Diesel near $6 squeezes margins as freight demand firms

Diesel's national average hit $5.967 a gallon in the week to September 7, up 6.6% on the week and 58.4% on the year, on the Energy Information Administration's pump survey. For an owner-operator that is the single biggest cost line moving right now: check your fuel surcharge is keeping pace before you book the next load. Read the number as direction, not what you will pay -- it is a retail average including taxes, and fleets buying on contract at truck stops pay less, with the gap widening when prices move fast.

The freight the fuel is burning is at least there. Dry van truckload rates rose 1.9% in August and less-than-truckload 4.5%, on the Bureau of Labor Statistics producer price index; all trucking is up 1.9% on the month. Retail sales rose 1.2% in August, and one industry read says carriers are seeing the first year-over-year volume growth in 42 months. Both freight figures are indices, not dollars per mile -- they track change from a base period and blend contract with spot business, so they turn later and more gently than a spot rate would.

The catch is on the cost side. J.B. Hunt told investors late Tuesday that third-quarter earnings could fall 5% to 10% from the prior quarter on surging fuel and driver costs, and its shares dropped 12%. When the largest names flag fuel eating margin, it is the surcharge conversation for everyone hauling under contract.

Part of the diesel run traces to supply. Saudi Aramco is working to bypass a damaged section of its East-West pipeline, keeping crude and refined-product markets tight -- which is why the pump has kept climbing even as some supply fears eased.

Two items worth a driver's attention this week. The FMCSA is warning carriers about an email scam tied to the new Motus registration system; verify any registration email before you click. And the House passed the Diesel Emissions Reduction Act, backed by the American Trucking Associations, which funds replacing or retrofitting older diesel engines.