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Published on April 11, 2005

There's opportunity in high oil prices

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Opinion

AKRON (April 11, 2005) — The staggering climb in oil and fuel prices could be a business opportunity in disguise for North America's commercial tire dealers and retreaders.

With crude oil hitting near record highs, trucking fleets and owner-operators are scrambling for ways to manage soaring fuel costs. That's where commercial dealers and retreaders can make a difference.

Dealers are in a great position to help fleets and owner-operators reduce not only their fuel costs but tire costs, as well. And they can do this in several different ways.

Fuel is the second highest expense in running a truck, behind driver's pay, ac-counting for 15-20 percent of operating costs, according to data from Michelin North America Inc. Tires, meanwhile, make up another 2 to 3 percent of operating costs and have a definite impact on a vehicle's fuel efficiency.

Preaching the rolling resistance benefits of properly maintained tires—or even suggesting new tires optimized for improved rolling resistance—could provide savvy dealers an "in" with fleet managers looking to keep costs under control.

Fuel-efficient tires, with 20-to-30 percent lower rolling resistance, for example, can reduce fuel consumption by 6 percent, Michelin said.

Talking up the issue of inflation pressure and lower rolling resistant tires also might provide an opportunity for dealers to take over the tire and wheel maintenance programs for local fleets. This would not only open up a new revenue stream, but it would further tie the fleet to the dealer.

Dealers also can help their trucking customers reduce tire costs by promoting the use of retreaded tires.

Truckers who have shied away from retreads because of a bad experience in the past may be more receptive to trying them again if it helps them better manage their soaring operating costs.

Switching to retreads from new tires can cut a fleet's tire costs by more than half, according to Harvey Brodsky of the Tire Retread Information Bureau. Compared with the $400 cost of a new tire in size 11R22.5, a retread costs only $125 with the owner's casing and still gets the same mileage, he said.

Mr. Brodsky recommends truckers look for a top-of-the-line retreader because not all retreaders are the same. He suggested they visit the plant to see for themselves what the operation looks like and if it uses non-destructive testing equipment.

Sky-high oil prices may be bad for trucking companies, but they can be a boon for commercial tire dealers and retreaders.

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