Small Trucking Firms Threatened by Fuel Costs
Of the 560,000 motor carriers in the U.S., 95 percent have 20 or fewer trucks and the rising cost of fuel is their number one concern, says Tiffany Wlazlowski, spokeswoman for the American Trucking Associations (ATA), the San Antonio Business Journal reports. “So, essentially the trucking industry is a small-business industry. The smaller your business, the higher percentage of your operating costs that fuel represents,” Wlazlowski says.
Roy Reyna, dispatcher for A1 Transport, a Texas company that sets up runs for more than 200 carriers who haul for the produce industry, says that many of his truckers are losing money on hauls because customers don’t want to pay higher rates or a fuel surcharge, a practice that is now common in the industry.
“Many operators that basically couldn’t take the squeeze had to park their trucks or have sold them or had them repossessed,” Reyna says, according to the Business Journal. More than half of the truckers’ rates go to gas, brokerage commissions and truck maintenance and insurance costs, the Business Journal says.
Small businesses that depend on trucks and heavy equipment are trying a variety of tactics to control fuel costs. Brian Leu, who owns Perfection Lawn Management in Rose Hill, Kansas, spends $115 every two days for diesel fuel to operate his big truck and mower. He can do about 30 lawns in that time, he says, according to the Wichita Eagle.
Leu gave clients in the West Wichita area to a former partner because he said, “You’ve just got to shrink your work zone. It’s not worth paying a guy to drive out there.”
Businesses in the Van Wert, Ohio, area are passing their costs along to customers, the Van Wert Times Bulletin reports. “You know the increase has to be passed along. Someone’s got to pay it,” says Tom Alexander of Alexander and Bebout, a construction firm that uses three dump trucks and heavy equipment.
Marlene Jones of E. Conrad Trucking in Van Wert is paying 14 percent more for fuel this year. While she can’t lower consumption, she tries to control costs by monitoring out-of-route miles. “And we try to hold on to our customers who are good about paying the fuel surcharge,” she said, the Times Bulletin reports.
Turning down business that is too distant from his location has been one tough decision Tom Clark of Dilly Door in Van Wert has had to make because of rising fuel costs. He also tries to get more than one worker in a truck and eliminate the use of bigger vehicles.
With recent events in the Middle East bringing the cost of crude oil close to $80 a barrel, truckers will be forced to raise their prices, said Kevin Madden, operations manager of East Coast Transport, nj.com reports. Madden says that there is a consensus among trucking companies that gas prices add a 28 percent cost to the freight. “Trucks ship any commodity you can think of. Prices are going to go up in a lot of areas.”
Madden believes that government action will be needed to protect the trucking industry and the consumer from future fuel price increases. “There has been a lot of talk through the different trucking companies about the need for the government coming in and regulating diesel prices,” he said, according to nj.com. “If it doesn’t happen, the cost of gas will affect everything.”