At current diesel prices, reducing highway speed from 75 to 65 mph can save several cents per mile, a small but meaningful offset when margins are already thin.
Why Higher Rates Don’t Always Solve the Problem
Freight rates have shown some upward movement in recent weeks. Spot rates are running roughly 25% higher year-over-year, largely because many carriers have exited the market over the past several years. That’s a meaningful difference from 2022 and one reason the current environment, while difficult, has not reached crisis levels.
But higher rates don’t necessarily mean better margins. In many cases, the rate increases carriers are seeing are being driven by fuel surcharges rather than stronger demand. So while the money comes in, it’s going right back into the fuel tank.
Fuel surcharges are designed to help carriers recover added costs, particularly on contract freight. However, they often lag behind real-time price increases and may not fully offset the expense. In the spot market, rates are quoted as a single all-in price with no separate fuel surcharge. That means the only way carriers recover higher fuel costs is if overall rates rise enough to cover them, and right now, they often don’t.
There’s also a cash flow problem. Carriers pay for fuel at the pump, but payment on loads can take 30 days or longer. That gap between outgoing costs and incoming revenue puts serious pressure on smaller operators, especially those already running on thin margins after several years of a depressed freight market.
One factor that may work in carriers’ favor is that this time around, trucks coming off the road aren’t being replaced. In 2022, larger fleets were actively hiring and absorbed much of the lost capacity. That’s not happening now. As more trucks sit idle, available capacity tightens, which could push rates higher and offer some relief for carriers who can hold on.
What Carriers Can Do Now
Diesel prices remain closely tied to global oil market conditions, and there is no clear timeline for relief. In the meantime, carriers should be looking closely at the factors within their control:
- Review fuel surcharge language in contracts. Make sure surcharge calculations reflect current Department of Energy (DOE) averages and that reimbursement timing doesn’t leave you carrying weeks of unreimbursed fuel costs.
- Pay attention to regional price differences when planning routes. With spreads of more than $2.00 per gallon between the cheapest and most expensive regions, where you fuel matters.
- Manage the cash flow gap. If payment terms are stretching 30 days or more while fuel bills hit immediately, explore options like fuel cards, factoring, or renegotiating payment timelines with brokers and shippers.
- Evaluate every load against current costs. In a market where fuel can erase already thin margins, being selective about which loads to accept isn’t a luxury. It’s a necessity.
The margins between staying on the road and parking the truck are getting thinner by the week. Carriers who take steps to manage their fuel costs now will be in the strongest position when the market stabilizes.
Don’t Let Compliance Become Another Cost
When operating costs are this high and margins are this tight, there’s very little room for additional financial hits. A failed audit, an overlooked violation, or a lapse in compliance documentation can mean fines that a carrier simply can’t absorb right now.
US Compliance Services helps motor carriers stay audit-ready year-round, so compliance doesn’t become one more cost you didn’t see coming. If you have questions about your DOT compliance program or want to learn how our portal can help you stay ahead of deadlines and reduce risk, give our team a call.
