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Rising Fuel Costs

How are industrial truck distributors handling the increasing fuel price for their mobile mechanics, and how are they recovering the cost?
– Ken MacDonald, President
                                                                                      M&G Materials Handling Co. (East Providence, RI)

Duncan Murphy: The cost of fuel has been problematic in our industry for several years, and it looms even larger with the most recent price spike. First of all, fuel surcharges work and can offset much of the increase, as does installing GPS for efficient routing. Other simple things that help improve fuel efficiency include using synthetic oils and special filters, proper tire inflation, removing weight and remote start to eliminate idling. Ask your technicians—they may come up with a variety of ideas while at the same time creating fuel consumption awareness, thereby altering behavior. Looking ahead, the auto industry will trudge forward, so stay on top of model improvements, a la the Sprinter Diesel from a few years ago, particularly for salespeople and sales managers’ vehicles. We are an industry of “tech heads” who want the biggest, baddest set of wheels. Put someone with an eye on costs and efficiency in charge of your fleet.

Mark Milovich: The easiest way to cover this cost is simply to pass it along to the customer base, either as a fuel surcharge or an increase in your labor and/or zone or travel charge. Check your vendor invoices and you’ll see it being done to you. In my opinion, however, this should be the last thing a service company tries to implement. Rising fuel prices have caused us to take a hard look at our own operations—are we being smart in our dispatching? The next available technician might not be the best option for the next call if he is any sort of distance from the customer’s location. If the customer can wait until later in the day, or even the next day, when a closer technician is available, that is a better option.

We place our field technicians in territories, much like the equipment sales reps. If a call comes in from his territory, it is his call. This helps to eliminate long travel times and builds a relationship between the customer and the technician in the territory. We have also limited the field technicians from returning to the shop for parts, pay checks or even turning in dirty uniforms at week’s end. We have a lower-cost employee, who drives a much more fuel-efficient vehicle than a service van, to make deliveries of these items to keep the techs in the field and off the interstates.

Another program we have implemented is replacing our fuel cards with a credit card that offers five percent cash back on all fuel purchases. With the card we chose, we could recoup as much as $6,000 annually in fuel savings. But you have to do your homework on this. Many cards have strict limitations, so be sure to read all the fine print and ask plenty of questions.

Look at your operations first to improve your efficiencies before passing the cost along. When it is all said and done, we may end up passing it along to our customers as well, but I’ll be confident in the fact that we are as efficient as we can be and have done everything possible before we do.

Dave Reder: We have a fuel surcharge based on a baseline of fuel per gallon and updated using a government Web site that reports average fuel prices per region.

Jerry Weidmann: At Wisconsin Lift Truck, we have instituted a fuel surcharge for service calls and cartage operations as opposed to raising labor rates. This gives us flexibility to adjust with the volatility of fuel costs without constantly having to adjust labor. With our current business system, we add a flat $11 fuel surcharge to field service work orders with a maximum of one surcharge per customer per day. This allows for multiple repairs at the same customer without billing for fuel on each repair on a given day. For cartage operations, we added a surcharge equal to 9.5 percent of cartage billed. Both charges are invoiced externally only.

Richard Donnelly: We charge for travel time and mileage, but we are one of the few dealers in our territory that does.

Material Handling Equipment Distributors Association

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