December 24, 2007
The long haul | With high diesel prices, Maine's truckers have had to shift gears to stay in business
By Kerry Elson
Truckers are used to weathering peaks and valleys in the market. The cost of fuel fluctuates, and usually the industry can cope. But these days, truckers are driving through a considerably deep valley: With diesel fuel hovering around $3.50 a gallon, many Maine trucking companies are nearing financial crisis. That's meant laying off drivers, making fewer deliveries or going out of business altogether.
The average cost of diesel fuel has risen 70% from a year ago, to $3.32 per gallon in mid-December, according to the U.S. Depart¬ment of Energy. And in New England, prices have risen by 82% to $3.57 a gallon. "It's not unusual to get a peak [in fuel prices] in the wintertime, but the amount that it's risen is unprecedented," says Dale Hanington, president and CEO of the Maine Motor Transport Association, a trade group in Augusta.
The crisis could have a chilling effect on Maine's economy ˆ about 90% of all Maine products are exported by truck, according to Hanington. But the pinch has been immediate for the state's trucking industry. All over Maine, trucking companies down to independent drivers are looking for strategies to ride out the storm. Some have kept their trucks off the road, while others are trying to find ways to guzzle less gas.
Maine truckers hoping to get some kind of financial relief started organizing in early November. The group, called the Coalition to Lower Gas Prices in Maine, has held meetings with state legislators in Lincoln, Damariscotta and Skowhegan to broadcast its concerns and brainstorm ideas for cutting costs.
Gov. John Baldacci has responded. On Nov. 30, he declared a civil emergency, saying he'd implement several measures to help, from expediting refunds on the state's diesel fuel tax for some truckers to expanding access to the state's highways and byways. For example, he's pressuring the federal government to raise weight restrictions on Interstate 95 and Interstate 395 north of Augusta, from 80,000 lbs. to 100,000 lbs., so that truckers with heavier loads can take these shorter routes and save fuel.
Some say the industry can't afford to wait. Many small trucking companies are likely to go out of business soon, says Belinda Raymond, a coalition organizer in Kingman whose husband, Albert, has operated his own tractor-trailer for the last 12 years. "If you're an independent trucker," she says, "you're not going to be an independent trucker for long after this."
Independent owner-operators make up as much as 60% of the industry in Maine, says Hanington. It's hard to say just how many independent trucking companies have closed because of high fuel prices. In some cases, companies may already have filed for bankruptcy, but their paperwork just hasn't been processed yet, reasons Hanington. "The actual casualties of this [spike in fuel prices] we won't know for a few more months," he says.
Mapping a new route
Some independent truckers aren't waiting for tax relief from on high. Instead, they're modifying their businesses so they can stay on the road. Jason Kane, a trucker in Skowhegan, stopped transporting granite and lumber on his flatbed truck about a month ago, once $3.50-a-gallon fuel costs began eating up half of his $3,000 weekly revenue. Kane launched a business, Zippy D's, delivering take-out for area restaurants in his more budget-friendly Dodge Caravan, which uses about $40 in gas per day, compared to $400 per day for his truck.
Kane's making far less money now ˆ about $200 a week ˆ but he's resigned to making the new business work. "I guess my feeling is, it is what it is and you've got to fight through it," he says. "You can't just whimper about it."
Truckers who still want to haul freight are cutting costs to stay afloat. David Mihalik has owned a trucking company in North Monmouth for the last 11 years, hauling bottled water for Poland Spring and paper for Sappi and Verso mills. With the business struggling for the first time, Mihalik earlier this month dissolved his former business, Mihalik Family Trans-port, and launched a new limited liability company, D. & T. Mihalik Freight For¬warding. Mihalik's new company doesn't have employees, and instead hires out trucks to independent contractors, a move he says will significantly cut employee-related costs.
Mihalik also is tinkering with his trucks to make them use less fuel. This spring, he plans to open a garage in Auburn, where he'll redesign two of his 11 trucks, and where he hopes to share his techniques with other truckers looking to save money. Among his ideas: installing more efficient engines and transmissions in the trucks, and making them more aerodynamic. He figures that boosting a truck's fuel efficiency by just one mile per gallon will save $1,700 in fuel bills for the average Maine trucker every month.
While it's the smaller trucking companies that are the hardest hit for now, big trucking companies, too, are taking steps to save money. Carlen Transport in Bangor, one of the largest in Maine with 140 trucks, stopped running 37 of them this spring and summer to save money on gas and driver salaries. In early December, it also reduced its trucks' average speed from 70 miles an hour to 67, a decrease that could save the company about $250,000 over the next year, according to Lenny Peters, president of the company.
