$6 Diesel Is CRUSHING Truckers

SPEAKER_1 (0:01)

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Patrick Bet-David (0:26)

Trucking industry is taking a hit with diesel prices. And this story is all over the place. And for those that are in the transportation business, this is a real thing. It's not something that's just being talked about that's not a real thing. I'm trying to find this story, what page this is on. Main Four. Main Four. There we go. Okay. Trucking industry hit by string of bankruptcy filings as diesel cost surge. Okay. So, let's read this.

A string of trucking and freight companies filed for bankruptcy in September as rising fuel insurance and operating costs squeeze an industry critical to moving goods across the US. At least eight transportation related companies saw Chapter 11 this month. Truckload LLC owner Marcus Overcast told Fox Business that diesel and insurance costs contributed to his Florida bankruptcy with insurance the biggest pressure. When gas prices go up or diesel prices go up, everything that goes from A to B is affected. Automotive expert Lauren Fick said everything has to get somewhere somehow or everything gets more expensive. Filter Included, Global Master, Incorporated, $1.1 million in assets, $3.26 million liabilities.

Pacer, all these companies have filed bankruptcy, by the way. Trump moved this week to temporarily allow red-dyed diesel on highways. Fick's estimated savings are $0.50, $2 per gallon. Diesel sold for about $6.26 Thursday at a Flying J in Orange, Texas. Tom, how important is this? Because we have a client of ours who had 150 trucks that he bought when the market was good. Diesel prices right now, he's selling them pennies on a dollar. How long can a lot of these guys survive if this continues, Tom? And what do you see is going to happen with this?

Tom (2:07)

So the trucking industry has got a triple whammy here.

The first thing is interest rates. Interest rates on those truck loans are up, just like interest rates on homes are up. So now the cost of having a loan from my truck or underneath it, the leasing rate, that's also there, it's up. So sort of the mortgage on these trucks, these trucks are 150, $200,000, the cabs, the pullers. And that's just where independent truckers, you know, buy those and then they pull loads if they can get loads. So number one, interest rates. Number two, now diesel has taken what margin that they were able to work with and just squeezed it to death.

And so now they're seeking chapter 11 protection. These were not, and I dove into this, Pat, these, this is chapter 11 protection. So what chapter 11 protection is allows you Vinnie, I can go to court and I can say to a bankruptcy court, not like a magistrate, just say, hey, look, I need some help here. I need to restructure these loans and redo this. Can I get certain amount of this debt forgiven? And then the court works for you to get that taken care of. And so between interest rates, between the changes in the amount of available loads to run right now, and the diesel cost, Pat, what little margin they had in there for EBITDA and for error is gone. And so they're seeking bankruptcy protection to go to the court to get some of the debt forgiven or get it restructured so they can come out tomorrow. And hopefully, if diesel prices are coming down and then get new financing on their trucks. But truckers, man, we need to appreciate them. This is a foundational part of the American economy, moving stuff from port to store, from store to home. And these truckers are out there, independent truckers, mom and pops that own two trucks and actually drive one of them.

This is a foundational part of our economy. And they're in trouble. And this article, citing a few of them right now, I'm worried that this is going to get worse with interest rates high and diesel continuing to be high, Pat. Because there's just, you can only squeeze a P&L, as you know, you consult with a lot of people in business. You can only squeeze it so much.

SPEAKER_4 (4:35)

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