Jamie Hagen believed the Great Freight Recession had finally drawn to a close.
The previous year had been tough for his South Dakota-based trucking company, Hell Bent Xpress. He had contemplated shuttering the business, as his funds dwindled during the lean years following the post-pandemic shopping surge in America.
However, he managed to refinance his equipment, demand for loads picked up, and freight rates started climbing again. “We began to see real progress. There was a lot of hope,” he remarked.
Then, the war in Iran erupted.
Diesel, the single largest daily expenditure in the trucking sector, has jumped 41% since the conflict began, hitting a national average of nearly $5.38 per gallon. Surging oil prices ripple throughout the U.S. economy. Gasoline prices for drivers have skyrocketed, and grocery bills may soon follow suit.
Owners of small fleets, like Hagen, and independent owner-operators are bearing the brunt of the oil spike in the for-hire trucking industry. They typically own their rigs, cover fuel and maintenance costs, and secure loads on the volatile spot market, where shippers tender one-off loads to carriers.
Small truckers are not generating enough profit quickly enough at current rates to offset their steep diesel bills.
Major carriers, such as JB Hunt and Schneider National, face less of the strain he is encountering.
They have long-term hauling contracts that include fuel surcharge clauses that automatically adjust when diesel prices rise. Large carriers often operate more fuel-efficient trucks than smaller ones and utilize sophisticated fuel hedging strategies.
Most smaller operators do not receive these fuel surcharges. Spot market rates are negotiated on an “all-in” basis, with no explicit fuel breakdown. Small operators are lucky if they recoup half of the higher fuel costs within their rates, noted Dean Croke, a principal analyst at DAT Freight & Analytics.
“Small carriers in the spot market are really getting hammered right now,” he stated.
Truckers often aren’t paid for weeks or months after completing a haul. Larger carriers, with access to working capital, can manage, but this presents a major issue for small operators now facing thousands of dollars in extra fuel expenses.
“Cash flow has become our number one hurdle,” Hagen said.
This week, a fuel pump shut off at $999.99 before he could fill the tank of his orange 18-wheeler Mack truck. Truckers are usually paid by the mile, not by the hour, and his costs have risen by twenty cents per mile since the war started—completely wiping out the five cents he usually makes per mile.
“We were already hanging by a thread. This is like a nail in the coffin,” he remarked.
An Industry of Peaks and Valleys
The number of truckers on the road swells when demand is hot and contracts as the economy cools.
Steven Burks, a former truck driver and an economist at the University of Minnesota Morris who researches the industry, estimates there are currently about 450,000 owner-operators hauling freight over long distances.
Thousands of operators flooded the market starting in 2021 to serve Americans stuck at home and benefiting from pandemic stimulus checks. Most firms that emerged to capitalize on the demand had five or fewer employees, Burks noted.
Freight rates soared by nearly 40%, and business boomed.
“You couldn’t throw a rock without making a profit,” Hagen recalled.
But the market pivoted at the end of 2022. Consumer demand started to wane, and rates began to fall. The industry suddenly faced a different problem: too many truckers chasing slowing freight volume. Many mid-sized carriers, small fleets, and thousands of independent truckers exited the industry.
The current stagnation in rates still reflects the oversupply following the post-pandemic boom.
The diesel shock might force some truckers to park their rigs—which, in turn, raises rates for those who remain active.
Christopher Lloyd, a long-time truck driver in Richmond, Virginia, is trying to hang on.
He went independent as an owner-operator in 2024 after years of working for various companies. He invested $187,000 in a new flatbed truck.
“I got into this to control the conditions of my career and the direction of my business,” he said.
He is adapting to rising diesel prices by tightening his “fuel strategy,” gassing up only at stops where diesel is cheaper, skipping $130 truck washes, pressing brokers to add more money to loads, and declining unprofitable runs in New England.
“The shippers there are still clinging to old prices,” he noted.
He has witnessed trucking devolve from a “ticket to the middle class into a slow crawl toward economic obscurity” across his career. Rates, driver pay, and benefits have all been reduced since the federal deregulation of the industry in the 1970s and 1980s.
But he has no plans to leave; he’s a lifer.
“As long as I can feed myself and keep the lights on, I’m staying on my feet.”
About the Author
