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High diesel costs put a hurt on Mississippi trucking companies

It may seem like a no brainer. But, yes, the sustained high diesel prices are putting a hurt on Mississippi trucking companies.

“With 550 trucks to fill, I can assure you my diesel fuel bill is phenomenal,” said John Stomps, co-CEO of Total Transportation Inc., Richland. “The cost of diesel is a hot topic right now. The high diesel prices are hurting us very, very badly. Diesel fuel over the past two years has risen at extremely high rates. The weekend of June 19, it was up to $2.91 per gallon. And the price is going to go higher because of the low-sulfur fuel that EPA is requiring to be produced right now.”

Carriers have fuel surcharges on shipments. But the transportation companies are paying for diesel on a weekly basis, and usually aren’t reimbursed for about 30 days.

“It is a cash flow drain,” Stomps said. “It is just tough. It is hurting large carriers, and it is devastating for small carriers. I don’t know if there is going to be an end in sight with the new engines and procedures we have to deal with.”

Stomps explains that government mandates to reduce diesel fuel emissions started five years ago with new requirements going into affect in 2007 requiring motors to burn low-sulfur diesel fuel to reduce pollution. In 2010, engines will be required to be even less polluting.

Many consumers don’t realize that higher fuel costs impact them in numerous ways beyond what it takes to fill up the tank in their personal vehicle.

“People don’t understand that whatever they eat, touch or use in their home, it all is transported by a truck,” Stomps said. “Everyone is paying for high diesel fuel prices.”

Eighty percent of all consumer goods and manufactured products are carried by truck in Mississippi, said David Roberts, president elect of the Mississippi Trucking Association.

Drop isn’t anticipated

Jimmy Clunan, vice president of Ergon Trucking Inc., doesn’t see prices going down any time soon. Currently, the company is adding a 17% fuel surcharge. While that helps, it doesn’t cover all the costs.

Ergon Trucking is taking a number of steps to improve mileage. Drivers are encouraged to use cruise control, and three years ago the company started using what is called “super singles,” which is four tires on a trailer versus eight.

“They give you better fuel mileage, and less drag,” Clunan said. “We have tractors and trailers rigged out that way. In the old days, we had 18 wheels. Today some of ours have only 10, four on the trailer, four on tractors and two on the steer axle.”

All trailers it has purchased in the past five years have automatic air that maintains tire pressure at 100 pounds. Drivers don’t even have to check the air, and tires are inflated at the correct pressure to get the best mileage.

Also, computerized systems on engines today are very energy efficient.

“There is not a lot more we can do right now,” Clunan said. “We try to average seven miles per gallon on our units, and are buying the lightest equipment, all aluminum rigs. We are probably going to get less fuel mileage on engines that will come out in 2007 because of meeting stricter EPA emissions limits. Those new emission limits will raise the cost of a tractor $8,000 for the engine.”

Reducing energy consumption

Glen Kedzie, environmental counsel for the American Trucking Associations, said there are numerous things that the industry is investing in to reduce energy consumption. The first is idling-reduction technologies. Small diesel engines, called auxiliary power units (APU), allow the main engine to be turned off during a period of idle.

“As a general rule of thumb in the trucking industry, idling the main engine of a truck consumes a gallon of diesel fuel per hour,” Kedzie said. “At the current cost of diesel fuel, an overnight stay can be pretty costly. For 10 hours at $3 gallon, that is $30. An APU uses .2 to .4 gallons of diesel fuel per hour depending on how many appliances you are using.”

APUs are not the only idling reduction devices. There is also electrification where an extension cord from outlets is used provide power when the truck is stationary.

“I think all these different technologies are seeing increased interest,” Kedzie said. “Everyone is running the numbers. They know how much these devices cost and what they can save in diesel. The technologies vary widely in how much they cost. There are advantages and disadvantages for each of these technologies.”

Shortest routes, tightest schedules

The trucking industry is also putting renewed emphasis on trip planning to ensure using the shortest route with a full load, and to tighten up scheduling of pickups and deliveries. Another issue that is being looked at is reducing speed to conserve fuels. In some companies, drivers are being paid a bonus for using less fuel.

Still another option to make sure fuel is stretched to the limit is improved maintenance of trucks.

“A fine-tuned truck can get maximum fuel benefits,” Kedzie said. “And the last thing is aerodynamic packages on trucks are becoming more and more used. You put aprons on trailers to reduce drag, nose cones on the cab, and different things that wrap around the truck. There is a lot of experimentation taking place.”

The majority of trucks out on the road today are owned by small businesses that are struggling with the high diesel prices, says Todd Spencer, executive vice president, Owner Operators Independent Drivers Association.

“Trucking is an industry that is comprised almost totally of small businesses,” Spencer said. “Ninety percent of the trucks in the country are owned by people who own 10 and fewer trucks. Small business will always be more impacted and more directly impacted by fuel costs. In this particular situation, fuel prices have been high enough for a while that rates have somewhat adjusted to the higher cost of fuels, meaning truckers are able to offset the cost. That is probably going to be more specific to road truckers, trucks that run longer hauls, than for truckers in short haul markets like ports and rail yards. Short-haulers may be struggling more so because they don’t have any bargaining ability to offset higher costs.”

Spencer said the high fuel costs are making the problem of driver attrition worse. The average turnover for drivers with large truckload carriers is 136%. In one year, if a company started out with 100 drivers, at end of year it would have replaced every one of those drivers plus another 36.

“This is an industry that goes through workers,” Spencer said. “The principal reason they go through drivers like that is there is not a significant initial investment in hiring them, and it is cheaper to find another one than pay them well enough so they stay. It is just unimaginable that anyone would think they could run a business with that kind of turnover. Most businesses wouldn’t even be able to survive with that turnover of workers.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.


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