Profits up in smoke? By Jerry Breeden The Trucker Staff COLUMBIA, S.C. - Rick Todd and Bob Hart live and work in different parts of the country, but both depend solely on the trucking industry to keep bread on their tables. Although they've never met, Todd, who is president of the South Carolina Trucking Association at Columbia, and Hart, a veteran driver from Lansing, Mich., share much the same opinion on the subject of current diesel proices. Todd fears that owner-operators and trucking companies in South Carolina and across the country will be forced to continue watching much of their money go up in smoke, or get out of the business altogether. Neither option sets well with Todd. "With the economy picking up steam and industry capacity tight, you would think trucking operations would be making money again," said Todd. "But with diesel fuel averages nationwide much higher than at the same time a year ago, whatever profit could be made is being wiped out." Next to labor, fuel costs are the highest operating expense incurred by trucking companies, and "typically represent 10 to 20 percent of their expenses," said Todd. He added that "historically, most fleets attempt to pass increased fuel costs along to shippers in the form of a surcharge. But now, in the best of cases, only a portion of those costs can be recovered because those surcharges do not cover empty or out-of-route miles, and carriers can't keep up with rapid spikes or increases." Keeping in mind what countless carriers across America are or could be facing in the not-too-distant future, Todd lamented that "this can wipe out whatever profits a carrier might be able to earn. "While most carriers are adjusting to persistently high diesel fuel costs," he said, "any rapid spike in prices is particularly detrimental to earnings." And, he addeded, "as households see their purchasing power chipped away by rising gasoline costs for their passenger vehicles, our industry is seeing the possibility for less goods-hauling demand, which is bad for truckers." Todd observed that "it is interesting to note that as you move west across the country, the price changes from a year earlier get significantly larger. Now, enter Hart. "I was talking to another driver the other day on the CB [radio] as he was heading home," Hart said. He said the other driver complained that the continuing increase in fuel costs was actually driving off the road - permanently. Hart quoted his fellow long-hauler as saying he's about ready to "park it by the shed and go paint houses." Hart said he personally drives from Lansing to Gallatin, Tenn., "a couple of times a week. I watch the fuel prices [where] I usually buy at [a certain outlet]. "Just this morning in Franklin, Ky., fuel was $1.54.9. Up the road at another place in Glendale, Ky., it was $1.57.9. Up in Memphis, Ind., it was $1.72.9. "Now they can say all they want to about how much a barrel of oil costs, and how the supply is down and all that. But when prices vary that much in one state within a hundred miles at fuel stops run by the same company, something is just not right." Hart said he "can see why the price might be up to $1.69.9 in Fremont, Ind., because they can gouge the drivers coming from the toll road. But to see more than a dime in fluctuation over a distance of 500 miles is nuts." Hart said he believes petroleum has become the political football of the current presidential campaign. "I believe, that this year being an election year, we will see all kinds of tricks played with our fuel prices. Bush has to get reelected to keep 'his' war going, so the Saudis will do as they're told: fluctuate the fuel prices." Todd said that trucking industry financial analysts report that truckload carriers could lose up to 5 percent of expected earnings this year because of skyrocketing fuel prices. Todd paraphrased a quote attributed to Energy Secretary Spencer Abraham, who reportedly said that fuel prices are likely to rise further because of growing worldwide demand...and because Congress has not developed an overall energy policy. Todd also said that with the economic recovery, many trucking operations look to expand their fleets to take advantage of growing business opportunities. "This time around, it is particularly difficult because lenders are very particular about who they're willing to extend credit to after a three-year freight recession and record carrier bankruptcies." Todd added that expanding fuel expenses and the cost of insurance together are making it very difficult for marginal carriers to obtain or afford federally mandated truck liability insurance. He said he sees "no relief is in sight," adding that "truckers have been trying to boost their profits by raising freight rates in the economic recovery, but could wind up pumping some of that gained revenue back into their fuel tanks." Hart said Americans "can keep our heads buried in the sand forever if we want. But I believe that our own government is to blame. I remember hearing in the 1960s about gas going to $2 a gallon someday. It turned out that the American oil companies were merely setting a goal for our future." Hart believes that the U.S. has "enough oil right here to fill our needs. Still, the oil companies point to the environmentalist as the reason for their not pumping oil. However, the real reason is - and this was published some years ago - the American oil companies will keep the caps on the wells until the price goes up to where they want it." He predicted that "when we get to $3 a gallon this summer, you will see rigs pumping and riggers drilling in Texas and other locations." _______________________________________________ Marxist-Leninist-List mailing list [EMAIL PROTECTED] To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/marxist-leninist-list
