Volume 9, Issue 5 - May 2008

Roll On

How the Door and Window Industry is Coping with High Fuel Prices

by Penny Stacey and Samantha Carpenter

High fuel prices are affecting everyone, from daily drivers to those paying more for food staples, due to increased shipping prices. But for a distribution company such as Dedicated Distribution Services (DDS), the difference amounts to a bit more. The company operates 75 tractor-trailers, which drive 2,000 miles a week, using approximately 400 gallons of diesel fuel every seven days. With diesel costing upwards of $3.79 per gallon at press time, this is a huge increase for the Indiana, Pa.-based company. Right now, it’s costing the company an extra $470 week per truck (over what the company paid around this time last year, when diesel was at $2.79 per gallon).

“With a fleet of 75 tractors, it’s an additional $35,000 per week of additional cash to keep our fleet moving,” says Don Undercofer, vice president and general manager for DDS.

Often, of course, these costs have to be passed on to the manufacturers that utilize their services.

“DDS will make every attempt to absorb increases in the cost of doing business,” he adds. “Just like the customers we service, the costs of materials to produce their products increase regularly. At some point we all have to make a decision as to when the cost of doing business increases to where it affects the [profit and loss statement]. When it gets to this point, the costs have to be passed along in order to stay in business.”

Manufacturers are not only seeing increases in prices from shipping companies, but many also have their own fleets of trucks who are experiencing high fuel prices.

Door and window manufacturer ProVia Door has seen increases in fuel costs in excess of $300,000 annually, according to chief financial officer Larry Troyer. The Sugarcreek, Ohio-based company utilizes its own fleet of trucks and contracts some trucks as well.

“Part of the dilemma is still providing weekly delivery to all of our customers in an effective, predictable manner,” Troyer says. “It’s tough to do that and use the most fuel-efficient delivery at the same time, but we’re trying to balance those two out.”

Hutting Building Products has its own fleet of trucks, but also utilizes less-than-truckload (LTL) carriers. The company has witnessed a 30-percent fuel cost increase in the last year.

Donald Black, operations director for the St. Louis-based company, couldn’t put a number on the exact amount of the increase—but says he knows his company isn’t making it up. “We can’t charge a fuel surcharge and our prices are determined by the market,” he says.

Pella Corp., which ships its products mostly via common carriers, is no stranger to the increases either.“Surging fuel costs are impacting all types of business, goods and services in the United States today,” says Pella spokesperson Kathy Krafka-Harkema. “In terms of Pella Corp. shipments with common carriers, we have seen significant fuel-related increases in shipping rates.”

The Solutions
Of course, the obvious question is, what are the options? Especially when it doesn’t look like the price of fuel is going down anytime soon.

Adapting routes is one way of cutting down on fuel used.

“We are using a routing system that has reduced fleet miles, as well as a truck-tracking system that monitors drivers and truck engines,” Black says. “We have increased miles per gallon (MPG) by more than three-quarters of an MPG. Some branches’ MPGs are up 1 MPG, so we are buying a lot less fuel.”

Huttig also pays an incentive to its drivers for increased MPG, Black says.

DDS uses a similar program.

“We have different trucking programs that allow us to plug in the stops that we’re going to and automatically configure the quickest way [and] the fastest way to do things, so we are using technology to limit us as much as we can,” Undercofer says.

He adds, “We also have another division that is tied in via satellite. They can get information via satellite that tells them when to get off a road and avoid a certain backup.”

Krafka-Harkema says Pella also takes this route.

“To maximize all types of shipments, Pella utilizes load-planning software to make the most efficient use of fuel, equipment and other resources necessary to truck products to our customers as quickly and efficiently as possible,” she says.

While ProVia has long used a routing system to make certain its trucks are taking the fastest routes possible, it has taken steps to make certain those trucks are used efficiently.

“We’ve made a few route changes just to make sure our trucks are fuller,” Troyer says.

Preventative maintenance also needs to be a priority for conserving fuel, says Undercofer.

“If the oil is good and clean, the vehicle is going to be more fuel-efficient,” he adds. DDS performs preventative maintenance on its trucks every 25,000 miles, which equates to about every two months. Previously, the company performed maintenance every 30,000 miles.

Idling Issues
While maintaining fuel when a truck is traveling from Point A to Point B usually is a top priority, Undercofer warns that saving fuel when a truck is idling—stopped for the driver to rest—also is an issue.

