Truckers thought the worst was over. Then diesel prices doubled

By Alicia Wallace, Natasha Chen, CNN

Wilmington, California (CNN) — The rattling whir of a diesel generator fills a corner of the truck yard.

For JD & LA Trucking, it’s the sound of business, the company’s bread and butter (… and poultry, produce and other perishables): The generator keeps refrigerated containers at the proper temperature until they are loaded onto a semi-truck and sent back out on the road.

That sound, those goods and those miles cost significantly more these days. Diesel fuel has been setting nominal record highs – an aftereffect of rising global oil prices as well as a supply bottleneck from refineries damaged by the wars in Ukraine and Iran.

The trucking industry and the consumer-driven US economy have ridden out energy shocks before. But the timing of this one stings for both: Truckers are still trying to find their groove after their industry’s post-pandemic downturn, while already inflation-weary Americans will likely have to swallow yet more price hikes.

“We’ve survived recessions, we’ve survived a bad economy, we survived Covid, and I want to believe we’ll survive this as well,” said Angel Diaz, co-owner of JD & LA Trucking.

“But they are scary times,” he added.

‘People are deciding to call it quits’

Diaz owns the 30-year-old trucking firm with his brother, Jorge. They took over the family business in October 2021, when their father passed away.

They’ve got 20 trucks hauling goods (dry and perishable alike) from the ports of Long Beach and Los Angeles – the two largest and busiest in the US – to their clients’ warehouses.

On a recent Monday, Angel Diaz drove past Los Angeles-area fuel stations where diesel was selling for $8.38 per gallon.

Earlier this year, he was paying just over $5 a gallon.

Efficiency is crucial in the shipping and logistics industry, and even more so now. The routes are mapped out to ensure that not a drop of fuel goes wasted; however, there comes a point when costs must be passed on to customers or operating is no longer economical, Diaz said.

The truck yards along the Port of LA seem far thinner than they once were, he said.

“That only tells me that people are going out of business; people are selling their trucks; people are deciding to call it quits just because things are getting so expensive,” he said. “I really think there needs to be a quick resolution (to the diesel price hike) before more people decide to leave the industry, because if enough people leave, that’s going to create supply chain shortages, something I don’t think the economy can afford at all.”

President Donald Trump earlier this week signed an executive order aimed at easing high diesel prices by directing the Internal Revenue Service to waive penalties on red-dyed diesel and instructing cabinet departments to encourage state agencies to waive taxes and limitations on the use of the fuel that’s typically reserved for off-road use.

Truckers and industry analysts cautioned that the expansion of red-dyed diesel is not a long-term solution nor a game changer.

Labor market shifts

The US trucking industry is shaking off a nearly four-year downturn, a post-pandemic correction marked by tumbling freight rates, carrier bankruptcies, and a high-cost/tepid-volume operating environment.

The pandemic’s pendulum swing toward goods spending caused demand to spike for the transportation of those products. In turn, a flood of new companies, drivers and vehicles entered the trucking industry.

Trucking employment hit a record high in 2022, with some of the sharpest increases in long-distance freight, according to Bureau of Labor Statistics industry data that goes back to 1990.

But after the economy reopened and spending swung sharply in the direction of services and in-person experiences, freight volumes (and freight rates) shrank.

“We basically had a glut of capacity and not enough volume,” said Rob Carpenter, a CDL-holder and trucking safety consultant who writes about the industry.

Rates turned south in 2023, as did the jobs. Earlier this year, long-haul trucking employment was at a 12-year low but has since started to slowly rebound, adding jobs for six months straight as freight costs have jumped higher.

In addition to the attrition, the trucking ranks have been thinned as a result of actions taken by the Trump administration, which moved to restrict the issuance and renewal of non-domiciled commercial drivers’ licenses (CDLs), enforce English language proficiency (ELP) requirements and remove thousands of training schools from its list of accredited institutions.

The Department of Transportation estimates that foreign CDL holders account for roughly 5% of the 3.4 million CDL holders in the US. Department officials say that since January 2025, 26,000 drivers have been placed out of service for failing to meet ELP requirements and enforcement actions have taken another 30,000 commercial license holders off the road.

Additionally, the administration launched the Freedom Haulers initiative, which provides incentives for military veterans to become truck drivers.

