The Soaring Cost of Diesel Is Bankrupting Small Trucking Companies

Once a week for a year, Luis Escalante spread envelopes across his kitchen table, sorting them into piles of past-due bills.Between costly repairs on his semi trucks and increased competition, he was struggling to keep his small Southern California trucking company profitable.Then the war in Iran started.

Diesel prices in the state jumped well over $5 a gallon.Then $6 and $7.

Paying thousands of dollars more for fuel every month, Mr.Escalante, 47, could no longer afford the high-interest loans buoying his business, and he reluctantly accepted the last-ditch plan he had long dreaded: filing for bankruptcy.“I had to be honest with myself,” he said.

“There was no way to keep going.”Almost all industries have faced downstream impacts from the war, but the high price of diesel has been particularly hard for farmers, who use it to power machinery, and truckers, who are paying around 70 percent more per gallon than they were a year ago.In September, at least 40 trucking companies nationwide, including Mr.

Escalante’s, filed for bankruptcy, according to BKwire, a bankruptcy data analytics firm.It was a 38 percent increase from a year earlier.While every failing business has its own story, logistics experts and bankruptcy lawyers say record-breaking diesel prices have been a contributing factor, especially for small operators.“When diesel goes from under $4 a gallon to over $6 in a year and freight rates don’t follow, the difference comes straight out of the owner’s pocket,” said David Cruz, a bankruptcy lawyer in Florida.

He has seen an uptick in trucking companies contacting his office since the war began, he added....