Diesel Prices Fall as Freight Rates Rise During Reefer Slump

Diesel down, rates up in limited fashion with seasonal reefer lull

Diesel prices eased during the latest reporting week, but the decline did little to change the cost picture for truck drivers and carriers. At the same time, truckload spot rates moved higher in limited fashion, with most of the increase coming from fuel rather than stronger linehaul pricing.

The national average price for on-highway diesel fell 14.7 cents per gallon during the week ending Sept. 28, to $6.38 per gallon, according to the U.S. Energy Information Administration. The decrease followed a record weekly average of $6.53 during the week ending Sept. 21.

Even after the drop, the latest average remained the second-highest ever recorded. Diesel was $2.63 per gallon more expensive than during the same week a year earlier and $2.84 higher than two years earlier.

The decline was widespread. Prices fell in every major region except the Rockies, where diesel increased 6.7 cents per gallon. The Gulf Coast recorded the largest decrease, at 22.2 cents per gallon.

California continued to have the nation’s highest average price at $8.18 per gallon. The West Coast excluding California followed at $6.64. The Lower Atlantic had the lowest average at $5.95, narrowly ahead of the Gulf Coast at $5.96.

Diesel averaged $6.51 in New England, $6.53 in the Central Atlantic, $6.53 in the Midwest and $6.41 in the Rocky Mountain region.

Fuel accounted for most of the rate increase

Truckload pricing moved in the opposite direction during the week. Total broker-posted spot rates increased by about a penny, according to data from FTR Transportation Intelligence and Truckstop.com.

Dry van and flatbed rates increased, while refrigerated rates declined as the market moved into a more typical seasonal pattern. Dry van spot rates rose 4.5 cents per mile after falling about 3 cents the previous week. Flatbed rates increased by slightly less than 1 cent after gaining more than 5 cents the week before.

Reefer rates fell 7.3 cents per mile during the latest week, following a decline of more than 6 cents during the week ending Sept. 18. The decline is consistent with the seasonal slowdown that often follows the late-summer produce and food-shipping peak.

Despite the recent pullback, spot rates remained well above year-earlier levels. Dry van rates were about 46% higher than a year ago, flatbed rates were up 42% and reefer rates were up 47%.

DAT Freight & Analytics reported that all-in rates, which include linehaul and fuel surcharge, increased across all three equipment categories. Dry van all-in rates rose 5 cents to $3.01 per mile, reefer rates increased 4 cents to $3.63 and flatbed rates jumped 5 cents to $3.60.

However, the higher all-in totals did not indicate broad-based improvement in linehaul pricing. DAT analyst Dean Croke said the diesel increase added about 5 cents per mile to the average dry van fuel surcharge and about 6 cents per mile to both reefer and flatbed surcharges.

The average van linehaul rate held at $2.17 per mile. Reefer and flatbed linehaul rates declined, meaning the full increase in their all-in prices came from the fuel component.

August showed a sharper spot-market decline

The latest weekly movement comes after a difficult August for spot linehaul rates. DAT reported the steepest August decline on record in each of the three major equipment segments, excluding fuel surcharges.

• Dry van: $2.19 per mile, down 20 cents, or 8.4%.
• Reefer: $2.61 per mile, down 14 cents, or 5.1%.
• Flatbed: $2.70 per mile, down 20 cents, or 6.9%.

DAT attributed much of the August weakness to normal seasonality and freight that moved earlier in the summer. Contract rates held up better, with dry van at $2.41 per mile and reefer at $2.65.

That left a 22-cent gap between dry van spot and contract rates, while the difference in reefer was only 4 cents. For drivers operating under percentage-based compensation, the narrower reefer gap does not eliminate the pressure from falling linehaul rates, particularly when fuel costs and operating expenses remain elevated.

Earlier in the summer, the national diesel average also posted a weekly decline of about 9 cents to $5.257 per gallon during the week ending Aug. 10, with prices falling across the major U.S. regions. The later surge shows how quickly fuel costs can reverse direction and overwhelm modest changes in freight pricing.

The current market therefore has two separate trends: diesel prices have pulled back from their late-September peak, while spot rates have shown only limited gains and reefer pricing has entered a seasonal lull. For truck drivers, the most important distinction is whether a rate increase comes from linehaul or from a fuel surcharge. In the latest data, fuel—not stronger underlying freight demand—accounted for most of the improvement in all-in rates.