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Economic realities shifting to favor trucking companies

A strengthening economy coupled with rising diesel-fuel prices are causing many trucking companies to impose hefty price increases, The Wall Street Journal reported.

The result has been a modest increase in fuel surcharges, higher retail rates and at times, better coordination to keep drivers from waiting to pick up and deliver.

Thomas Albrecht, an analyst at BB&T Capital Markets, expects trucking companies to boost rates by 8 percent to 10 percent this year, including fuel surcharges. In addition, because companies are paying more for drivers and fuel, they are finding they now have enough muscle over customers to avoid absorbing those costs themselves, the paper reported.

Schneider National Inc., Green Bay, WI, says customer demand exceeds its supply of 14,000 tractors and 40,000 trailers by as much as 10 percent.

Schneider is boosting shipping rates by 5 percent to 7 percent.

"The market for trucks is so tight we are able to pass along higher costs," Tom Nightingale, Schneider's vice president of corporate marketing, told the paper.

So far, the shortage of trucks doesn't appear to be disrupting supply chains, though some customers are being forced to schedule pickups two days in advance, instead of offering same-day service, the paper reported.

Meanwhile, higher trucking rates are starting to cause higher retail prices for some goods.

Carroll King, director of logistics at Hormel Foods Corp., Austin, MN, said the company was passing along its higher transportation expenses as part of a 4.5 percent to 6.5 percent price increase in June on Spam canned meat and hundreds of other packaged foods.

Route changes, better coordination

With their leverage growing, some trucking firms are concentrating their drivers and equipment on routes that best fit their networks, according to customers, while avoiding customers in more remote locations. Customers say they feel pressure to make things more efficient for the truckers.

Building-materials maker Owens Corning of Toledo, OH, this week expanded a Web portal that gives trucking companies status reports on upcoming or in-process freight shipments. The company also plans to launch an appointment system for trucks so that drivers won't have to wait in line when they arrive at an Owens Corning facility, John Gentle, the company's global leader of carrier relations, told The Journal.

Steve Feliccia, director of logistics at PolyOne Corp., Avon Lake, OH, said he was negotiating how much of a premium the maker of polymers and chemicals will have to pay to reserve additional trucks in the peak September and October shipping months. PolyOne already gives truckers two days' notice whenever it needs trucks, instead of calling the same day.

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