A panel of trucking executives at the CCJ Spring Sympo- sium in Tusca- loosa, Ala., deter- mined that increasing fuel sur- charges isn’t enough to keep up with rising diesel prices, and that other cost-control measures are necessary to survive in today’s economic environment.
“That’s a constant battle,” said Greg Brown, president of Oxford, Ala.-based B.R. Williams, one of three participants in the “Trucking Through a Tough Economy” panel discussion on Tuesday, June 10.
Ken Adams, president of Birmingham, Ala.-based Southern Cal Transport, warned trucking executives that the gap between what’s paid at the pump and the shipper’s reimbursement is “a number you need to look at closely.” Southern Cal Transport has revised its surcharge gap “a couple of times” since diesel prices began climbing rapidly. “It may surprise you what that gap is,” Adams said.
Jeff Wilmarth, president of Rockford, Ill.-based Silver Arrow Express, said his company also has adjusted its numbers. “Customers have been very positive and receptive,” Wilmarth said. “They know the situation.”
Brown said with today’s fuel prices, surcharges aren’t covering the cost on empty miles. “That requires you to look at your whole freight pattern differently,” he said. Freight rates aren’t covering known deadheads, Brown said. “How to we reduce those deadheads?” he said. “How do we redo pricing on freight, on surcharges?”
Wilmarth said Silver Arrow is using a backhaul calculator and reviewing costs more frequently. The company also is reviewing drivers’ routes to cut empty out-of-route miles and to facilitate better utilization.
The three panelists said their companies also have lowered their highway speeds to curb fuel costs, but sometimes it’s a tough sell to drivers. “You’re asking the driver to put in more time for the same amount of earnings,” Adams said.
The panelists said their companies also are keeping a closer eye on drivers to ensure they’re slowing down. “We didn’t tell them we were monitoring at first,” Brown said. “We wanted to see what was really going on.” Drivers overall weren’t happy at first, he said, but their competitive natures won out. “They’ve bought into it.”
Adams said Southern Cal Transport’s drivers are fully aware of the situation since they’re the ones at the pump watching the money counter whiz by. “They understand what the problem is,” said Adams, whose company also is keeping closer tabs on out-of-route miles and idling.
Wilmarth said Silver Arrow’s drivers also have been receptive. “Communicating with drivers also is key,” he said. “Find out their goals, and pass along your goals.” Auxiliary power units have helped curb idling, Wilmarth said. Adams said his company has been testing APUs, but that none have met their needs. Williams said his company’s’ drivers have been cooperative and have been lowering their idle percentages without APU units.
“We’ve had to look at everything across the board,” said Williams, referring to other cost-cutting measures as self-insured health insurance and being more proactive with wellness programs to get less-healthy workers involved. Adams said the safety and health insurance areas also have paid dividends with Southern Cal Transport’s costs. “This year has been one of the best years in that area in a long while,” he said. “You learn more about your business during these times than in good times.” Wilmarth said that every day at Silver Arrow, “We come in, put on our camo, and start hunting for ways to cut costs.”
If there is a positive development from the sour economy, it’s lower driver turnover, the panelists agreed. Adams said Southern Cal Transport’s turnover now is about 15 percent and that the labor market for drivers has been more stable. “Labor costs have been down because of the freight downturn,” he said. “Everyone knows the situation.” Wilmarth agreed, saying driver turnover at Silver Arrow has been “pretty static.”
Asked if high fuel prices could have a fundamental lasting impact on the trucking industry, Adams said a capacity reduction was a certainty. “Prices may come up for us,” he said. “There also may be a shifting of freight to railroads, so there could be less freight available to us.”
Williams said that while he wasn’t sure how long the current economic environment would last, “I hope somebody that’s a whole lot smarter than me’s got a plan.”
Wilmarth said he wanted to educate himself better on the situation, share that information with his customers, and learn more about their needs so that Silver Arrow could help them. “That’s going to benefit me in the long run,” he said.