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Scott Adams, president of AM-Cell Trucking, is feeling the strain of increased fuel costs and reduced cargo. (Photo by Paula Illingworth)
By Shelia Watson
Contributing Writer
Scott Adams, president of AM-Cell Trucking, shrugged as he reflected on the state of the trucking industry.
“It’s pretty tough, that’s for sure,” he said.
“Pretty tough” translates into fuel prices that have nearly doubled in a year and fewer containers moving through the port, which means a slowdown in business for the trucking companies that gear up to transport those boxes to their destinations.
“The jump in fuel prices hurt the most,” Adams said.
With 22 trucks in his fleet, most of which run regional and long-haul trips, Adams went from paying $20,000 per week to $38,000 per week for fuel.
“One of our trucks coming back from Tennessee saw a store that was selling diesel for $4 a gallon,” he said. “Last year it was $2.”
Still, Adams insisted that he is better off than many other trucking companies.
“Luckily here we don’t run on credit; everything’s paid for,” he said. “We have no payments on the land or trucks. That’s how we’re making it. The ones that have to make payments on their trucks in addition to the heavy fuel prices and the slowdown are really hurting.”
Rick Todd, president and CEO of the South Carolina Trucking Association, agreed.
“There are a lot of empty trailers and parked trucks, and yet payments must continue on that equipment, so it’s really causing a lot of strain,” he said. “We’re in that tough cycle where we’ll be seeing bankruptcies and consolidations and fleets cutting back.”
Todd also agreed that fuel prices are hitting hard.
“Diesel fuel prices are now at record highs and we don’t see relief in sight any time soon,” Todd said. “It’s really worrisome and it causes a huge strain on cash flow. You have to spend that money up front or with short-term credit, and it takes a while to get paid to recoup that.
“Because of that, our guys have to have fuel surcharges that are dynamic. Some of the bigger guys, the shippers and customers, are trying to push the surcharges back, but that’s a cost of doing business and they have to realize that.”
Competition here and elsewhere
Todd called the situation “worrisome” on a macro level due to the importance of the trucking industry in the overall economic balance.
“The Port of Charleston is predominantly a truck port, as are most of our Eastern seaports,” he said. “Rail has a role in moving cargo, but rail struggles with capacity problems. Trucking is generally the mode of choice. And that’s what you have to keep in mind when you plan for future growth.
“The port’s competitive position with Savannah particularly is acute. Savannah has done a good job of attracting warehousing and distribution centers in that area, and they’ve aggressively recruited shippers. We’re seeing the results of that in marketing. The state of Georgia has provided all types of incentives, and they’ve built the infrastructure. They don’t have some of the same challenges that we have like highway capacity issues and public opposition. Plus, they’re closer to I-95. That all adds up to additional problems for truckers in this state.”
Companies must keep in mind the big picture when considering the state of the industry, Todd said.
“Worldwide demand, the Middle Eastern issues, rogue oil-producing nations doing their posturing, the value of the dollar, the commodities futures market — all these things have a bearing on what we pay for diesel fuel,” he said. “In terms of fuel prices, some would speculate an oil bubble. But even though I’m an optimist, it’s hard to see fuel prices dropping dramatically any time soon.”
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