By Meredith Gardner
meredith.gardner@theindependent.com

And in turn, that rising cost will eventually hit everyone's pocketbooks, they say.

During the last four weeks, diesel fuel prices in Grand Island have risen at 50 cents per gallon, topping off at an all-time high of $3.88 per gallon Friday. That's $1.11 per gallon higher than the same day last year, when diesel fuel cost $2.77 per gallon.

A typical semi truck may average 6 miles per gallon and hold about 300 gallons of gas. That makes difference in the cost of a tank of diesel from last year to this year more than $330.

How are truckers making up for the higher cost?

"You don't," said Tom Pirnie, president of Grand Island Express. "You lose money, or your profits just decrease."

While many trucking companies use fuel surcharges as part of their hauling contracts, volatile fuel prices can cause companies to lose money anyway, said Larry Johnson, president of the Nebraska Trucking Association.

Independent owner-operators and small fleets are often the first hurt, he said.

"It (diesel fuel) is such a large portion of an owner-operator's budget, and cost fluctuations like that can really have dramatic effects," Johnson said.

Truckers that haul freight by the ton, such as grain or gravel, can have an especially difficult time trying to recoup fuel surcharges, he said.

That's been the case at Victory Hill Trucking based in Aurora, which primarily hauls commodities and sets some contracts months ahead of time. In January, contracts included fuel rates of $3.10 or $3.20 per gallon for work that would be done months later, said Shae Swanson, Victory Hill's owner.

When fuel prices go up, the company honors its contracts and takes a loss, he said.

"In our business, it's really tough to recoup that," Swanson said.

"We're just being really cautious on how we bid work now."

Victory Hill working to bid contracts no more than a few weeks ahead of time, Swanson said. He's also encouraging drivers to increase fuel economy by using highway routes at speeds of 55 miles per hour instead of the interstate at 75 miles per hour.

Eventually, the company may invest in less expensive equipment, raise rates and start doing business with larger producers that pay higher freight rates.

At Grand Island Express, Pirnie said his employees will work even harder to get the appropriate level of compensation for fuel costs from its shippers.

And in addition to adjusting its fuel rates and contracts, some truck drivers will take advantage of new technology, Johnson said. More aerodynamic trucks and trailers, single-tire technology and improved shifting patterns can have a positive effect on fuel economy.

At Hi-Tech Diesel in Grand Island, drivers have been asking what they can do to increase their gas mileage, and some are holding out on repairs and preventative maintenance, said Greg Shaner, the repair shop's owner. For some, that'll make future repairs even more expensive, especially if there's a catastrophic failure.

Not everyone sees high diesel fuel prices as all bad, however.

Pirnie said one benefit to larger trucking companies such as his, which has a fleet of 160 trucks, is a potential reduction in competition.

"The guys that are just barely making it won't be making it at all, and they'll be going out of business with these high fuel prices," he said.

But as diesel pushes drivers out of the profession, the already increasing freight rates will go up even more, Johnson said.

"If those people go out of business, there isn't as much capacity," Johnson said. "If demand remains fairly solid, then we're going to see freight rates come up as well."

In turn, shippers will have to raise their prices, which will affect consumers at the retail level.

With 11,500 carriers and 82,000 drivers, Johnson said Nebraska's trucking industry should be able to weather the high-priced diesel storm.

"With harvest coming, planting season, those types of things may carry us through the cycle," Johnson said.

At Victory Hill, Swanson said he remains confident his business will remain successful as it adjusts to the higher prices.

"I think we'll be OK," Swanson said. "And I don't see this lasting forever."