Fuel Prices Strain Trucking Across Australia, U.S.
Fuel Prices Strain Trucking Across Australia, U.S.
Anonymous
Key Points
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AAA reported U.S. diesel prices at about $6.31 per gallon, up more than 70% from a year earlier. GasBuddy analyst Patrick De Haan warned the national average could exceed $6.50 within days, with prices potentially reaching $7 in parts of the Midwest; California’s average had already surpassed $8.
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Norfolk Southern executive Claude Elkins described $8-a-gallon diesel in California as “science fiction,” while the Dow Jones Transportation Average fell nearly 3% in the same session that J.B. Hunt shares plunged.
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J.B. Hunt said fuel had already reduced the Dedicated segment’s operating margin by nearly 100 basis points in the second quarter, while sign-on bonuses and targeted driver-wage increases were adding further near-term costs.
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In Canada, Ottawa extended diesel-related tax relief into early 2027, but Akita Equipment general manager Alex Driscoll said his company had already raised prices and would need to increase them further if fuel costs remained elevated and the federal excise tax returned.
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Australian drivers attributed part of the latest price surge to the government’s removal of the final fuel-excise discount and to the closure of a Middle Eastern east-west oil pipeline after a drone attack, developments that pushed diesel prices higher despite available supply.
Record diesel prices are crushing trucking companies across the United States and Australia, forcing operators to warn of lower profits and potential price hikes for customers. U.S. diesel hit AAA reported $6.31 per gallon — up more than 70% in a year — while California's average surpassed $8, prompting major carriers like J.B. Hunt to slash earnings forecasts and laying bare the strain on an industry already facing thin margins.
The surge is hitting hardest at small carriers and owner-operators, whose existing freight rates often fail to cover fuel, insurance, maintenance, and wages. In Australia, some drivers say they will park their trucks until diesel prices fall substantially from the current Australian Energy Council rate of roughly 2.76 Australian dollars per liter, while Canadian operators warn they cannot absorb costs without raising prices further despite recent tax relief extensions.
J.B. Hunt Warns of 5% to 10% Earnings Drop
J.B. Hunt, a major U.S. trucking firm, said fuel and driver-related expenses will cut third-quarter earnings down 5% to 10% from the prior quarter. The announcement sent shares down more than 13% in a single trading session. Fuel had already shaved nearly 100 basis points from the company's Dedicated segment operating margin in the second quarter alone.
The company is layering on extra costs by raising sign-on bonuses and driver wages to retain workers, straining profitability further. Analysts nonetheless expect pricing and fuel-surcharge adjustments to narrow the earnings gap later, though the lag between rising fuel costs and rate increases is hurting carriers now.
Diesel Prices Could Hit $7 in Midwest Within Days
GasBuddy analyst Patrick De Haan warned the U.S. national average diesel price could exceed $6.50 per gallon within days, with prices potentially reaching $7 in parts of the Midwest. AAA data shows diesel already climbed to $6.31, a jump of more than 70% from a year earlier. California's average had already surpassed $8 per gallon.
Norfolk Southern executive Claude Elkins called $8-a-gallon diesel "science fiction," reflecting the shock rippling through the rail and trucking industry. The Dow Jones Transportation Average fell nearly 3% on the same day J.B. Hunt shares plunged, signaling broad investor concern about sector-wide margin pressure.
Canadian Carriers Seek More Price Increases Despite Tax Relief
Canadian government extended diesel-related tax relief into early 2027, offering temporary help. However, Akita Equipment general manager Alex Driscoll said his company had already raised prices and will need to increase them again if fuel costs stay high and the federal excise tax returns. The uncertainty leaves operators unable to commit to stable rate structures.
Trucking executives across Canada warned that rising fuel costs are forcing price increases or making work unprofitable for smaller carriers. The lag between fuel-price spikes and freight-rate adjustments means operators are absorbing losses on existing contracts.
Australian Drivers Park Trucks as Diesel Stays Elevated
Australian diesel prices are pushing operators to the breaking point. One owner-operator said he would park his truck until diesel fell substantially from roughly 2.76 Australian dollars per liter — a level high enough to make many routes unprofitable. ABC News Australia reported that drivers attributed part of the latest surge to the government's removal of the final fuel-excise discount.
The closure of a Middle Eastern east-west oil pipeline after a drone attack has also driven prices higher despite adequate global supply. Australian carriers now face the dual squeeze of elevated fuel costs and delayed customer rate increases, forcing painful choices about which loads to accept.
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