Fuel Prices — You Can Cry, Gouge, Or Improve Your Business

Ongoing volatility in the diesel market has led trucking companies to make strict pricing discipline a regular part of their operations.

In second-quarter earnings reports, most trucking companies said they are still able to minimize the impact of higher fuel costs on the bottom line, thanks to the rigorous application of fuel surcharges and operational adjustments. Yet fuel costs remain a major concern as they continue to eat up more and more operating capital.

“The skyrocketing cost of fuel is an obvious concern,” said Stoney “Mit” Stubbs, Jr., president & CEO of Dallas-based refrigerated carrier Frozen Food Express (FEE). “We continue to work with our customers to address the rising cost of crude oil as the price per barrel reaches [and exceeds] $70, with no apparent end in sight. But our fuel surcharges have helped us mitigate that problem.” … Full Article Here

 

Well I have a little news for you there, Mr. Stubbs.  You can sit back, pass on the costs to consumers with surcharges and tell the world what a good businessman you are, but don’t you think that some day the ability of the market to accept surcharge on top of surcharge is just going to reach a limit?

Those who actually give a hoot about this situation should read the article and note that Covenant, one of my “picks to watch” in the industry actually came out ahead on fuel costs … with a whopping 28% fuel cost increase.

Impossible you say?  Dave says not only possible but a crying shame that more execs aren’t report these kind of savings.  I’ve told you before and I’ll tell you again, finding 15% to 30% waste in almost any fleet’s fuel use is easy.  What’s hard is wrapping your mind around the idea that the way you did it five or ten years ago … or schemes to just stick it to the customer .  Saving fuel is better even than fuel costs dropping because it’s better for the environment and if your competition is of the whine and complain brigade you’ll pull that farther away from them.  And it’s more actual cash left in the cash register drawer.  15% savings on $3.00 fuel is equal to 45% savings on a dollar fuel.

How did Covenant do it?  The two major factors are ones I have been telling you about for years ,,, reduced idling and reduced off-route miles.  It isn’t rocket science, folks … why make it so darn hard.