Plastic Recyclers Paying $200-$400 Trucking Surcharge on Record Diesel Price

U.S. plastic recyclers are paying a fuel surcharge of $200-$400/truckload due to record high diesel prices, market sources told OPIS on Wednesday.

“Fuel surcharges have all increased,” sighed a buyer of plastic scrap bales for recycling at plants in the South, Southwest and Southern California. “This is raising all inbound and outbound cost by 1-2 cents per pound [for typical 40,000 lb truckloads].”

The surcharge now averages about 56.5cts/mile while overall trucking freight costs are 2.5 to three times higher than a year ago. “We’re absorbing it, but also raising prices [for pellets and flakes made from the scrap], and lowering the picked-up price we’re willing to pay for bales,” he said.

Tight distillate inventories and strong export demand have sent U.S. retail diesel prices to record levels this month, OPIS reported on Wednesday. Diesel prices in the U.S. averaged $6.3103/gal, about 71cts higher since the end of August and about $2.61/gal above prices at this time last year.

In Southern California, “Freight costs are significantly up,” said a plastic recycling plant manager there. “And most customers have to pay the additional cost. However, the additional inbound freight costs [for scrap bales] are absorbed by us.”

California’s average price per gallon of diesel, now $8.21, is the highest in the nation, The Wall Street Journal reported on Wednesday. The combined cost of gas and diesel is now $700 million higher per day compared with a year ago, MarketWatch reported last Thursday.

In the Upper Midwest, a buyer of plastic scrap and regrind (a form of flake) for plants there said he recently paid a flat $350 fuel surcharge on a truckload priced at 20cts/lb on a delivered basis.

“At the end of day,” a recycler said, “it all comes down to the cost of a barrel of oil.”

Reporting by Xavier Cronin, xcronin@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com