Mmmm…Gasoline…I never understood this… - Posted by Anthony - OH
Posted by Anthony - OH on June 09, 2000 at 10:28:55:
My wife drives an '86 Freightliner BTW. Loves it. I get to stay home and try to get this RE off the ground!
I keep hearing all these owner operators complaining about the price of Deisel Fuel. Now usually when the cost of a paticular good goes up across a whole industry, the industry passes that cost along and makes MORE money!!! (at least until demand slows)
All these owner operators should be passing the fuel prices on to their customers. I have seen a number of larger trucking firms on TV saying that say they do just that and that they are making more per load than they ever have.
Example I used to work for a company who built and sold PC’s. Whenever the cost of memory fluctuated, which it could double in a day, or triple in a week, we adjusted our prices accordingly. Profit was always a percentage over cost. So if memory prices caused a PC to go from $1000 to $2000 then our profit went from $200 to $400!!
Yes higher prices slow down the demand for your good or service (hauling oranges), but by passing on the cost of goods(Deisel) you should be at least making the same money. (Law of Supply and Demand)
Now what I have a feeling is happening is that you have a lot of Billy Bob Owner Operators who never went to business school. They know that they always have gotten paid $400/day for pulling their oranges across the state. Instead of passing the gas cost on to their customers, they eat it. Causing the smart Owner Operators(whom I’m sure your part of) to have to compete with companies who are (after the cost of deisel) working for free!
The solution is not lower gas prices (although I wouldn’t mind). Everybody pays (comparitively) the same price for gas. Its not like the Chinese can ship the goods cheaper. The solution is to buyout all those owner-operators who are working for free. They are all going to be filing bankruptcy soon. Thier customers still need those goods hauled and may be shocked to find out that thier friendly trucker was working for free (because of bad business skills NOT Fuel Prices). So when you call them and say you’ve bought the business (for pennies on the dollar), they will be happy to pay your Fuel-Adjusted rate. They surely don’t want to have to ship all those oranges via FED-EX. (Because FED-EX surely adjusts their rates based on costs.)