The U.S. trucking industry-and by association, its suppliers as well-appears to be at a tipping point.
On one hand, the industry reported month-on-month increases in tonnage shipped for three straight months through February, while on the other hand industry leaders expressed concern over the impact rising fuel costs are having on truckers.
In terms of tonnage, the American Trucking Associations (ATA) noted the February index for goods shipped was 3.5 percent above February 2007 and at its highest level in more than two years.
That performance, reported in late March, was deemed ``encouraging'' by ATA Chief Economist Bob Costello.
``The fact that truck tonnage did not lose any of January's robust 2.4-percent gain is quite positive,'' he said.
Mr. Costello is forecasting a mild recession for the overall economy during the first half of this year, but at the same time he noted that truck tonnage often leads general economic activity. Tonnage rebounded in 2001, he said, just as the aggregate economy was slipping into a recession.
``Perhaps we are seeing a repeat of the last recovery,'' Mr. Costello said, ``but it is still too early to make that call, especially with energy prices at historic levels. There are just too many downside risks at the moment to say definitively that trucking is leading an economic recovery.''
While the tonnage index performance offers some reason for optimism, the ATA and the Owner-Operator Independent Drivers Association (OOIDA) are calling on the federal government to take measures to increase the supply of diesel fuel, including possibly releasing oil from the U.S. Strategic Petroleum Reserve (SPR).
Noting that it expects the U.S. trucking industry to spend $22 billion more on fuel this year than in 2007, the ATA is urging Congress and the Bush administration to take whatever steps might be necessary to improve the fuel supply, including supporting increased refining capacity and the ``environmentally sound'' exploration of Alaska's Arctic National Wildlife Refuge and Outer Continental Shelf.
``The trucking industry is making great strides in its efforts to reduce overall fuel consumption,'' said ATA President and CEO Bill Graves in a statement. ``But an affordable supply of diesel fuel is imperative to keep our trucks moving. There is little to suggest that fuel prices will decline any time soon. Yet every day, ATA hears new stories from its members about how escalating fuel prices are hurting their businesses and affecting their livelihood.''
Mr. Graves wrote President Bush in mid-March, urging him to consider using oil from the SPR to help ``burst the bubble in the crude oil market.''
He also argued in his letter that oil markets are out of adjustment because ``many hedge funds drive up the price of crude based on speculation. We need something to break that chain, and an SPR release could do it.''
The ATA estimates the U.S. trucking industry will spend $135 billion for fuel in 2008 based on current fuel price forecasts, up nearly 20 percent over 2007.
Historically, fuel represents the second-highest operating expense for motor carriers-accounting for as much as 25 percent of total operating costs-but for some motor carriers, fuel is beginning to surpass labor as their largest expense, Mr. Graves said.
The cost to fill the fuel tanks on a typical tractor trailer has surged 116 percent, or $615, in five years, the ATA said. Because trucks haul 70 percent of all freight tonnage, high fuel costs can raise the cost of food, retail and manufactured goods.
In its letter to President Bush, the OOIDA said each time the price of fuel increases by 5 cents per gallon, a trucker's annual costs increase by roughly $1,000, which is proving to be an ``enormous burden'' on small business truckers whose average annual income is $37,000 to $40,000.
``The line between profit and loss for small truckers is getting thinner every day,'' the letter said.
The ATA represents more than 37,000 members covering every type of motor carrier in the U.S.
Escalating fuel costs are hitting commercial tire dealers doubly hard as they are facing reduced business with their customers at a time when they have to raise prices for their services to keep pace with costs.
More than two-thirds of commercial dealerships surveyed for this issue cited skyrocketing fuel costs as one of their primary concerns for 2008 and beyond.
Peter Gerry, owner of Pete's Tire Barns in Orange, Mass., said he's retrofitting his service trucks with ``pony'' motors that operate on about 0.4 gallon per hour vs. the 2 gallons an hour the trucks use when idling during a service call. It's an up-front expense he said he's willing to make.
