In brief: Werner said rising diesel, driver hiring and a late charge for old accident claims cut deep into its third-quarter profit.
Implications:
Fuel: Your fuel surcharge resets once a week, so a fast diesel climb leaves the carrier short until the next reset.
Renewals: Expect higher driver pay and claims costs to come up when your dedicated fleet renews.
The News
Werner Enterprises said three costs cut deep into its third-quarter profit: rapidly rising fuel prices, spending to recruit and keep drivers, and a late-quarter adjustment to its insurance reserves for past claims. The carrier listed them in a preliminary release ahead of its full results.
The claims charge reverses a trend Werner pointed to three months ago, when it said its insurance and claims costs had improved for a second straight quarter.
Why It Matters
None of the three costs is easy for a carrier to pass on in the middle of a contract, so they tend to show up in the next rate negotiation.
Driver pay: Werner says in its quarterly filing that higher driver pay hurts its results to the extent it can’t win matching rate increases.
Not just Werner: JB Hunt flagged the same driver and fuel costs, and CH Robinson expects spot truckload costs per mile to rise about 10% in 2027.
Zoom In
The driver line is tied to a shrinking labor pool. Federal enforcement on non-domiciled CDLs, B-1 visas and English proficiency is shrinking truck capacity, Werner says, and the company is still assessing what it does to its own driver hiring.
How It Works
Werner’s fuel surcharges reset once a week from the Energy Department’s Monday diesel survey, and the company says they recover most of a price increase but not all of it. This is because miles run empty or out of route can’t be billed, fuel burned idling goes unbilled, and a rate that changes once a week trails the pump price when diesel climbs quickly.
That last gap widened this summer. Diesel fell through June to $4.58 a gallon in early July, then rose for most of the next 11 weeks to a high of $6.53 on Sep 21, with three straight weeks in September each up by 24 cents or more.
For example, the US average rose 32 cents a gallon between Sept. 7 and Sept. 14, by our math. A carrier billing on the Sept. 7 price was buying fuel up to 32 cents a gallon above it by the end of that week, and that gap stays with the carrier until the surcharge resets the next Monday.
Who’s Exposed
Dedicated fleet customers: 6,960 of Werner’s trucks ran in dedicated fleets at the end of June, 80% of its truckload fleet, up from 65% a year earlier after it bought FirstFleet. The FirstFleet deal added more grocery, and food and beverage customers, and Werner already expects each dedicated truck to bring in 3% to 5% more this year, helped by price increases on renewals.
One-way truckload shippers: In July, Werner expected its revenue per mile, before fuel surcharges, to rise 10% to 13% in the third quarter from a year earlier, after a second quarter of higher spot rates and contract increases.
Shippers named in crash suits: Werner pays the first $15 million of each liability claim itself under its current policies. The median trucking verdict rose from $760,000 in 2023 to $3 million this year, according to a forthcoming US Chamber Institute for Legal Reform study, and suits can also name the broker or shipper behind the load. A Dallas judge just upheld a $604 million verdict against broker CH Robinson.
Peer Insights
Food distributor UNFI hedges its diesel and uses Samsara to cut miles across about 2,000 delivery vehicles, so it works on both the price of its fuel and how much it burns. Its miles per delivery ran nearly 5% below the year before through May.
What’s Next
Oct. 21: Knight-Swift, the largest US truckload carrier, reports its third quarter, which will show whether the same costs hit its fleet.
Oct. 27: Werner reports, and plans to give more detail on the three costs.
Photo: Lauren Reams, CC BY-SA 4.0, via Wikimedia Commons
