October 4, 2000

Businesses pass on cost of fuel By Donna De Marco THE WASHINGTON TIMES

More businesses are following the lead of the nation's top airlines and passing on the cost of sky-high fuel prices to their customers.

From pest control and lawn care to delivery services and moving companies, businesses that rely heavily on fuel are trying to recoup high energy costs after months of paying from their own pockets. Terminix and TruGreen Chemlawn, both owned by ServiceMaster, have instituted fuel surcharges that vary from state to state. Terminix, a pest-control company, sent letters to its approximately 2 million customers informing them that it will add a $1 fuel surcharge for each service visit effective Oct. 1. The company said it has absorbed the fuel increases over the past several months but it cannot afford to do so anymore. The letter indicates that the extra cost is temporary and will be removed when gasoline prices drop.

As of Monday, the price for a gallon of regular, unleaded gasoline is $1.52, down from $1.55 a week ago, according to the Department of Energy. A year ago, the average price was $1.29 per gallon, according to AAA Mid-Atlantic. The Federal Reserve said yesterday it was worried about high energy prices creating a broader inflation problem if companies begin passing on those costs to their customers. So far, only businesses that rely heavily on transportation are doing so. Last month, the top five U.S. airlines  Continental, AMR Corp.'s American Airlines, Delta Air Lines Inc., UAL Corp.'s United Airlines and Northwest Airlines  raised fares by adding $20 round-trip surcharges to offset the rising cost of jet fuel. That's on top of another $20 round-trip surcharge that started in January.

Silver Spring, Md.-based ABS Moving & Storage, which always has added an extra cost for long-distance trips, began adding a fuel surcharge to its local jobs about six months ago. The surcharge ranges between 3 percent and 5 percent depending on the job. Most customers are paying $20 to $50 more. "People understand it," said manager Joe Shem. "If the price goes back to $1.20, then we'll take it off." The American Moving and Storage Association created a fuel surcharge system that determines how much its member companies should charge for fuel based on the Department of Energy's monthly report on the average price of diesel fuel. The system is only a guide; it is up to the companies to adjust their prices. The current price for diesel fuel is $1.62 per gallon, according to the Energy Department. Sending packages also has become more expensive as some of the nation's largest delivery services have tacked on extra costs. United Parcel Service in August imposed a 1.25 percent increase for all of its products from air and ground to domestic and international deliveries. "We held off as long as we could," said Steve Holmes, a UPS spokesman. "This is not a revenue stream. It's a cost-control measure." The company may raise the cost again if oil prices continue to rise, Mr. Holmes said. "There's a point where we have to cover our costs, but as we did before, we'll hold off as long as we can," he said. FedEx Ground Package System Inc. also implemented a 1.25 percent fuel surcharge on all of its services effective Aug. 7. FedEx Corp.'s biggest business segment, FedEx Express, added a 3 percent fuel surcharge on most of its domestic and international services in February and another 1 percent increase in April. Airborne Express added a 3 percent fuel charge in April. That hasn't been enough to cover its costs, so the Seattle-based package carrier is tacking on an additional 1 percent charge Oct. 16. CSX Corp., the Richmond-based railroad company, said it will impose a fuel surcharge on its rail rates starting Oct. 25 to match other carriers. In August, the District of Columbia Taxicab Commission added another 25 cents to an existing 50-cent surcharge that went into effect in April. The 75-cent surcharge will remain until at least December when the commission meets to discuss the matter. However, some local companies remain optimistic and are holding out in hopes of gas prices falling in the near future. C&M Exterminators Inc. in Hyattsville, Md., hasn't added a surcharge yet and "hopefully we won't have to," said manager Tony Nicro. "We would rather eat it than put that kind of surcharge [on our bills]." Orkin, based in Atlanta, has not considered adding a fuel surcharge, said Martha May, director of public relations for the Atlanta-based exterminating service.

Reginald Tymus, owner of Capital City Limousine Co., doesn't want to keep changing his prices depending on the cost of fuel. "I'm trying to hold off to see if the prices go down," Mr. Tymus said. "I like to keep a consistency in my prices."

http://www.washtimes.com/business/default-200010421240.htm

-- Martin Thompson (mthom1927@aol.com), October 04, 2000