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35% of Truckers Say 2022 Will Be ‘Drastically’ Less Profitable Because of Fuel Prices: Survey

Neil lives in Canada and writes about society and politics.
Published: July 26, 2022
35 percent of US truckers say 2022 is set to be a "drastically" less profitable year than 2021, primarily because of fuel prices.
Semis queue to enter the port of Dover on April 22, 2022 in Dover, England. In a FreightWaves survey, 35 percent of truckers rated 2022 as a year that will be “drastically” less profitable, primarily because of fuel prices. (Image: Dan Kitwood/Getty Images)

Owner-operators of trucking companies are not feeling particularly optimistic in their outlook as to how their 2022 is going to play out, a new survey shows.

In a survey conducted by transport industry-leading publication FreightWaves and published on July 25, the sentiment was expressed rather prominently.

The survey queried 76 owner-operator respondents, who reported a median gross revenue of $240,000 in 2021. Despite the appearance of a lush statistic, median costs weighed in at $140,000.

The highest in the range was $800,000 in revenue and $700,000 in costs. Overall, one respondent stated they made $450,000 last year, while another said they actually lost $20,000.

2021 statistics are notable because the trucking industry, like many others, was running at a multi-year peak on the back of central banks cutting interest rates to near-zero and governments stimulating the economy with helicopter drops.

The outlet asked its clients to rate on a scale of 1 to 10 their “expectations for profitability this year compared to 2021.”

A score of 1 represented a 2022 that is “drastically less profitable” and a 10 a 2022 that is “significantly more profitable.”

Roughly 35 percent of the group, the largest of any number, responded with a 1. 

None of the 76 respondents answered with a 10.

The crew was also asked what issues they felt were currently impacting their business. The number one response was fuel prices, followed by volatile rates, and availability of work.

In May, Vision Times reported that U.S. truckers were paying as much as $1,200 to fill their trucks with diesel amid record prices.

With diesel exceeding $5 per gallon across much of the country, trucks carrying a 120 to 150 gallon tank (two tanks in the case of long haul truckers), in conjunction with a fuel economy of 6 miles per gallon, the pressure has been enormous.

Truckers in some parts of Canada have been paying close to $10 per gallon.

Coupling rising costs with a phenomenon noted in May that the spot market rates paid to contract a driver for runs was rapidly plummeting at a rate of close to 13 percent per month, even though it was the busiest time of year, has been another catalyst in the calamity.

The impact on the industry started to manifest in June when the price of used trucks at auction likewise began to crater, with newer model trucks fetching as much as 16 percent less in only a month.

At the root of the problem is very likely a slowing economy, rapidly entering a full blown recession. In June, the most massive retailers in the industry such as Amazon, BestBuy, and Target, all reported bloated inventory levels combined with slowing sales

Retailers had been forced to purchase large orders of goods months in advance due to the 2021 supply chain crisis, only to find that demand was in the midst of being destroyed when it finally started to land.

Amazon, for example, had reported having almost 47 percent more inventory year over year, a hard pill to swallow when sales were up only a paltry 7.58 percent.

Walmart likewise showed inventory bloat in the range of 32 percent, and sales increases less than 4 percent.

On June 25, Walmart shocked the markets when it released a “surprise warning weeks ahead of its earnings report,” Bloomberg reported.

The warning cautioned investors that earnings per share would decline a horrific 13 percent, a significant number in light of an estimated 1 percent decrease previously reported. 

The news sent Walmart’s shares falling from a close of $132 on the day to a post-market low of $120.

One analyst told the outlet, “When things go wrong at Walmart, you can extrapolate that it’s happening at other retailers, as well.”

Another analyst from Edward Jones explained that Walmart was being hit especially hard because its business model “cater(s) to a low-income customer.”

A Bloomberg Intelligence analyst, Jennifer Bartashus, explained, “When something impacts a retailer that everyone knows like Walmart, that can lead to a further slide in consumer confidence.”

And Bartashus appears to have been correct. Walmart’s competitor, Target, slid from a close of $157.49 to $149.54 in post-market trading on the news.