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This week’s top stories in trucking

Diesel Benchmark Posts Record Weekly Jump Amid Strait of Hormuz Crisis

The Department of Energy’s weekly retail diesel price surged 96.2 cents a gallon to $4.859. It is the largest one-week increase since the series began in 1994. This spike marks eight consecutive weeks of gains, pushing prices $1.40 a gallon higher overall.

The crisis stems from a near-total shutdown of traffic through the Strait of Hormuz. S&P Global Energy reports only four ships transited the waterway on March 8, compared to 91 on Feb. 28. Goldman Sachs estimates traffic at just 10% of normal. Persian Gulf loadings collapsed to 3 million barrels per day. That is far below the typical average of 20 million barrels per day.

Fleet executives should prepare for prolonged higher fuel costs. Shut-in wells in Iraq and Kuwait don’t restart quickly. A recovery could take anywhere from weeks to months.

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Mexico Truck Production Plummets Nearly 50% Amid Prolonged Freight Slump

Mexico’s heavy-vehicle industry posted staggering year-over-year declines in February, with production crashing 49.1% to just 6,974 units. Exports dropped 32% to 7,849 units, with the U.S. absorbing 91.3% of shipments.

The slump reflects 14 consecutive months of domestic market contraction and signals broader weakness across North American freight demand. Retail sales plunged 38.9% while wholesale fell 27.3%.

“The fixed gross investment indicator has been in negative territory for more than a year,” said Cristina Vázquez of the Mexican Association of Automotive Distributors. “That sends a very relevant signal about confidence in the economic environment.”

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Connecticut Man Admits to $3.5M Amazon Trailer Fraud Scheme

Ameer Nasir, 25, pleaded guilty to wire fraud charges after defrauding Amazon Logistics of more than $3.5 million through phantom trailer movements. The scheme ran from December 2019 through February 2021.

Nasir established 23 trucking companies registered with Amazon, including Pak Express Transport. He misappropriated identifying information — including Department of Transportation numbers — from legitimate carriers with no connection to him.

The fraud hinged on exploiting Amazon Relay’s manual override feature, allowing Nasir to bypass geo-fencing and falsely confirm more than 1,000 trailer movements that never occurred. He now faces up to 20 years in prison, with sentencing set for May 29.

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California’s Non-Dom CDL Crackdown Hits 13,000 Drivers — National Rule Looms

California canceled approximately 13,000 non-domiciled commercial driver’s licenses on March 6. The state acted after the Federal Motor Carrier Safety Administration withheld $160 million in highway funding. Audits found 25% of sampled non-domiciled CDL records failed compliance — licenses issued beyond drivers’ lawful presence dates.

“Trucks parked, loads canceled, and nobody knows whose license will be pulled next,” said Fateh Singh of Freedom Drivers.

A national change takes effect March 16 when the FMCSA’s Final Rule goes into effect, limiting non-domiciled CDL eligibility to H-2A, H-2B and E-2 visa holders. The agency estimates 97% of the current 200,000 non-domiciled CDL holders nationwide will not qualify.

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Eight Days to a CDL: The Training Loophole That Won’t Close

A driver from Hawaii recently picked up his commercial learner’s permit, flew to New Jersey, trained Sunday through Thursday, passed his skills test Friday and flew home Saturday — becoming authorized to operate an 80,000-pound truck. The process from permit to license took eight days. The school shared the example.

The Entry-Level Driver Training (ELDT) rule, implemented Feb. 7, 2022, requires no minimum training hours. “There is NO minimum number of hours required,” Federal Motor Carrier Safety Administration (FMCSA) documentation states. Proficiency certification is left entirely to training providers.

The Training Provider Registry now lists 35,000 providers versus roughly 2,100 state-licensed schools. Steve Gold, CEO of 160 Driving Academy, said the structure allows broad participation: “Anybody and their brother can put themselves in there as a licensed entity.”

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SONAR spotlight: Diesel costs surge while spot rates hold steady

(Source: SONAR)

Summary: For trucking, the Iran conflict is causing concerns, namely that while all-in dry van spot rates remain elevated, the cost of diesel is rapidly surging.

Unfortunately for fleets, while the U.S. is an energy exporter, it is beholden to the costs of crude, which is currently extremely volatile. Between 40% and 60% of the cost of a gallon of diesel is impacted by the cost of crude oil.

Looking at dry van spot rates, the SONAR National Truckload Index 7-day average (NTI) fell 1 cent per mile all-in week-over-week from $2.77 on March 2 to $2.76. The NTI is 4 cents per mile lower than $2.80 last month. Compared to last year, the NTI is 48 cents per mile, or 21%, higher.

Diesel prices paid at the pump nationwide have risen even faster. The Diesel Truck Stop Actual Price Per Gallon (DTS) jumped 98 cents per gallon, or 25.7%, in the past week from $3.81 to $4.79. The DTS is $1.09, or 29.5%, higher than $3.70 last month and $1.14 per gallon, or 31.2%, higher than $3.65 last year.

To illustrate the impact, imagine a fleet that does not have a dedicated fuel surcharge and is too small to have a fuel-buying program. This is typical of smaller fleets and owner-operators, who may save a few cents per gallon from their preferred fuel card but are otherwise exposed to fuel cost swings.

In a 300-gallon tank, assuming a driver fuels up once per week, they will go from spending $1,143 at $3.81 per gallon to $1,437 at $4.79 per gallon. That’s roughly $294 in lost earnings per week, multiplied by 52 weeks for a rough estimate of a $15,288 annual pay cut.

This is an illustrative example. But for fleets seeing early signs of rate relief, if these elevated fuel prices persist, it will represent another cost-related headwind. It’s too early to determine if this would lead to carrier exits, as the owner-operator segment ranges from long-tenured drivers with no truck payments to newly minted authorities leasing or purchasing assets.

What can be determined is that this may be inflationary for rates, as these carriers who cannot get a fuel surcharge will find other means to pass along these higher costs, namely by attempting to charge more for all-in spot rates.