Pharos-Tribune

Business

March 16, 2011

Dealing with diesel

Trucking companies battle increased costs

— Gas prices aren’t the only fuel that is increasing — so are diesel prices and those are affecting local trucking companies and consumers.

As the cost for diesel increases, so does the costs for all industries, according to Pat Tierney of Tierney Industrial Warehouse.

“The freight industry passes the cost onto the consumers,” he said. Transportation companies generally charge customers a fuel surcharge to help with its fluctuating costs.

Right now, Tierney said, fuel charges are all over the board.

“They are typically as high as 24 percent right now,” he said. “It doesn’t matter what you are buying. Anything you purchase delivered by a trucking industry or by train, is based on cost of fuel.”

According to Tom Pasquale, with Pasquale Trucking Co., the rising cost of diesel has a huge effect on the trucking industry.

“It’s our biggest expense,” he said. “So, it hurts.”

His company has approximately 40 semis on the road, which travel within a 700-mile radius of Logansport.

He explained the company’s customers pay a fuel surcharge, which increases as diesel costs increase.

While that charge helps, it doesn’t cover the entire cost of the diesel used.

“Our trucks average six miles per gallon and they run a couple thousand miles a week,” Pasquale said. “You do the math.”

The company immediately noticed the price increase and has attempted to find ways to save money.

“We have no choice,” Pasquale said. “We have to have fuel to run our trucks. We have to deal with it. It makes it tough.”

Gangloff Industries said the effect is especially noticeable when the cost of diesel increases by 30 cents in - a two-week period.

“The national average today was $3.87,” CEO Randy Ferguson said Monday afternoon. “Two weeks ago, it was at $3.57.”

Ferguson said Gangloff keeps contracts with all of its customer for the fuel charge. That charge changes every Monday.

“The way fuel has been increasing, even changing the surcharge once a week, we haven’t been able to keep up,” he pointed out.

This means the company is left to operate with a less margin.

“Everyone has had a tight budget to work on already,” Ferguson said. “This has just made it even harder.”

It also mean less of an opportunity for Gangloff Industries to complete some projects scheduled for spring — including equipment purchases.

“It is just making the whole economic picture a little more gloomy,” he said.

The increased prices also affects other materials needed by Gangloff. Tires have increased 12 percent and it has seen an eight percent increase in bulk oil.

The company currently operates 42 trucks within a 400-mile radius. The trucks also get 6 miles per gallon and travel between 2,500 and 3,000 miles per week.

Both companies are doing everything possible to save money on diesel.

Pasquale Trucking has a diesel storage area and the business tries to fill its trucks as often as possible. Since the diesel is purchased in volume, Pasquale gets a better deal.

Auxiliary power units have also become a popular item for use in semis. With the units, drivers do not have to leave trucks idling to supply power for heat or air conditioning.

Pasquale installed the units in his company’s trucks four to five years ago. Gangloff just started installing them about six months ago. Ferguson said Gangloff will not see immediate results, but will in the long run.

Both trucking companies also have the capability to electronically govern the speed of the trucks.

“We know we have to start planning for the future and we can’t sit back and do nothing,” added Ferguson.

Pasquale — and every other trucking company — can only hope things will change in the future.

“We’ll just pray for peace and that crude oil comes down,” said Pasquale. “We’ll also use less.”

• Denise Massie is a staff writer at the Pharos-Tribune. She can be reached at 574-732-5151 or denise.massie@pharostribune.com

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