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Reacting to Gas Price Increases Story 1

Streamlining the cost of delivering the goodsTruckers and shippers around New Jersey are kicking their fuel-saving efforts into high gear as gas and diesel prices continue to soar.

Truckers are packing alternative power sources to curtail diesel-draining idles at rest stops. Shippers are pooling together to bring down fuel surcharges. And in some cases, trucking companies are scrutinizing costs more closely before agreeing to haul goods.

“We’re being more careful, all of us, on that basis, because the cost of making a mistake is that much greater,” says Matt Wright, president and chief executive officer of Apgar Brothers, a trucking company in Bound Brook.

Truckers want to make sure they have a return load they can pick up near their destination before heading on long trips, says Wright, who also is president of the New Jersey Motor Truck Association.

“We’re not going 200 empty miles any more. We can’t afford to,” he says. “That complicates the whole logistical exercise, and that’s being experienced, I would say, across the country.”

Another complication is the number of independent operators and trucking companies leaving the business. Delanco-based Jevic Transportation Inc. shut down in May and filed for bankruptcy, attributing the move to rising fuel costs.

The disappearance of companies and owner-operators could spark a shortage of trucking capacity when the economy recovers, Wright adds.

To stay afloat, trucking companies and their drivers are finding ways to burn less diesel. Many are driving slower and idling less, Wright says. His company has a fleet of 55 trucks and annual revenue of about $10 million.

In addition, more trucks are carrying what are known as alternative power units that can provide heating, cooling and electricity while the engine is shut off. The units burn diesel, but at a much slower rate, saving money when trucks are parked for the night but drivers still need to stay comfortable.

The auxiliary power unit, or APU, might burn one or one-and-a-half gallons during a 10-hour rest, compared with 10 gallons for the engine, Wright says. “That’s a big savings for us.”

The units typically cost between $3,000 and $7,500, and weigh between 300 and 400 pounds. Companies usually add them after buying a truck, but manufacturers are starting to make them a standard feature on new vehicles.

Truck stops also are providing power sources for trucks without APUs. The stops typically hire an outside vendor to offer the service, says Mindy Long, a spokeswoman for the National Association of Truck Stop Operators. One of the largest vendors is called IdleAire.

The power costs between $1 and $2 per hour, making it cheaper than burning up a $5-gallon of diesel in the same period, Long says.

In addition to the cost savings, a growing number of states and counties are outlawing idling for more than a few minutes, she adds.

If more trucks come equipped with APUs, however, truck stops may hesitate to invest in offering power themselves, she adds. “It is a business decision that truck stops are making.”

Even with cost-saving measures in place, expenses are piling up.

Nationally, truckers are on pace to spend $154 billion on fuel this year, up from $112 billion in 2007, according to the American Trucking Association, an industry trade group in Arlington, Va. The tab in 2006 was $106 billion.

KLK Trucking Co. Inc. in South Plainfield is paying a weekly fuel bill for its seven-truck fleet of between $4,500 and $4,800, compared to $1,800 to $2,000 a year ago, said Susan Krystopik, the company’s president.

“We absorb as much as we can and we pass along what we can’t,” says Krystopik, who also is vice president of the state trucking association. KLK delivers sand, stone, top soil and other construction materials. The company’s fuel surcharge is 7 percent, she adds.

Other companies are levying fees more than five times higher.

Sealed Unit Parts Co. Inc. in Allenwood had been paying fuel surcharges of 37 percent on partial loads, says Ralph Weiner, logistics manager for the Wall Township company, which manufactures and distributes equipment for heating, ventilation and air conditioning.

The company eventually joined with Logistics Management Inc., a company that pools demand to secure lower rates. Sealed Unit now pays a fuel surcharge of 17 percent, Weiner says.

“It’s like joining the Price Club,” Weiner says. “You get better prices because they’re volume-shopping.… It really matters now, especially with the rising diesel costs. It’s pretty critical.”

Sealed Unit also has been relying more on the UPS Hundredweight Service, which provides a discounted rate to customers who ship multiple packages to the same address on the same day. The fuel surcharge from UPS is 6.5 percent, Weiner says.

More companies are showing an interest in purchasing freight services as part of a group, says George Muha, a regional sales manager for Logistics Management. He’s based in Chester.

Another way for shippers to save is to consolidate freight shipments, Muha says.

Instead of sending three or four small orders during the week to a customer, a company can wait to ship everything at once on Friday, he says. Given minimum charges, one big shipment usually will cost less than several small shipments.

Customers don’t always like the arrangement, Muha says. But most of them understand the rationale. “For the most part, everybody is going along with it,” he says. “There’s been very little push-back.”

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