Fuel prices hitting hard

June 1, 2004
The high price of diesel fuel is affecting every company's wallet, but the larger carriers may be better able to cope than smaller ones. The extent to which the steady rise in the price of diesel fuel is affecting carriers' financial health depends primarily on whether or not they have fuel surcharges in place. At a Bear Stearns conference on transportation in New York City last month, Gerald Detter,

The high price of diesel fuel is affecting every company's wallet, but the larger carriers may be better able to cope than smaller ones. The extent to which the steady rise in the price of diesel fuel is affecting carriers' financial health depends primarily on whether or not they have fuel surcharges in place.

At a Bear Stearns conference on transportation in New York City last month, Gerald Detter, president and CEO of Con-Way Transportation, pointed out that most carriers do pass fuel price increases on to customers, thus mitigating the impact of recent price hikes.

But it's often a different story for small and medium-size operations. According to Kirk Thompson, president and CEO of J.B. Hunt, “Some small and mid-size carriers don't have a fuel surcharge…or don't have a good one; they are at risk.”

Even some of the larger carriers say that surcharges don't cover the extra cost completely. Steve Russell, chairman and CEO for the Celadon Group, said that while their fuel surcharge “did the job” in 2003, this year it's only covering 75-80% of incremental increases.

Trucking companies that service the West Coast have been hit especially hard. Some, such as Swift Transportation, have already instituted what they're calling a “West Coast” surcharge. U.S. Xpress Enterprises will also implement a West Coast surcharge, which it plans to negotiate with customers, according to Patrick Quinn, president and co-chairman.

But even the surcharges may not be enough. As Con-Way's Detter observed, higher fuel prices could impact trucking to the extent that “consumers' spendable income goes into their fuel tanks.”

About the Author

MARILYN WILSON

Sponsored Recommendations

Stop Sweating Temperature Excursions

Advanced chemical indicators give you the peace of mind that comes from reliable insights into your supply chains. Compromised shipments can be identified the moment they arrive...

How Electric Vehicles Help You Prolong the Life of Your Fleet

Before adopting electric vehicles for commercial/government fleets, prioritize cost inquiries. Maintenance is essential; understand the upkeep of EV fleets. Here’s what you need...

How to Choose the Right Route Planning Solution

This free buyer's guide will help equip you with the knowledge and insights needed to analyze route planning software and vendors in the market and, ultimately, make an informed...

How to Put Your Trucking Data to Work

How fleets can overcome data overload to optimize operations and get ahead.

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!