Channel 19

Todd Dills

O/O challenges: More solutions to high fuel

| August 01, 2012

As promised in my feature in this month’s magazine running down the top challenges for owner-operator businesses in today’s environment, which began online yesterday as a five-part series, I’ll be sharing over the next couple weeks several outtakes from interviews. Today, we’re looking at the No. 1 problem you named in our polling and surveying on the issues earlier in the year: Fuel prices. They’ve been back on an upward trend the past four weeks after a brief fall. No better time to do it, eh? Here are selections from what my sources had to say about dealing with fuel prices:

Owner-operator Jeff Clark
I don’t view fuel prices as a huge problem. They require constant efficiency. The more efficient you are, the more you will be rewarded. 

Truth about Trucking proprietor/fuel hauler Allen Smith
There’s no doubt that the price of fuel is on everyone’s radar. The biggest problem that many face is how create a formula to create a net profit. People still have these numbers in their head — $1.50/mile, $2.00/mile, $1.00/mile. etc… You have to figure out all your costs and go from there, whatever you choose — surcharge or rate adjustment, it just has to be part of your business formula and design.

Personally, I see the Fuel Surcharge Index tool as an excellent way to incorporate a surcharge into your rates, as it takes into consideration daily and not weekly fuel costs.

Smith went on to note that he sees “natural gas in the future” powering a great deal more of heavy-truck transport around the nation, referencing the big partnerships of Navistar and Pilot Travel Centers, among other such partnerships elsewhere in the industry, to boost availability of NG powertrains and fueling infrastructure.

And efficiency, of course. Many fuel additives are available to improve mileage as well as aid in burning cleaner. Reduce idling (when appropriate for the driver), keep up with maintenance, don’t speed, and [for carriers] have well-trained and well-paid drivers. If you take care of your employees, your employee will take care of you.

Schneider National’s Mike Bethea, direct of the owner-operator program
We offer discounts and cost-plus fuel at some of those [chain truck-stop] locations. As an owner-operator, you have to take advantage of those kinds of programs. We all know [price] will go back up, and you can almost follow those spikes in fuel prices and bankruptcies — fuel starts to pass the truck itself as owner-operators’ biggest cost. If you’re getting less than 6 mpg — that’s the minimum acceptable level — if you get less than that you’ve got to have your truck paid off.

A lot of [Schneider owner-operators] have gotten APUs, but we’re also starting to see the environmental laws in states creating a problem because they don’t allow the use of diesel-powered APUs. On these newer Freightliners, we’re getting onboard in the coming year with a newer technology, an electrical system that runs the AC and heats the coolant form the engine [powered solely by batteries]. It works well through that 8-to-10-hour period. 

The other thing is the whole natural gas phenomenon — we have some units ourselves that we’ve put on. They’re running all over… They’ve performed very well with lower emissions. That’s the kind of change … that’s necessary, and we may not ultimately have a choice. The first part of some of these tests are very promising.

Owner-operator Don Lanier, leased to expediter J.D. Clark Logistics
It’s tough. At four bucks a gallon it’s hard to watch those numbers spin and the totals be hundreds of dollars. We do get a fuel surcharge built into our trips, though.

I’d like to see some teeth given to the Commodities Futures Trading Commission, which regulates energy futures, but I’m also looking forward to CNG trucks. I will buy one…

I do use perks cards, and an OOIDA Truckers Advantage Fleet One card saves me money at the pump.

Landstar Chief Safety and Operations Officer Joe Beacom
Landstar’s support of its [Business Capacity Owners, or BCOs] relative to fuel is a two-pronged and historically effective approach.

  • http://www.facebook.com/james.vincent.100 James Vincent

    IM73 IVE BEEN AROUBND TRICKS OVE60 YEARS I CAN STILL REMEMBE WHEN DIESEL WAS MUCH CHEPER THAN GA. THEN THE MID 70;S T4-75 GA STARTING GOING UP UP DISESEL DIDNT.. TO MY KNOWAGE DUESL WAS A VTHROW A WAY BY PROIDUCT IF GA. NOW WE PY MORE FOR DISEL THSN WE DO FOR GAS. LOOK BACK TO THE 70;S, WHAT WAS THGEVPRICE OFVBA BARREL OF OIL THE COMPARED TO NOW? LOOKNAT THE PROFIT OF ASLLNTHE MAJOR IOL CO., BIG PROFIT TO THEM AT THE EXPENCE OFVTHEV THUCKING INDUSTRUAL.

  • http://www.facebook.com/james.vincent.100 James Vincent

    IT SEEMS THGAT EVERY TIME THE GOVERMENT WANT MORE MONEY UP GOSE THE PRICE OF FUEL OR MIREVTAXES ON TGHE TRUCKER. JAMES VINCENT

  • http://www.facebook.com/lance.hottrod Lance Hottrod

    After 40 years as an OTR driver, I had enough of the cheap freight, I was leased to what used to be a good carrier and had been with that carrier 20 of the 40 years. 4 million miles, no tickets or chargeables, and had never been shut down at a scale. They say they get the correct fuel surcharge, and they do, but then the RATES go down. They used to require their agents have at least 50% of their own freight so there were no brokerage fees with those loads which made the rates good. Now they let “kitchen table” agents book loads, and those ARE cheap because every broker takes some off the top. I refuse to haul cheap freight because all that does is wear out the truck, tires, engine, etc., for nothing. When it got to the point that all I could net per week average was $400, I retired early. Every other industry raises prices at will, but the trucking industry rates are garbage, does not even pay to own a truck anymore. When I can’t make any more money than a Wal-Mart job, it’s time to quit.