Chart of the Week: Diesel Truck Stop Actual Price Per Gallon, National Truckload Index – USA SONAR: DTS.USA, NTI.USA
Retail diesel fuel costs (DTS) are up 33% versus April 2019, while the National Truckload Index (NTI) that measures all-in spot rates are only up 16% over the same time. The implication is that carriers are in a far worse position on the spot market than they were in 2019 as they are unable to fully pass along operating costs.
Fuel is just one of many trucking operating cost inputs that have inflated dramatically over the past five years, but it is one of the largest measurable costs that are relatively homogenous across the national carrier base. It is also a glaring example of how desperate the truckload spot market has become.
Doing the math to calculate the average cost per mile based on 6.5 mpg, an industry standard that many fuel surcharges are based on, we get the outputs in the chart below:
The average diesel cost per gallon and NTI values were taken from early April of each year. The cost-per-mile estimates from 2019 to 2024 may not seem that dramatic to the casual observer, but putting it in the context of what it was during a more profitable year, the swings are significant.
The full context is that 2019 and 2024 are arguably two of the softest truckload capacity environments in history; carriers had little to no pricing power. The 2021 market was nearly the exact opposite.
The fact that carriers seem to have less pricing power than in 2019 should not be taken lightly. It shows there is a level of desperation not reflected in the nominal rate, which is up 16%.
Fuel costs tend to rank second behind driver wages in terms of a carrier’s total costs. According to a 2023 ATRI report, driver wages increased 30% from 2019 to 2022. Maintenance costs were right there as well, with a 30% increase.
Point being the 16% rate increase is actually a decrease when incorporating inflated operating expenses. Adding them all together means that carriers are almost certainly losing money consistently on the spot market.
Why it matters
Unprofitability is unsustainable in a free market. That statement is not news, but the severity of the unsustainability is what should be most alarming. This environment is significantly worse than 2019 for transportation service providers.
Anyone procuring or managing transportation where long-term or contract rates are at or near spot market levels is at a severe risk of service failure if the market flips, which it will inevitably do.
Contract base rates (VCRPM1) from SONAR’s invoice database show that contracts are roughly 25% higher than the spot market rates excluding fuel costs above $1.20 per gallon — comparable to a standard fuel surcharge — on average. The invoice data skews heavily toward the larger carrier and larger shipper contract agreement, which represents the bulk of the domestic truckload environment in the U.S.