As for commercial dealerships/retreaders in North America, Kal Tire retained the top spot with estimated sales of $500 million through its 163 outlets throughout western Canada.
Southern Tire Mart L.L.C., the Columbia, Miss., dealership that was re-established five years ago by Thomas and James Duff, moved up to No. 2 on the dealership ranking with sales of $350 million through 47 outlets in seven states and to No. 3 on the retreader rankings with 2,410 units of daily production.
A new face in the top 10 of commercial dealers at No. 9 is Tredroc Tire Services, a company that was formed out of the merged assets of Antioch Tire Inc. and Chicago Bandag Inc./CBA Tire.
Antioch, Ill.-based Antioch Tire bought CBA last October and integrated the two Chicago-area businesses into the entity, which generated $158 million in sales last year through 21 commercial tire outlets and six Bandag retread shops in four states.
Goodyear's Wingfoot Tire Commercial Tire Systems L.L.C. unit retained the top spot among truck tire retreaders ahead of Michelin North America Inc.'s Tire Centers L.L.C. unit and Southern Tire Mart. Bridgestone/Firestone's GCR Tire Centers was the No. 4 retreader on its own accord, but BFS also owns two other retreaders in the ranking-Tire Distribution Systems and White Tire L.L.C.-whose combined retreading capacities would push BFS to No. 2 if counted together.
Purcell Tire & Rubber Co. claimed the top rung among OTR retreaders, slipping ahead of NRI Inc., which experienced a 10-percent drop in output last year. Seven of the 15 largest OTR tire retreaders saw drops in production last year.
Eastern Tire Service Ltd. of New Glasgow, Nova Scotia, is considered the largest passenger/light truck tire retreader ahead of Techno Pneu Inc. of Rimouski, Quebec.
New to the commercial rankings this year are:
* Action Tire Co., a Forest Park, Ga., dealership with nine outlets encircling Atlanta and a 3-year-old Oliver retread plant in Forest Park. Founded in 1985 by Rick Stewart, Action Tire reported commercial-related sales last year of $25 million, dealing primarily in Cooper, Ohtsu, Toyo and Yokohama new tires.
* Ozarko Tire Centers Inc., a West Plains, Mo., dealership with eight outlets in Missouri and Arkansas and two MRT plants. Ozarko had $23.6 million in commercial sales last year and produced about 245 retreads daily.
* Phelps Tire Co., a Seattle-based dealership with five commercial outlets in Washington and one in Alaska plus an MRT plant. Phelps' commercial sales of $22 million earned it the 49th spot in this year's ranking.
* Quality Tire Co., a Salt Lake City-based commercial dealership with three outlets in Utah and one each in Colorado, Idaho and Montana, along with three Oliver retread plants. Sales of $21.6 million last year landed Quality Tire the 50th spot in the rankings.
Other dealerships growing in the past year include:
* Eastern Iowa Tire in Davenport, Iowa, opened one new commercial outlet to give it 10 locations in Iowa, Nebraska and Illinois; the firm's commercial outlets do business as Heartland Tires & Treads.
* Boulevard Tire Center in Deland, Fla., added two outlets for a total of 180.
* Kal Tire added mold cure retreading capacity to its Kamloops, British Columbia, plant.
* New Pride Corp., the former Pacific Coast Retreads, closed its Oakland, Calif., retread plant and consolidated the production at its Rancho Dominguez, Calif., plant.
* East Bay Tire Co. opened a commercial outlet in Fresno, Calif., earlier this month, giving the Fairfield, Calif.-based wholesaler its fifth commercial outlet.
* Redburn Tire Co. opened a Bandag retread plant at its commercial outlet in Albuquerque, N.M., giving the Phoenix-based dealership five Bandag shops-two each in Arizona and New Mexico and one in Nevada.
* Pete's Road Service Inc. relocated its Long Beach, Calif., store to Gardena, Calif., and is expanding its Coachella, Calif., outlet.