SHELBY TOWNSHIP, Mich. (WXYZ) — Truckers and local businesses are watching diesel prices closely after a 28% spike since the war with Iran began.
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Kenneth Hardnett, owner and operator of Real Strategic Transportation, a local trucking company, said the speed of the price increase caught him off guard.
"Just how quickly it increased," Hardnett said. "It moved up so fast and for me to be an owner operator, or just truck drivers period, it hurts our bottom line."
He estimates the higher prices will cost him an extra $4,000 a month — an expense he said he wasn't prepared for.
"I have a wife and three kids and its really important that I can bring in every dollar I can to help run my business," Hardnett said.
While truckers are among the first to absorb the financial blow, experts and business owners say it is only a matter of time before those costs are passed along the supply chain.
Salvo Munaco, owner of Vince & Joe's Gourmet Market, said he is watching the situation closely.
"We do get concerned about it because as soon as diesel gets around a $5 threshold, a lot of our vendors will start to implement surcharges," Munaco said. “Being a small company, sometimes for us to get those surcharges off the invoice, it takes a little back and forth.”
In the short term, Munaco said he would absorb any added costs rather than pass them on to customers.
"We don't want to raise prices, that's number one. So we try to eat (the cost) as long as possible, look at better efficient practices that we have to implement and we just try to hang in there as much as we can," Munaco said.
David Ortega, a food economist and professor at Michigan State University, said the conflict is the latest in a string of economic disruptions affecting the food supply since COVID-19.
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Ortega noted that on top of fuel costs to transport food, one-third of the world's fertilizer supply also moves through the Strait of Hormuz. However, he does not expect grocery prices to rise significantly in the near term — depending on how long the conflict lasts.
“It’s not something we're going to see overnight at the grocery store. There's a significant lag for these shocks to work their way down the supply chain,” Ortega said. "The big question here is how long this conflict lasts. If we're talking about a couple weeks, we're probably not going to see a big impact. If we're talking months, then it's a different story."
Shoppers at Vince & Joe's said they are paying attention and hoping for a swift resolution.
"Everything is about to go up, so we hope this doesn't last long," Angela Ponte said.
"It's all convenient to have these nice things, but I think peace and security is what matters most," Tom Vitale said.
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