Fuel prices threaten trucking industry

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Fuel prices threaten trucking industry

By WILLIAM FINN BENNETT Staff Writer

VICTORVILLE -- With diesel prices up 90 percent in a little more than a year, High Desert trucking companies and independent truckers everywhere are facing a rough road ahead.

Smaller companies are being hit hardest, according to Micki Havens, spokeswoman for Dee Jay Transportation of Adelanto.

Truck stops want to be paid up front. But truckers typically must wait 30 days for payment. And with fuel costs accounting for about one-fourth of truckers' operating expenses, the outlook is bleak for some.

"There are a lot of owner-operators in the High Desert, plus smaller trucking companies that are hurting," Havens said.

The trucking industry is one of the major employers in the High Desert, according to Denny Wyatt, vice president and co-owner of Apex Bulk Commodities. The company employees 250 people at its Adelanto facility.

There are more than 500 bulk trucks in the High Desert serving companies in the cement, limestone, borax, soda ash and other industries, Wyatt said.

Several small independent companies also work out of this area as well as a number of owner-operators, he said.

Roadway Express and Yellow Freight, two industry powerhouses, also have major facilities in the High Desert.

The price of a gallon of diesel fuel in California has gone up by 90 percent since March 1999, Wyatt said. Since Apex, company-wide, consumes 600,000 gallons of the combustible, its fuel costs have gone up $450,000 a month.

A good trucking company operates on margins of just 1 to 2 percent, according to Wyatt. Fuel now accounts for 20 percent of his company's costs, up from 15 percent a year ago. As a result, bottom line costs have increased by 5 to 7 percent.

"So, it's easy to see that we cannot absorb these increases and stay in business," Wyatt said.

He said the trucking industry has attempted to absorb the costs, but it can no longer afford to do so.

"The impact on the industry is that there is a direct correlation between trucking bankruptcy and fuel costs, and our fuel costs, as of last week, are higher than they have ever been," Wyatt said.

He said the impact is mostly on the little guy.

"He's the one who is buying the fuel down the street at $2 a gallon" Russell said.

"So you can rest assured there is not a trucking company here in the High Desert that is not being severely impacted by high fuel costs."

He said fuel prices, which are high all over the U.S., are even worse in California because of tighter air quality standards.

Fuel prices in California typically run 20 cents, or more, a gallon higher than in neighboring Arizona and Nevada.

As a result, Wyatt said, the impact in the High Desert is not just on the truckers that are here and somehow survive.

In the case of his company, at least, it means fewer jobs coming to this region.

"Apex Bulk employs 125 people in Las Vegas, Nevada," he said. "One of the main reasons we placed those jobs there rather than the High Desert," he said, "is because of lower fuel costs in Nevada."

According to Mike Russell, a spokesman for American Trucking Associations, 745 trucking companies in the country went belly-up in the second quarter of 2000 alone, mainly due to increased fuel costs, and his organization believes the worst is yet to come.

"We are frankly scared to death about this coming winter," Russell said, "and the potential of higher diesel prices and the damage they will do to this industry and eventually to the U.S. economy."

Hinting at what might be the outcome of continued high prices, he said: "We haul over 80 percent of freight moved in the U.S. If we can't afford to move it, we'll have to leave it on the loading dock until prices come down."

President Clinton is scheduled to meet today with Walter B. McCormick Jr., president of the American Trucking Association. According to Russell, the purpose of that meeting is to try and convince Clinton of the gravity of the situation, and to get him to release U.S. strategic oil reserves. Hopefully, by doing so, he would reduce the upward pressure of the market, and bring diesel prices down.

Whatever Clinton decides to do, it can't be soon enough for Steve Callander, an independent owner-operator from Stockton.

"This truck is paid for in December 2001," Callander said during a break Tuesday at the Outpost truck stop at Interstate 15 and Highway 395. "When it is, I'm getting out."

http://www.vvdailypress.com/topstory/dp092000a.html

-- Martin Thompson (mthom1927@aol.com), September 21, 2000


Moderation questions? read the FAQ