Trucking costs are rising fast. That could mean even more inflation for consumers

The prices producers charge for goods and services rose 0.4% in August from the month before, according to the Bureau of Labor Statistics’ producer price index. Most of that increase can be traced to the rising cost of energy.

Diesel costs were up more than 24% over the month. That, in turn, is fueling inflation in transportation and warehousing — the cost of trucking is up more than 14% from the same time a year ago, according to PPI data.

”The price trucking companies receive, which is what the PPI is picking up, that is going to rise, really as almost a linear function of how those diesel prices are changing,” said Jason Miller, a professor of supply chain management at Michigan State University.

The trucking industry is also losing workers, he said. The Trump administration has been cracking down on drivers who aren’t proficient in English and as a result, there are fewer trucks on the road.

“That drop has been so much that it’s giving carriers a little bit more pricing power. And so we’ve seen freight rates increase beyond just the price of the diesel fuel,” Miller said.

Some companies have been waiting until the last minute to ship things in case rates come down, said Zac Rogers, a professor of supply chain management at Colorado State University.

But so far, prices have stayed up, he said. “And now, we’re getting close to what would be the last second, at least ahead of Q4 and peak season.”

Companies can’t wait anymore. They have to pay for trucking, regardless of how expensive it is.

“The calculation they’re doing is, ‘Well, we would rather pay a little bit more, and maybe we can pass some of that extra cost down to consumers, than to be out of stock, and miss out on the sales altogether,’” Rogers said.

Passing along those extra costs isn’t always easy.

“Sometimes you can and sometimes you can’t,” said Peter Furth, CEO of FFF Associates, which imports specialty food items. “Sometimes you lose business, because the total cost to deliver a product to the customer is too high, and they just can’t absorb it.”

Furth said even though he’s been paying more to truck in products a lot of his customers — which make, say, fig bars using fig paste they buy from him — have been pushing back against price hikes, out of concern grocery shoppers might not buy them if they’re too expensive.

“So our customers who make the fig bars are very, very careful to try to hold their cost down, because they don’t want to lose sales,” he said.

That means Furth’s company has to eat the cost instead.