|Trucking industry copes with rising costs||| Print ||
|Articles - April 2011|
A new gas tax and soaring crude prices are prompting Oregon truckers to innovate to protect their bottom lines while passing on as much cost as they can to consumers.
“Everybody’s doing this,” says Scott Smith, a VP at Salem-based May Trucking, which operates nationwide. “This is a game you have to play to continue to be efficient and be a player.”
For May Trucking, that means adjusting routes for fuel efficiency and limiting trucks’ idle time — and tracking both by satellite. It also means surcharging customers to compensate for fuel increases.
May Trucking employs about 500 Oregon truckers — the most in the state. Its size allows it to afford to use satellites, receive about a 10% discount from wholesale fuel vendors and apply a surcharge.
Not so for many of the little guys, says Debra Dunn, head of the Oregon Trucking Association (OTA). Many of them have to eat the rising fuel prices to be competitive. But they can still save through innovation, such as using onboard computers, to monitor fuel efficiency. Or they can resort to usual tactics: efficient rerouting, choosing the most profitable loads and avoiding mountains and snow.
When Oregon legislators voted to increased the gas tax by 6 cents in 2009, hopes were that the economy would have recovered more substantially since the tax went into effect in January 2010. And no one foresaw a series of revolutions in the Middle East that have threatened to push crude prices to $150 a barrel.
“It hurts,” says Marie Dodds, spokeswoman for AAA of Oregon and Idaho. “When the price of diesel shoots up 18 cents in one week as it did [in March] that’s a pretty steep increase to your bottom line.”
Yet, the OTA supports the gas tax, saying the $300 million a year in road projects funded by the tax are important.
May Trucking estimates it will pay $300,000 in new gas taxes. While the company supports the infrastructure repair, it calls the tax unfair because trucks that haul logs are exempt. “This just makes it harder to do business in Oregon,” Smith says.
If fuel prices keep rising more quickly than trucking companies can absorb, they’ll continue to pass on what costs they can to to customers, says University of Oregon economist Tim Duy. “If it’s none," he says, "then the pain will tend to center in the truckers.”
For some in the industry, that could become a fight for survival.
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