Death by fuel, insurance, taxes: decreasing margins force Northern trucker to call it quits. (Transportation).

Joe Bichler spent a warm March morning oil-spraying the engines of one of his trucks, wiping away a winter's worth of road salt.

More than just regular maintenance, the president of Algoma Transport Services is sprucing up his vehicles these days in preparation to put them up for sale.

Driving rigs and building companies has been Bichler's life for more than 40 years. Always a hands-on owner, Bichler was as likely to be seen behind the wheel heading down Interstate 75 as he was behind a desk shuffling through paperwork.

For years he operated Steel City Truck Lines in the Sault before opening this new enterprise on Cathcart Street four years ago.

He built the firm from scratch up to 10 trucks, 20 trailers and 26 employees hauling hardwood logs between Michigan and Northern Ontario, and landed a lucrative deal to transport glue resin from lower Michigan to the Sault's Georgia-Pacific flake-board plant.

But with diesel fuel prices spiking to an historic high this winter, combined with what Bichler calls "unacceptable and unreasonable increases" in insurance costs, business taxes and bridge tolls, he could not afford to stay in business. By the end of January of this year he made the agonizing decision to fold up shop.

"I'm done," Bichler says. "I'm not going into debt and piss away my assets. In the four years I've been in business, the cost of fuel doubled.

"When the margins get too small, you've got to make a decision."

Fuel, which once made up 20 per cent of his operating costs, rose to more than 40 per cent. Typically truckers protect themselves by setting up a fuel surcharge, a mechanism for passing on operating increases which is calculated as a percentage on freight rates.

But his carrier partner would not come to the table to deal with the rapidly escalating fuel costs, so he could not pass on the increases to customers.

There is fierce competition on the roads from other carriers willing to work with a lower surcharge, he says. Also, American truckers still enjoy a big advantage on fuel prices. As well, he finds the large Class I railways are now muscling in to scoop up any short-haul traffic to the U.S.

"The increased cost of fuel has moved a lot of traffic onto rail and into areas where railways weren't even quoting a year or two ago," says Bichler. "They're not as affected by the increased costs of bridges (tolls) and they don't have the 20 to 30 per cent increases in insurance premiums annually. So it's a big advantage for them.

"Every time my fuel and insurance costs go up, I become fair game for the railways," says Bichler. "They can do it more efficiently."

In early March, the Ontario Trucking Association reported the average Ontario diesel wholesale price increased to 57.08 cents per litre, its highest point ever, representing an increase of 31.49 cents per litre or 122 per cent over the last 14 months.

"Everyone's feeling that pinch, whether it's a big or small company," says Doug Switzer, manager of government relations for the Ontario Trucking Association.

A number of rising costs have conspired to dig deeper into carriers' pockets, he says.

Fuel costs are 93 per higher than in 2002, insurance premiums average about 40 per cent higher than last year, WSIB rates increased by six per cent and there are new surcharges to compensate drivers for long wait times at border points.

After the last set of fuel increases three years ago, some carriers built in escalator clauses into their contracts, but Switzer says, other reluctant operators do not always pass their costs on to the shippers and pursue the proper compensation because of the competitive nature of the industry. Sometimes shippers or associate partners are not willing to ante up for those costs incurred by the carrier. Without that co-operation, many small operators do not survive.

"Companies with deeper pockets and reserves can weather this a bit longer, but everyone's feeling the same pinch," says Switzer. "The smaller companies are always vulnerable to economic volatility, which is what we're going through right now."

"We're encouraging (carriers) to do that, to share the burden with shippers," says Switzer. "These are tough economic times and in any sector there are small companies that are going to get hurt and go out of business."

In terms of government intervention, Switzer says the less involvement is better, though the federal government can do more by settling the hours of service issue governing how many hours a driver can work and granting the industry some General sales Tax relief on fuel.