North Carolina’s Transportation Sector Fuels Concerns Amidst Geopolitical Tensions and Economic Headwinds

The economic ripple effects of international conflict are being acutely felt by North Carolina’s trucking industry, with soaring fuel prices and a complex web of tariffs squeezing operators and their employees.

For Etienne Hightower, CEO of Believers Trucking, the current economic climate presents a formidable challenge. His company, which operates 30 trucks as a freight partner for Amazon, is grappling with escalating operational expenses that are far outpacing revenue. “Nobody wants to pay us more to haul stuff, yet all my expenses are going up,” Hightower stated. “Right now, I’m fighting to maintain my staff, their quality of life, and I want to give them more.”

Hightower detailed how the cost of running a truck has surged. Previously, a cost of $1.30 per mile at a hauling rate of $2 per mile yielded a healthy profit. However, increased fuel prices and other overheads have pushed his operational costs to $1.80 per mile. Simultaneously, a dip in shipping demand, attributed in part to tariffs, has forced him to lower his rates to $1.90 per mile, leaving a razor-thin profit margin of just 10 cents per mile. He expressed concern that unforeseen mechanical issues, a common occurrence in the trucking industry, could easily erode this meager profit.

The price of gasoline in North Carolina has seen a significant increase, with regular fuel averaging $4.21 per gallon, a nearly 50% jump from the previous year, according to AAA. Diesel prices have experienced an even steeper rise, now averaging $5.49 per gallon, more than 60% higher than a year ago.

A Roundtable of Concerns

These pressing economic issues were the focus of a recent roundtable discussion convened by Representative Deborah Ross (D-Wake). Business leaders, including Hightower, gathered to articulate the economic ramifications of ongoing geopolitical conflicts and trade policies. “This war was started illegally, it’s being continued illegally, and Congress has not had an opportunity to weigh in,” Ross remarked. “And the people of the United States are footing the bill. They’re footing the bill through their gas taxes and they’re footing the bill through all the money that goes to have a war.”

Hightower emphasized that the current economic turbulence exacerbates challenges his business was only beginning to overcome following the pandemic. He noted a roughly 25% decrease in freight coming into the U.S. over the past eight quarters. Furthermore, other policy decisions have added to the burden, including a 13% increase in healthcare coverage costs for employees, linked to specific legislative acts and the expiration of Affordable Care Act tax credits.

The impact on his workforce is significant. “We have about 50 drivers that are going without raises. They’re being hit both ways. One, with the extra expenses in their life, and then they’re working super hard for me, unfortunately,” Hightower lamented. “I wish I could give everybody two more dollars an hour, but that’s just not in the cards.” In response, Believers Trucking has begun offering life insurance and establishing a “crash pad” – a communal living space – for drivers who travel long distances, providing them with a place to rest and prepare meals, thus saving them money.

Damon White, a team lead at Believers Trucking, shared how the need to use toll roads for his commute, due to a new yard location, adds to his daily expenses. “It’s more of an impact on some of my guys that work for us at Believers because they live an hour, some live an hour and a half, away, so they have to spend more money,” he said. “The war just needs to end, so after that everything can maybe get back to normal.”

Global Supply Chain Disruptions

Gary Harris, executive director of the North Carolina Petroleum and Convenience Marketers Association, highlighted the disruption caused by the closure of the Strait of Hormuz. This critical chokepoint typically handles a significant volume of crude oil exports, much of which is now being rerouted. While American crude oil exports are increasing across the Pacific, replacing the disrupted flow is not straightforward.

Harris explained that alternative crude oil sources, such as those from Venezuela, have a higher sulfur content (“sour” crude) compared to the “sweet” crude typically extracted in the U.S. This necessitates different and often costly refinement processes. Consequently, the immediate impact of these new imports may not lead to lower prices in the short term. Furthermore, the ongoing instability in the global oil market could deter refineries from making the substantial investments required to adapt to potentially unreliable long-term supply sources.

Looking ahead, Hightower anticipates a protracted period of recovery. “I’d like to say it’ll be over in 20 months after the war ends, but I don’t think it will be. But I think eventually we’ll get there,” he concluded.