Energy: Courier Services, Security Firms, Truckers Struggle With Rising Costs
Rising fuel costs, both for gasoline and diesel, are putting the squeeze on Southern California fleet operators.
And energy economist Philip Verleger Jr. says it’s going to get a lot worse before it gets better: He predicts gas prices climbing as high as $3.50 a gallon this summer, thanks to a lack of refinery capacity and the public’s love of gas-guzzling sport utility vehicles.
The rapid surge in prices has left everyone, from the owners of messenger services to trucking companies, scrambling to pass costs on to their customers.
“What’s scary is people are saying we may be looking at three bucks for a gallon of gas,” said Robert Faulkner, a co-owner of Procourier, a Los Angeles-based messenger service with 300 cars on the road. “My partner and I are asking, ‘What are we going to do?'”
The rising fuel costs have many fleet operators adding fuel surcharges of up to 10 percent to help cover their costs.
“We just pass it on to the customer. There’s no ifs or buts about it,” said Mike Barbata, president of Jet Delivery Inc., a Los Angeles messenger firm with 425 employees. “In the end, the consumer pays for it.”
For clients of Laguna Hills-based Coastline Courier, that means a 5 percent surcharge added on to only the mileage portion of their bill rather than the whole invoice. Coastline President Bob Hoskins said that way, customers aren’t paying extra for weight charges of waiting time.
“On average, it adds about $1.50 to $2 to each ticket,” he said.
Inter-Con Security Systems Inc., a Pasadena-based security firm, has a fleet of 40 cars in Southern California, half in Los Angeles and half in San Diego. The company has seen its fuel costs increase 20 percent since last year.
Yet, the company can’t pass that increase onto its customers because of previous contracts, some of which don’t come up for renewal for three years.
“At this point there’s not much we can do,” said Ray Nassief, vice president of domestic operations. “We just have to eat the additional cost and figure out a way to be more efficient.”
Dependable Highway Express, a Los Angeles-based trucking and warehousing company, tries to extract a fuel surcharge from its customers but some simply refuse to pay.
“The customer is saying, ‘Do you want our business or not?'” said Bob Massman, vice president. “We have to decide if it’s worth handling this account without the surcharge.”
California truckers are paying an average of $1.72 a gallon for diesel, compared to $1.51 in Arizona, $1.54 in Las Vegas and $1.34 in Portland, Ore.
That puts California truckers at a competitive disadvantage to out-of-state truckers, said Stephanie Williams, vice president of the California Trucking Association, which represents about 85 percent of the state’s trucking companies.
“A big rig can go 1,800 miles on a tank of fuel. These guys (from out of state) can fill up in Arizona, make a run into California and never have to pay the higher price,” she said. “It’s really bad for California. It’s taking money out of people’s pockets.”
Woodard is a staff writer with the Los Angeles Business Journal. Sandi Cain, of the Orange County Business Journal, contributed to this report.