Peters says he's not only worried about high fuel prices. The poor housing market is hurting business, too, because his company mostly transports building materials to locations around the country. He doesn't anticipate that business will pick up again until 2009, but he's sure Carlen will still be around then. "We've had our ups and downs before," says Peters. "When it comes back up again, we'll be there."
The average cost of diesel fuel has risen 70% from a year ago, to $3.32 per gallon in mid-December, according to the U.S. Depart¬ment of Energy. And in New England, prices have risen by 82% to $3.57 a gallon. "It's not unusual to get a peak [in fuel prices] in the wintertime, but the amount that it's risen is unprecedented," says Dale Hanington, president and CEO of the Maine Motor Transport Association, a trade group in Augusta.
The crisis could have a chilling effect on Maine's economy ˆ about 90% of all Maine products are exported by truck, according to Hanington. But the pinch has been immediate for the state's trucking industry. All over Maine, trucking companies down to independent drivers are looking for strategies to ride out the storm. Some have kept their trucks off the road, while others are trying to find ways to guzzle less gas.
Maine truckers hoping to get some kind of financial relief started organizing in early November. The group, called the Coalition to Lower Gas Prices in Maine, has held meetings with state legislators in Lincoln, Damariscotta and Skowhegan to broadcast its concerns and brainstorm ideas for cutting costs.
Gov. John Baldacci has responded. On Nov. 30, he declared a civil emergency, saying he'd implement several measures to help, from expediting refunds on the state's diesel fuel tax for some truckers to expanding access to the state's highways and byways. For example, he's pressuring the federal government to raise weight restrictions on Interstate 95 and Interstate 395 north of Augusta, from 80,000 lbs. to 100,000 lbs., so that truckers with heavier loads can take these shorter routes and save fuel.
Some say the industry can't afford to wait. Many small trucking companies are likely to go out of business soon, says Belinda Raymond, a coalition organizer in Kingman whose husband, Albert, has operated his own tractor-trailer for the last 12 years. "If you're an independent trucker," she says, "you're not going to be an independent trucker for long after this."
Independent owner-operators make up as much as 60% of the industry in Maine, says Hanington. It's hard to say just how many independent trucking companies have closed because of high fuel prices. In some cases, companies may already have filed for bankruptcy, but their paperwork just hasn't been processed yet, reasons Hanington. "The actual casualties of this [spike in fuel prices] we won't know for a few more months," he says.
Mapping a new route
Some independent truckers aren't waiting for tax relief from on high. Instead, they're modifying their businesses so they can stay on the road. Jason Kane, a trucker in Skowhegan, stopped transporting granite and lumber on his flatbed truck about a month ago, once $3.50-a-gallon fuel costs began eating up half of his $3,000 weekly revenue. Kane launched a business, Zippy D's, delivering take-out for area restaurants in his more budget-friendly Dodge Caravan, which uses about $40 in gas per day, compared to $400 per day for his truck.
Kane's making far less money now ˆ about $200 a week ˆ but he's resigned to making the new business work. "I guess my feeling is, it is what it is and you've got to fight through it," he says. "You can't just whimper about it."
Truckers who still want to haul freight are cutting costs to stay afloat. David Mihalik has owned a trucking company in North Monmouth for the last 11 years, hauling bottled water for Poland Spring and paper for Sappi and Verso mills. With the business struggling for the first time, Mihalik earlier this month dissolved his former business, Mihalik Family Trans-port, and launched a new limited liability company, D. & T. Mihalik Freight For¬warding. Mihalik's new company doesn't have employees, and instead hires out trucks to independent contractors, a move he says will significantly cut employee-related costs.
Mihalik also is tinkering with his trucks to make them use less fuel. This spring, he plans to open a garage in Auburn, where he'll redesign two of his 11 trucks, and where he hopes to share his techniques with other truckers looking to save money. Among his ideas: installing more efficient engines and transmissions in the trucks, and making them more aerodynamic. He figures that boosting a truck's fuel efficiency by just one mile per gallon will save $1,700 in fuel bills for the average Maine trucker every month.
While it's the smaller trucking companies that are the hardest hit for now, big trucking companies, too, are taking steps to save money. Carlen Transport in Bangor, one of the largest in Maine with 140 trucks, stopped running 37 of them this spring and summer to save money on gas and driver salaries. In early December, it also reduced its trucks' average speed from 70 miles an hour to 67, a decrease that could save the company about $250,000 over the next year, according to Lenny Peters, president of the company.
Peters says he's not only worried about high fuel prices. The poor housing market is hurting business, too, because his company mostly transports building materials to locations around the country. He doesn't anticipate that business will pick up again until 2009, but he's sure Carlen will still be around then. "We've had our ups and downs before," says Peters. "When it comes back up again, we'll be there."
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