With gas prices nearing or topping $4 per gallon across the country, the financial strain placed on individuals and small businesses alike is worsening. With the rising price of gasoline slowing the economic recovery of industries, the commercial transport industry has been among the hardest hit. Commercial transport companies are treading on uncertain ground as fuel prices threaten their bottom lines and squeeze their profit margins.
The escalation of gas prices has forced trucking companies to compensate by passing a portion of the added expense of a gallon of gas on to their customers through increased fuel surcharges. Companies say they are attempting to keep those surcharges to a minimum so as not to lose the patronage of clients.
Bud Asti, part owner of Richochet XPress Inc. in St. Marys, said in an effort to stay competitive with regard to surcharges, he is absorbing significant losses, adding that he recoups only 60 percent of his costs and loses the remaining 40.
"I hate 'em [gas prices]. They've made me raise my prices to the customer and they're not happy. It's terrible, it's crucifying me," Asti said. "My fuel, let's say, is $200 round-trip. If I were to charge the customer that I would get very few orders, very few runs."
Asti, who transports mainly for local powdered metal factories, said he raised his fuel surcharge up two points this week to the dismay of his customers.
"In other words, I went from like 18 to 20 percent and the customer says, 'Wow'. Some of them [customers] are understanding and some of them are saying, 'I don't know if that's right or not,' and I say, 'Well, my trucks don't run on air.' I had a surcharge before, it's nothing new, it's just that I raised it up because of the cost," Asti said.
Asti said it is difficult for smaller companies like his to compete with larger companies that are able to offer lower surcharges.
"You got all these bigger outfits that can undercut you tremendously. When I look them up, their surcharge is way less than mine," Asti said.
According to the U.S. Energy Information Administration (EIA), fuel surcharges are not regulated but rather the result of negotiations between a trucking company and its customers.
Asti added that the fuel economy of tractor-trailers is especially poor, with the average tractor-trailer getting only 5.2 miles to the gallon.
"It hurts. You just stop and think now. The average tractor-trailer has a 100- to 150-gallon tank on it. Now do the math. That's $400 to $500 alone," Asti said.
Asti said that the company was started in 2000 and the peak of the economic crisis and record-high oil prices in 2008-2009 forced him to halve his fleet of 22 tractor-trailers.
Pick up a copy of the Saturday, March 24, 2012 edition of The Ridgway Record for more.