By Steve Yablonski
Local truck companies coping with high price of fuel. ‘It’s bleeding us,’ says owner of Laser Transit
Worker shortages, COVID-19, disruption in the supply chain and now skyrocketing prices at the fuel pump have created a tough road for the trucking industry.
“Every product touches a truck at some point,” said George Joyce, CEO of Laser Transit, Lacona. “The cost of everything is going up.”
While the rising gas prices have affected all businesses, it has hit the trucking industry especially hard.
The pandemic has changed consumers’ buying habits, Joyce noted. With more people buying things online it has amplified the problem.
“Consumers are saving on gas, but it puts an additional strain on the trucking industry due to the increased need for shipping and transportation,” he said.
“Obviously, in the trucking business, that’s one of our main costs. It is always in the top three. Right now fuel is our number one expense. It can fluctuate, third one time and first another time, like right now,” said Chris Jorolemon, VP of operations, Page Trucking, Weedsport.
“We have the ability to raise rates and put a fuel surcharge in place. But ultimately, when we do that it helps us from a business standpoint—but for you and I, the general consumers—it just gets passed on down the line,” he added. “You are seeing that now with groceries; with most everything you buy today. There is no product that we consume that doesn’t move by truck at some point along the way. Whether it is the gas that we are putting in our vehicles, food we’re buying at the grocery store or the clothes we are buying, you name it, everything is moved by truck.”
“It’s bleeding us. I look at where we were before the war broke out in Ukraine, that week, and then look at now—if I look across all the thousands of gallons that I’ve purchased and look at what I have paid the difference right now versus then is more than 32%,” Joyce said. “We have fuel discounts because we buy in quantity. We were down at $3.97 a gallon and up to $5.22; looked at a pump today and diesel was up to $5.45.”
“When trucking companies like us have to increase our rate or put a fuel surcharge in place, for customers, that is changing the price of the products they buy. It just hits us, the general consumer, hard. I think we’re seeing that in the market place currently, Jorolemon said. “For most customers and contract work, we have fuel surcharges in place to help offset the high cost of fuel.”
Page has had to raise rates in many cases over the last six months not only for higher fuel prices but for rising cost of equipment, tight driver market (shortage of drivers), higher cost of insurance due to the litigious environment it operates in, lack of skilled labor in the fields that support the business (commercial motor vehicle drivers, warehouse workers, truck and trailer technicians and mechanics, welders and fabricators, etc, he added.
When the economy came back, it came back fairly strong and “there’s a great need for the trucking industry,” he said.
“However, there’s a shortage of drivers nationwide. The supply chain issues and with COVID, a lot of commercial drivers have left the business. We had some drivers that maybe wanted to work another year or two. But COVID caused them to retire sooner. There is a shortage of workers in every aspect of business. It’s a struggle to find qualified workers.”
“Of course, you know, for business, it’s just not the added expense (of fuel), it is how do you recover it? Our customer base, a lot of it, is paid by the mile or flat. Even with fuel surcharges you’re only getting paid typically on a fuel surcharge for the loaded miles, not any empty miles,” Joyce explained. “Between your drop-off and your next pick-up you’ve got those miles that aren’t reimbursed. So it’s never good for trucking you’re using kind of a fuel surcharge that really doesn’t fully compensate for you anyway.
“That’s where we’re at. We’re doing everything to reduce those empty miles. We’re doing everything to make sure we’re keeping drivers routed to the shortest distance so they are not going off routes. All our trucks are monitored so we can see where a truck is at any given moment.”
There are things you can do to at least control some of the things that you can control. “But the problem is, you can’t control the price of oil. That typically is our number two cost right behind wages. At times it’s more like number one, even ahead of labor. I think we could see that spiral again,” Joyce added.
Recession worries
Different customers have different schedules. Some are a little closer to the mark while others aren’t. Pricing is always an issue.
“When you have a spike in fuel cost, you never recover all of it. The pricing always lags; there are a number of factors that you’re up against.
When fuel rises like this often it can trigger a recession in other factors. The price of oil is kind of a leading indicator of where the economy is going,” Joyce said.
“We are busy. We have definitely not had to lay off anyone or curtail services on the trucking side of our business, as the demand is very high due to driver shortage and supply chain challenges in many markets,” Jorolemon said. “We do have concern about signs pointing towards a recession. But the trucking business has always been cyclical and we do our best to not only be prepared for the up cycle, but more importantly be prepared for the down cycle as well.”
