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Saturday, July 26, 2008

Jim Palmer Trucking Enters Chapter 11

With the price of diesel fuel, it is small wonder that many trucking firms around the US are going into bankruptcy to reorganize or some even default on leases, loans, fuel charges and more.


Jim Palmer Trucking entered into Chapter 11 in July to reorganize after missing payments on leases and other items.  Lonnie Wallace, the President of Jim Palmer highlighted his main concerns in an interview with the Salina Journal.

The real culprit, he said, is the price of diesel fuel. During the week Palmer Trucking filed bankruptcy, diesel was selling for $4.76 a gallon, $1.88 a gallon more than the same week in 2007.

"It's costing us 34 cents a mile more in fuel charges to run now than it did the same time last year," Wallace said.

That amounts to $14.5 million a year in increased fuel costs. Fuel surcharges tacked onto customers' freight rates are covering only 85 percent of that, he said. Based on those figures, roughly $2.16 million of the higher diesel fuel price is absorbed by Jim Palmer Trucking each year.

That amount doesn't include "deadhead miles," those traveled without freight, and what it costs in fuel to keep refrigerated trailers cold.

"There's no compensation for that from the shippers, at this time," Wallace said. The company is negotiating to recover some of its other fuel costs.

When the cost of fuel goes up, all to often the trucking firms and the truck drivers themselves are the weakest link in the logistics structure put together by contracts and business agreements.  Wal-Mart will not accept higher prices on its latest shipment of milk, eggs, blue jeans or acne treatments and typically the supplier will pass off those costs to the lowest bidder in the freight hauling business, which means the trucking firms fighting for business end up getting the shaft from the market place.