There have been a lot of TV spots on the plight of independent truck drivers with the increase in gas prices. I realize that in a competitive marketplace there are other constraints that can limit the ability of a producer to pass on input prices, but the implication seems to be they can’t pass on cost increases due to some factor that has nothing to do with microeconomics. Are these constraints contractual in nature or is this market still regulated to the extent that price controls exist?
Cards, I thought the rise in costs always get passed along to the consumer. I mean, it’s you and I paying for costs of FOB (freight on board) including increased price of tolls, gasoline price hikes, middle men costs, etc., that is incurred. As I understand it, such costs are factored into the retail price consumers pay in some shape or form.
“They’re coming to take me away ha-ha, ho-ho, hee-hee, to the funny farm where life is beautiful all the time… :)” - Napoleon IV
Jinx, then it begs the question: if they can pass on the costs, why all the complaining?
Lots of truckers are independent operators. They own/lease their truck [front part of the semi]. They contract to haul the trailer [back part of the semi] for a fee. Their profit is the difference between the hauling fee and their operating expense, which includes fuel. The trucker, not the shipper, pays for the fuel.
When the trucker has a fixed contract, rising fuel costs cut into his profit.
at work, just last night, they were talking about this. seems that the father of one of the guys at work is a trucker, and he recently bought a new truck… I guess at the current prices, he’s paying as much per month on gas as he is on his truck payments… (in the area of $1800/month)
talk has been around the plant where I work, that the truckers are prob’ly gonna go on strike on Sunday… I think this is to protest govt. taxes on fuel, which amount to, IIRC, $0.30/liter, driving the cost of fuel to $0.73/liter
(this is Canada, btw)
Also, prices for diesel fuel itself have been skyrocketing; we complain about paying a buck fifty or so a gallon, but diesel, which used to be under a dollars a gallon, is now approacing two dollars; truckers are paying TWICE what they used to for fuel, and when you consider a truck is on the road maybe 16+ hours a day, that’s a lot of cash.
Also, prices for diesel fuel itself have been skyrocketing; we complain about paying a buck fifty or so a gallon, but diesel, which used to be under a dollars a gallon, is now approacing two dollars; truckers are paying TWICE what they used to for fuel, and when you consider a truck is on the road maybe 16+ hours a day, that’s a lot of cash.
Long-term, yes. Short-term, not always. My understanding is that many of the independent truckers contract themselves out to freight companies for fixed periods (six months, one year, …), and they can’t change their prices during the contract period. Until their contracts expire, they’re stuck.