“Endangering lives and undercutting our country’s truck drivers just to protect cheap labor is an unacceptable price to pay,” Peyton Vogel, a Transportation Department spokeswoman, wrote in an email to CNN. “We will never compromise the safety of American families on our roadways.”

The administration’s rule, which affects nearly 200,000 foreign CDL holders, has been challenged by labor unions and drivers, and a case is before an appeals court in Washington, DC.

An industry out of balance

The US freight trucking industry, which has long endured high turnover rates, is in a period where driver supply has shrunk, said Stephen Burks, a trucker-turned economist and professor emeritus at the University of Minnesota Morris.

“Rates are now rising due to a modest contraction in the driver supply (and the promise of further cuts from the FMCSA) and a sharp increase in fuel prices,” he said. “The challenge is the costs of fuel tend to rise more quickly than rates do.”

Jason Miller, a supply chain management professor at Michigan State University said the trucking industry is out of equilibrium, but not to a point where there’s a structural shortage of drivers.

He said he expects the higher-rate environment will lure drivers back into the industry in the coming months.

In the meantime, the supply-demand imbalance does make the industry more susceptible to unexpected shocks, said David Spencer, vice president of market intelligence for freight-broker Arrive Logistics.

“That’s going to keep the vulnerability of the truckload market high, should we see a demand spark, or should we see further regulation that takes large chunks of [the driver supply] out of the market at once,” he said.

However, such a spark appears unlikely, he added.

“You pull on the thread, and you have to believe that elevated diesel prices are only going to be additional costs to the consumer,” Spencer said. “We don’t see any reason to believe housing is going to make an immediate recovery; so, the outlook for demand is weakening amidst the economic backdrop.”

Prices flow though the supply chain

In recent months, trucking companies and some of the major consumer brands have flagged transportation issues, notably fuel and labor, as potential pain points.

“Driver costs are going up, fuel prices are high, and it’s really tough to find capacity (drivers/trucks),” Brad Delco, chief financial officer at trucking giant J.B. Hunt, said last month at a Morgan Stanley conference, according to a FactSet transcript.

Those higher costs and concerns are flowing through the supply chain, said Adam Josephson, a packaging industry analyst and founder of Sakonnet Research. In recent weeks, companies such as RXO Logistics, Campbell, J.M. Smucker, McCormick and others have cited higher transportation cost inflation, he said.

“Everyone is being forced to raise their prices, and obviously that eventually shows up as higher prices for consumers,” he said.

The Food Industry Association said it takes 30 to 45 days for a spike in diesel prices to trickle down to the grocery store.

Rolando Pozos, chief executive officer of Amapola Deli & Market, a small chain of Mexican grocery stores in Southern California, said he’s trying not to raise prices for his customers.

“We can see how our suppliers start adjusting prices and they put that surcharge that we all love to see – the fuel surcharge – and it’s definitely hard to swallow,” he said.

Transportation costs tend to account for a small share – typically under 5% – of the selling price of commonly purchased goods, said Miller, the Michigan State University supply chain professor.

However, sharply rising diesel prices hit far more acutely and quickly in industries such as mining, quarrying and cement mixing, as well as other materials that are key in construction. While some potential price hikes are building in the pipeline, some industries such as construction and some services could see impacts more quickly, Miller said.

Double whammy for truck drivers

High diesel prices could force companies to make hard decisions, pull back on hiring, cut short investment and slow economic activity in the process, Miller said.

“Diesel hits the consumer mostly indirectly and with a lag for a lot of products,” he said. “This is not going to start showing up fully until six or nine months from now. And that’s very different from gasoline, where people feel the effect today.”

And for truck drivers, higher fuel costs and the potential for higher inflation creates a double whammy. Fuel surcharges (formal agreements that come into play when prices rise) can help soften the blow; however, drivers often have to eat the cost of higher spot prices in the interim.

“They’re citizens, too,” said David Owen, president of the National Association of Small Trucking Companies. “Not only do they get hit with the price of fuel, they get hit with the cost of blue jeans at the store or groceries at the grocery store as well.”

Angel Diaz of JD & LA acknowledges that the high prices are out of his control but mentioned his company can’t afford to leave the trucks parked.

They just have to ride it out.

“(My father would say) ‘you’ve made it through worse, and we’re going to make it through this one,’” Diaz said. “And I want to believe that. And I will do everything in my power to do so.”

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