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Company forum: Skyrocketing fuel costs

October 1st, 2008 / By: / Industry News

The price of oil has driven up fuel and living costs on a global scale. InTents asked a few companies to weigh in, via e-mail and on the forum at Rent Talk Online. Read on for their opinions about the effects of the price rise and practical solutions for staying afloat.

William Pretsch — Mahaffey Fabric Structures, Memphis, Tenn.

Mahaffey has reacted to escalating fuel prices in two ways. In the short term we’ve reset our delivery fees and have added contractual language permitting the use of a fuel surcharge. The surcharge serves to protect us from price spikes that would be unforeseen when the tents have been booked months in advance.

The second reaction centers on our fleet planning. In previous years we appreciated the flexibility of having our supervisors drive heavy-duty crew-cab Ford F-250 pickup trucks. We are now considering buying smaller trucks that use unleaded gas instead of diesel, especially when they are often only being used by a single supervisor. In Tennessee, the price difference between unleaded and diesel is nearly $1.00 per gallon. The new trucks are less expensive initially and they burn less-expensive fuel — a win-win for our company and for the environment.

Doug VanMeter — Rental City, Vineland, N.J.

Fuel costs have almost doubled from last year, and I have experienced a backlash from my clients after I increased my fuel surcharge to 45 percent of our normal delivery rate, up from 30 percent. They are unwilling to pay and would rather go to a lower-quality company and pay less in delivery charges than pay for the better service and better quality of equipment. So I had to reduce my fuel surcharge back to 30 percent and absorb the cost internally. I have also imposed a mandatory shutting down of trucks idling more than two minutes at a stop. I am not sure what we are going to do if prices continue to rise.

Steve Kohn — Millers Rentals, Edison, N.J.

Fuel is certainly an issue. We can only charge so much for delivery. We dramatically increased prices on many of the top rental items in our inventory in order to make up for the shortfall. We are also being very careful when dispatching orders to make sure we cover as much territory on one truck as possible. We explain to our clients that their order might arrive a day or two earlier if we are in the area. The same goes for pickup. They understand. We also encourage clients to pick up their smaller orders to save transportation fees (that is how we refer to delivery now; it sounds better). Also, if an order requires more than one vehicle to deliver, we charge per vehicle — another reason to use the term “transportation” rather than “delivery.”

Anonymous

We have had to enforce a delivery fee ($35) on all of our deliveries, even if they are only a mile down the road. We know how much we spend a week in fuel and how many jobs we do a week, so we just try to make sure that the delivery fees cover the gas for the week. If we get a customer who complains, we kindly remind them that gas is $5 a gallon and we don’t drive hybrids in the tent business.

Carole Gagne — Fiesta Tents Ltd., Lachine, Quebec

The cost of running our rental trucking fleet has risen considerably, and we lost some profit by honoring agreements signed while the fuel was still reasonably priced. We’ve had to adjust our prices with a fuel surcharge for new contracts. We’ve noticed an increase in our transport costs for both our raw materials and our deliveries. Also, there have been price increases in the raw materials that are oil-based. Eventually, all increases will be passed on to the clients.

We fear that the trend of the rising cost of fuel is affecting lifestyles. So many people have lost their jobs in the auto industry and other related companies. They may have to change their lifestyles and cut back on their spending. These middle-class people attended the many events catered by the rental industry. Therefore, if this trend continues, everyone is at risk of lost revenues and/or losing their jobs.

We see the effects everywhere — at the grocery store, the pharmacy and obviously the fuel pump. Our fuel cost has risen close to 40 percent in the last year. Everyone is affected in one way or another. The only ones who seem to benefit with this fuel economy are the major oil companies that are making record profits.

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