Climbing Fuel Prices Puts OTA
in Media Spotlight
(April, 2008) – With fuel prices at record
levels, the trucking industry is reeling from the spike in the price of diesel
fuel. Reporters seeking comment about the impact on the industry, and what the
trickle-down effect will be on consumers, have trod a steady path to OTA’s
door.
In recent weeks, dozens of major radio, TV and
newspapers bureaus have interviewed OTA spokespersons to hear about the impact
of diesel fuel prices on the trucking industry.
While OTA President David Bradley fielded the majority
of calls from reporters, both members and staff bolstered his
efforts.
Last week OTA Chairman Mark Seymour (Kriska) could be
heard across the province on CBC Ontario Morning radio and on CJOH TV (a CTV
affiliate) talking about fuel prices.
Similarly, OTA Government Relations Manager Doug
Switzer made an appearance on CTV national morning news program, Canada AM. And,
OTA Communications Manager Rebecka Torn’s comments could be read following
interviews with newspaper chains Metroland and Canwest.
“The rising price of diesel fuel is having a
significant impact on trucking companies and individual owner operators,”
Torn told reporters.
“Traditionally, fuel represents anywhere from 15 per cent to 30 per cent of a carrier’s operating cost, which is usually their second largest component cost after labour. The cost of fuel has been gaining on labour as the top cost and is now in the range of 40 per cent to 50 per cent for most trucking companies.”
Many companies, Torn said, have tried to mitigate rising costs by improving fuel efficiency through the use of speed limiters, auxiliary heating and cooling systems, a reduction in idling and other methods. In the end, however, many have little choice but to try and pass the added cost along to customers in the form of fuel surcharges.
“Some trucking companies are struggling in their efforts to recover fuel cost as some shippers are balking at paying the fuel surcharge,” Torn said.
“No doubt this is putting many companies, especially those that do not have the resources to weather this storm, at risk.”
In the same Metroland article, economics professor Perry Sadorsky at York University’s Schulich School of Business said, “In many cases, those added costs for trucking companies are gradually being passed along to other companies, such as grocery retailers, said. It is only a matter of time until consumers, in turn, pay more as a result.
“They have been trying to internalize the cost so far,” he said. “Eventually, they’ll have to pass them along.”
“Traditionally, fuel represents anywhere from 15 per cent to 30 per cent of a carrier’s operating cost, which is usually their second largest component cost after labour. The cost of fuel has been gaining on labour as the top cost and is now in the range of 40 per cent to 50 per cent for most trucking companies.”
Many companies, Torn said, have tried to mitigate rising costs by improving fuel efficiency through the use of speed limiters, auxiliary heating and cooling systems, a reduction in idling and other methods. In the end, however, many have little choice but to try and pass the added cost along to customers in the form of fuel surcharges.
“Some trucking companies are struggling in their efforts to recover fuel cost as some shippers are balking at paying the fuel surcharge,” Torn said.
“No doubt this is putting many companies, especially those that do not have the resources to weather this storm, at risk.”
In the same Metroland article, economics professor Perry Sadorsky at York University’s Schulich School of Business said, “In many cases, those added costs for trucking companies are gradually being passed along to other companies, such as grocery retailers, said. It is only a matter of time until consumers, in turn, pay more as a result.
“They have been trying to internalize the cost so far,” he said. “Eventually, they’ll have to pass them along.”
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