Fuel Price Pass-Through to U.S. Trucking Rates: Speed, Asymmetry and Supply-Chain Implications

Trucks carry 65 percent of U.S. freight tonnage, and fuel is about a fifth of carriers’ operating cost. This paper estimates how the retail price of diesel passes through to long-distance truck freight rates, using monthly producer price indices for truckload and less-than-truckload carriers, 2006–2026, and local projections. A one-percent change in the diesel price is followed by a change in freight rates of 0.11–0.14 percent in the same month and about 0.3 percent after three months. Diesel price changes persist: the price is typically 1.6 percent away from its starting level a quarter after a one-percent change. Per percent of realised change, freight rates move by about 0.2 percent after a quarter, which, with fuel at a fifth to a third of the rate, corresponds to one-half to nearly all of the fuel cost change. Beyond six months the response to diesel price decreases appears much larger than the response to increases, the reverse of the “rockets and feathers” pattern of retail fuel. The estimates do not establish asymmetric pricing: decreases have been more persistent than increases, the gap per percent of realised change is not significant at the five-percent level at long horizons, and it is absent under the stricter of two rules for excluding freight-market downturns. For less-than-truckload carriers pass-through has been higher since 2020. If 60 percent of a suspended federal diesel tax reached the pump, as an outside estimate suggests, long-distance freight rates would be about 0.5 percent lower three months into a suspension.