Post by HardTimeTrucker on Nov 20, 2008 17:32:32 GMT -5
Thursday, Nov 20, 2008
Tough Times for Truckers as Firms Try to Cut Costs
‘Trucking is all about cash flow,’ an industry leader says — and the credit crunch hasn’t helped
By CHUCK CRUMBO
ccrumbo@thestate.com
If the state of trucking in South Carolina is any indication, truckers could be in for the long haul before the economy turns around.
“I would tell you now is the toughest time I’ve seen in the last 15 years,” said Clifton Parker, a 30-year veteran of the trucking business and president of Gaston-based G&P Trucking Co.
Heading into 2008, trucking already was struggling as the economic slowdown hurt the industry’s biggest customers —automotive and construction.
Then, this year it was whiplashed by a combination of rocketing fuel costs and the flailing economy.
First, diesel fuel hit a record average price of $4.75 per gallon in late July. Because trucks haul 70 percent of the nation’s goods, a rise in diesel costs triggered a rise in prices of most consumer products.
Then, as fuel prices fell, the financial markets’ cratering and the collapse of Wall Street triggered a nationwide credit crunch.
Credit is needed to help the trucker bridge the stretch between the time the goods are delivered and when the shipping bill is paid.
“Trucking is all about cash flow,” said J. Richards Todd, executive director of the S.C. Trucking Association. “The companies have to pay cash for fuel and wages.”
Credit also is needed by the industry’s customers that make the products delivered by trucks.
Parker said a typical shipping bill is payable in 25 to 30 days. Now, some customers might stretch out paying their bills to 60 days.
To make it in such a tough operating environment, trucking companies need to be more efficient, said Philip Byrd, chairman of the S.C. trucking group and president of Bulldog Hiway Express in Charleston.
One cost-cutting move that has yielded savings for Bulldog was dropping the maximum speed for drivers to 65 miles per hour from the legal limit of 70, Byrd said.
Shaving the speed by 5 mph improved fuel economy by 1.3 miles per gallon, Byrd said. That’s a huge difference when trucks were getting less than 6 miles per gallon. Now, they are averaging 7 miles to the gallon, he added.
While timely delivery is crucial to a trucker’s success, Byrd said other efficiencies have made the company more productive.
For example, he said the company has worked to reduce the time a driver might have to wait for deliver or pick up a load.
The company’s fleet of 200 trucks hauls shipping containers to and from the ports of Charleston and Savannah, Ga., as well as loads on flatbed trailers.
Despite the grim economy, Byrd said the company expanded its operation in 2007 to the Port of Savannah. The expansion has helped his business grow by about 35 percent, he said.
Trucking executives believe there’s reason for optimism, thanks in part to lower fuel prices.
When the price of diesel was around $4.75, the fuel surcharge amounted to about 35 percent of freight bill, Parker said.
Now, the fuel surcharge is around 15 percent of the bill, he said.
That can make goods delivered by truck cheaper, economists said.
For well-managed companies, there’s opportunity to grow because their overextended competitors have to cut back the number of trucks and operations, Byrd said.
“A lot of companies have cut back,” Byrd said. “I’d say capacity has shrunk 3 to 5 percent.”
Parker believes the economy and his industry can bounce back relatively soon.
“With low interest rates and low costs, some of the things are in place for a turnaround,” Parker said.
For many South Carolina truckers, business is triggered by growing shipments at the Port of Charleston.
On Wednesday, the port reported that the number of container units its three facilities handled in October was up 6 percent over the same month in 2007, and up 16 percent over September’s shipments.
“There’s optimism that things can turn around before summertime,” Parker said.
Reach Crumbo at (803) 771-8503.
Tough Times for Truckers as Firms Try to Cut Costs
‘Trucking is all about cash flow,’ an industry leader says — and the credit crunch hasn’t helped
By CHUCK CRUMBO
ccrumbo@thestate.com
If the state of trucking in South Carolina is any indication, truckers could be in for the long haul before the economy turns around.
“I would tell you now is the toughest time I’ve seen in the last 15 years,” said Clifton Parker, a 30-year veteran of the trucking business and president of Gaston-based G&P Trucking Co.
Heading into 2008, trucking already was struggling as the economic slowdown hurt the industry’s biggest customers —automotive and construction.
Then, this year it was whiplashed by a combination of rocketing fuel costs and the flailing economy.
First, diesel fuel hit a record average price of $4.75 per gallon in late July. Because trucks haul 70 percent of the nation’s goods, a rise in diesel costs triggered a rise in prices of most consumer products.
Then, as fuel prices fell, the financial markets’ cratering and the collapse of Wall Street triggered a nationwide credit crunch.
Credit is needed to help the trucker bridge the stretch between the time the goods are delivered and when the shipping bill is paid.
“Trucking is all about cash flow,” said J. Richards Todd, executive director of the S.C. Trucking Association. “The companies have to pay cash for fuel and wages.”
Credit also is needed by the industry’s customers that make the products delivered by trucks.
Parker said a typical shipping bill is payable in 25 to 30 days. Now, some customers might stretch out paying their bills to 60 days.
To make it in such a tough operating environment, trucking companies need to be more efficient, said Philip Byrd, chairman of the S.C. trucking group and president of Bulldog Hiway Express in Charleston.
One cost-cutting move that has yielded savings for Bulldog was dropping the maximum speed for drivers to 65 miles per hour from the legal limit of 70, Byrd said.
Shaving the speed by 5 mph improved fuel economy by 1.3 miles per gallon, Byrd said. That’s a huge difference when trucks were getting less than 6 miles per gallon. Now, they are averaging 7 miles to the gallon, he added.
While timely delivery is crucial to a trucker’s success, Byrd said other efficiencies have made the company more productive.
For example, he said the company has worked to reduce the time a driver might have to wait for deliver or pick up a load.
The company’s fleet of 200 trucks hauls shipping containers to and from the ports of Charleston and Savannah, Ga., as well as loads on flatbed trailers.
Despite the grim economy, Byrd said the company expanded its operation in 2007 to the Port of Savannah. The expansion has helped his business grow by about 35 percent, he said.
Trucking executives believe there’s reason for optimism, thanks in part to lower fuel prices.
When the price of diesel was around $4.75, the fuel surcharge amounted to about 35 percent of freight bill, Parker said.
Now, the fuel surcharge is around 15 percent of the bill, he said.
That can make goods delivered by truck cheaper, economists said.
For well-managed companies, there’s opportunity to grow because their overextended competitors have to cut back the number of trucks and operations, Byrd said.
“A lot of companies have cut back,” Byrd said. “I’d say capacity has shrunk 3 to 5 percent.”
Parker believes the economy and his industry can bounce back relatively soon.
“With low interest rates and low costs, some of the things are in place for a turnaround,” Parker said.
For many South Carolina truckers, business is triggered by growing shipments at the Port of Charleston.
On Wednesday, the port reported that the number of container units its three facilities handled in October was up 6 percent over the same month in 2007, and up 16 percent over September’s shipments.
“There’s optimism that things can turn around before summertime,” Parker said.
Reach Crumbo at (803) 771-8503.