Serves the Commercial Small Fleet Market of 10 – 50 Vehicles

Fuel Surcharges Don't Ease Pump Pain for Delivery Drivers

August 11, 2005

With fuel prices at record highs, many large delivery and shipping companies have protected themselves with fuel surcharges. Yet some smaller companies and drivers are feeling the squeeze. Major pizza chains such as Domino’s and Papa John’s have added a $1 fuel surcharge in most markets, according to a Knight Ridder news story published this week."The delivery charge helps offset costs associated with increasing drivers' per-run payment, labor costs and insurance," said Dana Harville, a Domino's spokeswoman in Ann Arbor, Mich., in the article. Papa John's also notes the higher ingredient costs related to fuel. However, Pizza Hut has added a $1 delivery surcharge but is not sharing that with the drivers, reports the Anderson (Indiana) Herald Bulletin. “(Gas prices) have affected us,” said Erica Trahan, a daytime driver at Pizza Hut. “A lot of our drivers are quitting. They pay us 85 cents (flat) per delivery, and it’s not working.”She said Pizza Hut is charging $1 delivery charge and chalking it up to operating costs, but the drivers don’t see any of it.“It’s hard to make a living as a driver right now,” she said. “All our tips go into the gas tank.”Ironically, the drivers who are aren’t making as much are delivering more pizza than normal for Domino’s. Because of the rise in gas prices, customers are avoiding carry outs in favor of having their pizza delivered, the story said.Package-delivery companies such as Federal Express, which has seen higher costs for jet fuel for its planes and diesel fuel for its trucks, depend on fuel surcharges the Knight Ridder story said. FedEx revises its surcharge monthly; for August it stands at 12.5 percent for express shipments and 2.75 percent for its slower ground service. Some online retailers depend on FedEx or UPS, but many Amazon.com partners ship via the U.S. Postal Service. Postage rates have not changed as a result of gas prices.Independent shipping companies have surcharges as much as 19 percent, compared to 7 percent a year ago. Charlie Cheshier, owner of Cheshier Leasing LLC, said in the Herald Tribune story that sometimes customers don’t want to pay the surcharge, but he tries to avoid them. Anderson cab companies are feeling the pinch but will not raise rates for their customers.“It’s pretty much business as usual,” said Randy Willis, owner of Anderson Taxi. “With high gas prices, we’re holding prices for customers.”Willis said he doesn’t foresee any changes until gas hits $2.80 a gallon. “I’d be forced to take a look at that,” he said.Companies that provide school bus service, however, have no choice but to eat higher costs until the next time they renew contracts with school boards. One school bus company in Linwood, Ohio reports its fuel bill went from $25,000 to $30,000 to $46,000, according to an August 10 story in the Cincinnati Enquirer. First Student Inc., the nation's second-biggest student transportation provider, operates 158 bus routes for school systems in Cincinnati, Wyoming and Reading. Contract manager Mike DeHaven said the company has no choice but to absorb the higher gas costs, the story said.For the city of Cincinnati, each penny of higher gas prices equates to $20,000, said city fleet manager Jim Schwab.Earlier bulk purchases have insulated the Warren County, Ohio and Clermont County sheriff's offices and the Ohio State Highway Patrol from the brunt of the higher gas prices.Christine Wolff, spokeswoman for Cincinnati Public Schools, said the district is watching the crisis from the sidelines."Our cost does not go up with the cost of fuel because we have a set contract," Wolff said.School systems that aren't immune to gas price spikes are adapting - by combining routes.Campbell County Schools, for example, lopped 200,000 miles from its expected total mileage in the 2005-06 school year by making such changes. At $2.50 a gallon for gas, that's more than $71,000 in savings.
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