“Every state has an idling law, whether they enforce it or not,” he says. “For example, in New Jersey, if a truck is sitting at a delivery site for more than three minutes with the engine on [the driver] will get cited. As soon as those three minutes hit, they want you to shut that key off, and that causes discomfort for the drivers. This is a driver’s office, and imagine your office being 110 degrees.”

DDS has taken several measures to combat this issue. The first is installing auxiliary power units (APUs), which cost around $7,500 each, in some of its vehicles.

“It’s, in essence, an air conditioner compressor and power compressor to provide you with heat and cooling during the time your truck typically would be idling,” Undercofer says.

Using the APU cuts a truck’s fuel use down to 1.3 gallons per hour during a 10-hour break.

“We’ve seen limited improvement, but again, you’re looking at $7,500 per unit, so the return on investment is approximately 28 months,” he adds. 

ProVia also is purchasing similar units with all of its newest trucks.

“They’re expensive, but with the price of fuel, we feel reasonably confident in time they’ll pay for themselves,” Troyer says.

But, they’re not perfect.

“They don’t keep tractors cool on hot days or warm on cold days—they’re really just supplementing,” Undercofer says.

Another alternative DDS is exploring is the use of stations set up by a company called IdleAire Technologies.

“[IdleAire] is promoting this new technology at truck stops,” Undercofer says. “It’s kind of like going to a drive-in theater. Whenever you go into their facilities, you pay an annual fee or weekly fee or daily fee and it allows you to hook directly into a heating and air system or cable TV. 

Right now, it’s most popular in the Northeast.

“It’s cheaper than running throughout the night, but it’s still an expense,” says Undercofer, who has been with DDS for 11 years. 

Simple Strategies Can Help Mitigate Rising Fuel Costs
As soaring oil prices drive the cost of diesel to record highs, Ryder System Inc., a global transportation and supply chain management company, offers simple strategies to help businesses reduce fuel consumption and improve the efficiencies of their fleets and overall supply chains.

“Regardless of industry or size, almost every business relies on trucks in some way to move products across the nation’s highways, and, therefore, is feeling the impact of these price increases,” says Todd Renehan, executive vice president, sales and marketing, fleet management solutions.

Operating practices that can be implemented immediately to improve the fuel efficiency of fleets include: 
• Train drivers to practice fuel-efficient driving techniques; speed is the largest single factor impacting large truck fuel economy. Simply reducing speed from 65 miles per hour (mph) to 55 mph can result in an improvement in miles per gallon by as much as 22 percent;
• Improve tire maintenance; correct tire pressure, alignment and frequent tire maintenance have a significant impact on fuel economy. Have drivers check for visual defects before starting their work each day and use the recommended inflation pressure provided by the tire manufacturer;
• Specify fuel-efficient equipment; new engine technologies, improved aerodynamics and weight-saving designs are available to improve the fuel economy of today’s fleets;
• Implement an ongoing preventive maintenance program; a well-maintained vehicle is a more fuel-efficient vehicle. Consider outsourcing the maintenance of your fleet to an experienced third-party provider, or at least make sure your fleet is on a scheduled maintenance program for even the most routine care to optimize performance; and
• Leverage technology; take advantage of new telematics and onboard diagnostics systems, which help fleet owners analyze fuel purchases, optimize routes and monitor idle time and vehicle performance—all of which help mitigate rising fuel costs. Other strategies that help reduce fuel consumption and streamline a company’s supply chain include: 
• Integrate real-time inventory visibility in the warehouse; leverage innovative technology to streamline and improve the accuracy of inventory levels and reduce unnecessary trips; 
• Optimize distribution networks; establish regional distribution centers to serve customers on demand and optimize and consolidate routes, reducing the number of loads to require fewer trips and less idling; 
• Consider a dedicated fleet solution; control routes, fuel consumption and idle time with dedicated assets, drivers and strategic route planning; and 
• Improve transportation management; coordinate supplier shipments to consolidate freight costs and negotiate better rates, and leverage multiple modes.

Penny Stacey is the assistant editor of DWM magazine. Samantha Carpenter is a contributing editor of DWM magazine.


DWM

© Copyright 2008 Key Communications Inc. All rights reserved.
No reproduction of any type without expressed written permission.