Rising diesel prices and tighter trucking capacity have impacted transportation costs across the electronics recycling and IT asset disposition (ITAD) industries. The effects extend to specialized carriers serving enterprise customers and companies operating their own fleets.
Recent developments in North American freight markets point to higher operating expenses and difficulties securing transportation on certain routes. For electronics logistics and reverse logistics operators, these conditions affect collection costs and the movement of equipment between facilities and processing sites. They also raise questions about the profitability of contracts negotiated before the latest fuel-price increases.
Diesel prices and the Russian supply agreement
US diesel prices reached about $6.27 per gallon in early October, following disruptions to international fuel supplies associated with the conflicts in Iran and Ukraine. On Oct. 9, President Donald Trump announced an agreement with Russian President Vladimir Putin to supply more than 300,000 metric tons of diesel immediately, followed by 500,000 tons in November and an additional 1 million tons thereafter. Washington also temporarily eased restrictions on Russian diesel imports.
The agreement could provide some relief, although the announced quantities are relatively small compared with US consumption. The actual deliveries and their effect on domestic diesel prices remain uncertain.
For ITAD companies operating their own trucks, higher diesel prices directly increase collection expenses. Those relying on contracted carriers may face higher freight rates or fuel surcharges.
The exposure is particularly significant for fixed-price service agreements that include transportation. Where equipment recovery values cannot offset higher collection costs, operating margins narrow.
Likewise, recyclers handling lower-value materials face similar pressures. Long collection distances and relatively small shipment volumes can make transportation disproportionately expensive compared with the value of recovered materials.
Specialized carriers confront tighter capacity
Fuel prices are only part of the problem. The North American cross-border freight market is experiencing driver shortages and regulatory restrictions. An October freight-market index registered 57 for Canada and 54 for Mexico, with readings above 50 indicating tighter conditions.
Higher equipment financing costs are also discouraging fleet expansion. Some transportation corridors have experienced substantial rate increases, although these increases are not representative of the entire trucking market.
For specialized reverse logistics providers, securing capacity involves additional requirements. Enterprise equipment collections often require documented chain of custody and secure handling procedures. Customers may also specify vehicle security measures.
These requirements limit the number of suitable carriers. Even where general freight capacity is available, a shortage of qualified drivers or appropriately equipped vehicles can complicate scheduling. Consequently, specialized transporters face greater pressure to renegotiate contracts when operating expenses exceed the assumptions underlying their original rates.
Fleets face pressure on national contract economics
For ITAD providers operating their own fleets, the combination of higher fuel expenses and uneven collection volumes is placing additional pressure on the economics of national service agreements.
The challenge is particularly pronounced where enterprise contracts require consistent geographic coverage despite substantial differences in equipment volumes between customer locations. Low-volume collections and long-distance routes can become increasingly difficult to justify.
These conditions may encourage providers to revisit collection thresholds, pickup schedules and transportation charges when negotiating or renewing contracts. They also strengthen the economic case for coordinating collections across multiple customer accounts, particularly in markets where individual locations generate insufficient volumes.
Regional consolidation facilities may offer additional opportunities to reduce transportation expenses, although their financial advantages depend on shipment volumes and the costs of intermediate handling.
For providers pursuing national accounts, the issue is increasingly one of contract profitability: how to preserve geographic coverage and service commitments while recovering the actual cost of collection.
Cross-border transportation adds complications
Cross-border movements present further challenges for companies transporting used equipment between the United States, Mexico and Canada.
Driver eligibility restrictions have reduced available capacity. About 25,000 Mexican freight drivers reportedly had US visas withdrawn, while temporary border disruptions have forced some carriers to use alternative crossings.
For ITAD operators shipping equipment for refurbishment or downstream processing, delays can increase costs and extend transit times.
Freight imbalances add another expense when carriers cannot secure profitable return loads and must recover the cost of empty mileage.
Outlook: Transportation costs reshape pricing
Rising transportation costs are impacting the economics of ITAD and recycling contracts. Agreements negotiated under earlier fuel-price and freight-market conditions are coming under pressure, particularly those covering geographically dispersed customer networks.
Providers competing for large enterprise accounts should consider national coverage as an important commercial advantage, but it comes at a growing cost. Low-volume locations are becoming more expensive to serve, increasing the importance of differentiated transportation pricing and collection terms.
Regional ITAD operators with concentrated customer bases are naturally better positioned to manage collection costs within their established territories. This is while national providers face a different challenge: maintaining broad geographic coverage while protecting margins across accounts with widely varying collection volumes.
Transportation costs are becoming more prominent in contract negotiations. Factors such as fuel surcharges, minimum pickup volumes and collection frequency are increasingly seen as important to the economics of service agreements. The ability to recover higher costs depends upon existing contractual commitments and the negotiating position of individual providers.
The ITAD and recycling industries will need to pay closer attention to geopolitical developments as transportation costs become highly exposed to events far beyond their domestic markets. The wars in Ukraine and Iran, shifting international energy relationships and the approaching US midterm elections are introducing further uncertainty into fuel markets and freight economics. Even with efforts to stabilize diesel supplies, transportation costs are unlikely to return quickly to earlier levels, and further volatility should be expected.
For an industry dependent on the movement of equipment across regional and national borders, developments thousands of miles away are translating directly into operating costs and profitability. Geopolitical risk is becoming an increasingly important consideration in transportation planning and contract pricing.
