TMCnet News
Know when to fold 'em: Fed up with diesel costs, some truckers are cutting back(Paducah Sun, The (KY) (KRT) Via Acquire Media NewsEdge) May 4--Tim Swinford has parked three-fourths of his truck fleet and laid off 20 of his 35 employees, hoping soaring diesel fuel prices will finally run their course. "I don't think my grandfather or my father ever did anything like this," said the third-generation co-owner of Swinford Trucking at 845 Bleich Road. Normally the firm runs 30 trucks, but the Swinfords idled most of their rigs by cutting out the costliest routes, notably to the east and west coasts. Freight rates are better and diesel prices cheaper in the middle U.S. out of places like Chicago and Baton Rouge, La., he said. Fuel accounts for as much as 25 percent of operating expenses, according to the American Trucking Association. Diesel prices jumped $1.37 in the past year to a nationwide average of about $4.20 a gallon with no end in sight. Fuel cost Swinford about $120,000 in January alone, up $28,000 over January 2007. Surcharges compensate for only about 70 percent of the costs and don't rise quickly enough to offset diesel prices, which can jump a dime in one day, he said. "It takes a lot of revenue to make up that difference." Oil prices have roughly quadrupled in five years, shooting up tire and maintenance costs, Swinford said. Insurance expenses also have jumped. "Alternative energy is the answer," said Swinford, managing partner of Southland Renewable Fuels, which wants to build a $60 million biodiesel plant in the planned Riverport West industrial park. Swinford also supports U.S. Rep. Ed Whitfield's short-term plan with fellow lawmakers to give motorists a rebate on the federal taxes they pay on fuel. The diesel fuel tax is 24.4 cents a gallon. Profits dropping On an average day, owner-operator Mark Berton of Princeton spends $450 to $500 a day fueling his Peterbilt truck, which gets 5.5 miles per gallon. Fuel costs have cut about $100 daily out of his profits since this time last year. "By the time you pay yourself, that doesn't leave much to pay for tires and make a truck payment of $1,800 a month," he said. Berton said he's heard of several independent drivers who have quit or are considering quitting. He said he couldn't survive without a 12-hour daily run hauling gypsum between Joppa, Ill., and Clarksville, Tenn. "I'm just trying to weather the storm," he said. The Kentucky Motor Transportation Association has had no reports of trucking firms closing, but the situation is the worst since a trucking slump of 2001, said Jamie Fiepke, president and CEO of the group. Small companies are hit the worst, having to reduce fleets and run the most cost-efficient lanes. "Some of our board members visited Washington last week," he said. "They really don't have an answer, and they really don't know when the rising costs will stop." Dipping into U.S. oil reserves and flooding the market could help temporarily by discouraging speculators who are driving up costs because of the weak foreign dollar, Fiepke said. In the long term, refinery capacity must be increased, and there should be reasonable exploration of Alaskan reserves, he said. Prices rising Consumers are sharing the brunt of shipping costs, Fiepke said. "Food is the one thing that's getting all the press, but prices are going up all over because of shipping costs," he said. "In Kentucky, trucks at some point handle 89 percent of the commodities delivered to the door. It's a pass-through system, so when the price of fuel goes up, so does the cost of products." Paducah-based Dippin' Dots was hit with an 8 percent cost increase in pallet shipping in September, followed by an 18 percent hike in April. Those expenses have been passed along recently to customers, company spokesman Terry Reeves said. "It still doesn't offset all the cost increases we've had to absorb since last fall (higher milk and nitrogen prices because of higher fuel costs), but we've tried to empathize with our customers and compromise," he said. Larger firms are better able to absorb rising fuel costs but are still feeling the pinch. Celadon Group of Indianapolis recently reported a third-quarter profit drop of 96 percent because of rising diesel fuel prices. Paschall Truck Line of Murray, which runs 1,200 rigs nationwide, is negotiating surcharges and considering battery-powered sleeping quarters to keep drivers from having to idle engines at a fuel cost of about $32 nightly, Maintenance Vice President David Graham said. "We think this fuel-cost situation is probably short-lived until there is equilibrium in the market to balance fuel costs with the economy," he said. Joe Walker can be contacted at 575-8656. * To see more of The Paducah Sun, or to subscribe to the newspaper, go to http://www.paducahsun.com. Copyright (c) 2008, The Paducah Sun, Ky. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |