High fuel costs pinch truckers

Jeff Lynch looks for ways to grind out an extra half mile per gallon from the diesel fuel that powers his logistics company's fleet.

Rick Gaetz, meanwhile, looks for indications that rising fuel prices are soaking disposal income out of consumers' pockets, weakening the economy and spelling even more trouble for the trucking industry.

In matters great and small, the transportation industry that's a key part of the northern Nevada economy is focused on the challenges of continued increases in fuel costs.

At the start of last week, diesel fuel prices averaged nearly $3.10 a gallon in the West Coast region, up 57 cents from year-earlier figures, reports the federal Energy Information Administration.

Fuel is the second-largest cost for trucking companies, trailing only labor, and fuel typically accounts for about 25 percent of truckers' operating expenses, says Paul Enos, deputy managing director of the Nevada Motor Transport Association.

And that's sent trucking executives such as Lynch, president of ITS Logistics in Sparks, to their spreadsheets to figure how to keep fuel costs from eating them alive.

The most obvious answer tacking fuel surcharges onto freight rates is nearly universal across the industry.

But when diesel prices move quickly they climbed 7 cents a gallon just in the last week of April trucking companies that reset their surcharges on a weekly basis can't keep up.

And the calculation and recalculation of surcharges adds an additional burden to the small office staffs of independent truckers.

Many of the steps taken by ITS Logistics to limit the pain of higher fuel prices are seemingly small.

It no longer allows drivers to take truck tractors home with them. The company pays drivers only for the specific route they're hiredto drive, and doesn't pay them for any additional mileage along the way.

On the supply side, ITS Logistics is studying the possibility of buying fuel in bulk. And to increase its purchasing power with truck stops, the company now requires drivers to purchase diesel from a designated list of suppliers.

A third option limiting the speed at which trucks travel is trickier.

"We're all about time," says Lynch. "So it's hard for us."

But on some trips, he says, the fuel savings from traveling at a lower speed may offset the costs.

The company also is studying the possibility of incentives for drivers who beat mileage standards. Driving habits, Lynch says, have just as much effect on fuel economy in a semi-trailer rig that gets 6 miles to the gallon as they do in a family car that gets 20 miles to the gallon.

Gaetz, the president of Vitran Corp., the Toronto-based company that bought Sparks' Sierra West Express in January, says his company looks to grind down its fuel costs through steps such as keeping vehicles in top condition.

"We manage it as best we can," he says. "But there's not a lot that can be done. The reality is that North America is in a fuel crisis."

His worries extend far beyond the immediate effects of diesel at the pump. The effects of higher fuel prices will spread through the economy as retailers pass along higher freight charges to their customers.

As that happens, Gaetz says, pinched consumers will be buying less and that means less freight for trucking companies to haul.

Nationwide, Enos says, about 80 percent of all communities get freight service exclusively by truck and can't turn to rail or other options.


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