AVON, Ind. (WRTV) — A truck company owner on Thursday said he has had to nearly double his fuel surcharges since the war with Iran began.
Dennis Nottingham owns Advanced Trucking in Hendricks County. He said his 40 or so trucks carry everything from heavy bulk cargo to refrigerated groceries. Nottingham said a typical over-the-road tractor-trailer like the ones in his fleet carries about 200 gallons of fuel, sometimes less, and gets about 6-7 miles per gallon.
"Fuel is our biggest expense. That's over 50% of our expense," he said. "With the fuel prices increasing, what's happening is, the market takes time to shift."
One month after President Donald Trump announced Operation Epic Fury had been concluded, Iranian forces continue to block shipping through the Strait of Hormuz, the narrow waterway through which one-fifth of the world's oil is shipped. According to AAA, diesel costs $5.74 per gallon in Indiana, compared to $3.53 one year ago. Unlike gasoline, the administration of Indiana Gov. Mike Braun has not suspended the state's tax on diesel, which is 61 cents per gallon.
Nottingham said the increase in diesel prices has forced him to increase his fuel surcharges. He said he now sometimes charges customers as much as 80 cents per mile for fuel, versus 35 to 40 cents per mile before the war with Iran.
"If it costs more for us to deliver that produce to the store, then that ultimately ends up, the consumer eating that cost," he said.
President and CEO Gary Langston of the Indiana Motor Truck Association said exact fuel costs are highly variable because different companies drive different mileage, but fuel is often the second-largest expense after payroll. He said filling up an over-the-road tractor-trailer now might cost $1,300 to $1,500 compared to $900 at the beginning of the year.
Langston said many small trucking companies have gone out of business due to fuel costs, including some in Indiana, though he could not provide numbers.
Those costs already are getting passed along to consumers. The consumer price index for April showed a 3.8% increase in prices for all goods compared to a year earlier. April is the most recent month for which data is available.
Economics professor Michael Hicks at Ball State University said, "Almost everything we buy is delivered using some petroleum products. So, trains are diesel-operated, delivery trucks are diesel-operated. So we think about it when we're buying something on Amazon or shopping like that, but think about every delivery to every fast food restaurant, every delivery of products to every store."
Hicks said consumer price increases due to fuel spikes usually take weeks or months to appear because the increased costs take time to work their way through the system. He said companies usually don't raise prices at first because they don't want to be the first to do so, but costs eventually force their hand. Hicks said the prices consumers are seeing now reflect shipping costs from the initial spike in fuel prices in March. He said he would not be surprised if inflation reaches 4-5% in the coming months.
Langston and Nottingham both said they are not concerned by Braun's decision to suspend state taxes on gasoline but not diesel. Langston said truck companies benefit from fuel taxes because they go toward road improvements. Nottingham said giving consumers a break at the pump will help offset the increased prices they are paying at the store.
Nottingham said he has seen prices come down recently. "We'll be able to manage. Like I said, we've had to make adjustments in how we run the business. Hopefully, for everyone, this ends soon, and that we can see a little bit of relief there and the prices come down."
