Trucking companies close some of their routes because of spiraling diesel prices.

Trucking companies close some of their routes because of spiraling diesel prices

`If we can't pass the costs on we'll park our trucks'

Soaring diesel fuel prices -- up more than 40 percent during the crisis in the Middle East -- are jackknifing Southland trucking companies and forcing the closure of some marginal routes.

"It's just about putting us out of business," said C.R. Hart, chairman of Los Angeles-based 4H Mountain Valley Express Inc. "If it keeps going up, we're going to have trouble."

The company has already closed some of its routes to Victorville and Lancaster, areas with few customers, Hart said. His company has 50 employees and 40 trucks.

Other companies are trying to pass costs along to customers but it's been a rocky road in a business notorious for its thin profit margins.

"We're fighting with customers, trying to get them to pay a few cents a package more for freight," said Kenneth Wiley, president of Los Angeles-based K.H. Wiley Trucking Inc. "Some have paid the difference, some have grumbled and some haven't paid. If we can't pass the costs on, we'll eventually have to park our trucks."

The price of wholesale diesel is averaging $1.34 a gallon, a 41.3 percent increase since the Iraqi invasion of Kuwait, according to the California Trucking Association. Retail diesel is averaging $1.42, but station prices range from $1.35 to $1.52.

Absorbing the costs is expensive, yet truckers are reluctant to raise rates.

Wiley Trucking, which owns five trucks, is losing between $800 and $1,250 each week, and Murray Trucking Unlimited, which has 30 employees and is based in Santa Fe Springs, lost about $11,000 during August.

"It's very tough to pass on extra costs to customers. After dealing with them for 10 or 15 years, you can't just turn around and raise charges," said Leo Gonzalez, spokesman for Los Angeles-based Reliable Transportation Inc., which owns four tractors and subcontracts other work out.

Reliable Transportation is absorbing fuel cost increases, hoping that oil prices will eventually come down, Gonzalez said.

Murray Trucking absorbed all of the fuel price increases in August, according to Bob Murray, but it passed some of the costs along to customers during September with a 3 percent surcharge. Fuel costs have increased operating costs by 5 percent, but the company aims to drive some of its competitors out of business with the lower rates.

"What saved us, quite frankly, is that we already saw other carriers raise their rates up to 5 percent," Murray said.

Long Beach-based 3C Trucking hasn't bought any diesel since the Persian Gulf crisis began, but supplies are running out.

The company is facing a price hike of about 4 percent. Its profit margin is around 3 percent, said treasurer Jim Cameron.

"You take away 4 percent from there and you're going in the hole," Cameron explained.

The rates of 3C and many other trucking companies are regulated by the Public Utilities Commission. Calwest Tariff Bureau, which represents 3C and 450 other trucking companies, is appealing to the PUC for a 10 percent rate increase, Cameron said.

Some companies say customers understand the rate hikes and are complying with the surcharges.

Evans Tank Lines, based in Maywood, transports gasoline, so its customers are more understanding of fuel price hikes than most. The company has implemented a surcharge of 4 percent to 5 percent, said President Cleo Evans.

And Compton-based LA East Express is placing surcharges of 2 percent to 5 percent on bills.

"The customers themselves aren't griping a whole bunch because they know what the situation is," President Kelly Davidson said.

However, even with surcharges, "We never recoup everything we lose," Davidson said.

Andrew's Moving & Storage has implemented a 2.5 percent surcharge along with the rest of the moving and storage industry, said Wayne Holbrook, sales manager of the Glendale-based company.

According to Luke Sherwood, spokesman for the California Trucking Association, no segments of the trucking industry are excluded from the cost increases.

"Everything is really being affected," he said. "There really are no areas that are immune from the pinch."