Fueling Your Company

Distributors find some solutions to high gas prices.

With the national average topping $4 a gallon, high fuel prices create a multitude of problems for compressed gases and welding equipment distributors. In addition to having to pay a surcharge to suppliers to deliver product to them, an already low profit margin is dipping even more when the cost of being on the road is added in. With no end to rising fuel prices in sight, relief must be found somewhere besides the pump. GAWDA members, feeling the pressure from these costs, have developed their own solutions.

Importance of Communication
With a fleet of 45 vehicles—including 20 delivery trucks and four tractor trailers—covering four states, fuel economy is of paramount importance at WESCO Gas & Welding Supply (Prichard, AL). “Every little penny counts when you’re running a business,” remarks President Jenny McCall. Dispatchers at the company’s seven branches play a key role in that effort, conducting monthly meetings with drivers to discuss how speeding reduces fuel efficiency and the importance of turning off engines at stops.

Dave Mahoney, AWESCO
“If we take the overlap delivery route, put it in the prior day’s route and make that route longer, we may see some benefits.”
Dave Mahoney, AWESCO
 
Guy Marlin, Lampton Welding Supply Company
“We instituted a fuel surcharge because we don’t think it’s fair to a customer coming into our facility to buy something and then have to pay a raised price to cover our cost of gas.”
Guy Marlin
Lampton Welding Supply Company

Everyone at S.J. Smith Company (Davenport, IA) learns that proper driving techniques save fuel—a must-have at a company that operates 80 vehicles from 12 branches, more than half of which burn diesel. Training is hands-on: “The traffic safety and compliance manager rides with drivers to instruct them on proper shifting techniques and using appropriate gears to maximize fuel economy,” says President John S. Hanlon.

“Righting” Fuel Cost Wrongs
The package delivery company UPS has a unique way of saving fuel. A mapping program designs routes that avoid left-hand turns whenever possible. At 83 percent of UPS facilities, drivers predominantly make right-hand turns. All facilities are expected to adopt the policy by 2009. UPS approximates that the technique saves them three million gallons of fuel and three million miles each year, as right-hand turns eliminate idling at red lights and waiting to cross busy traffic.

Jackson Welding Supply Company (Rochester, NY) listens to suggestions from its drivers on more cost-effective routes. “We take their advice to heart because we want to be as efficient as possible,” President Robert Jackson says of his drivers’ ideas. “They’re the ones getting the receipt at the gas pump.” The 14 company vehicles are driven a total of approximately 9,000 miles per month.

Helping Employees
The 37 employees at the two branches of AWESCO (Albany, NY) may be in for a change—the company is exploring allowing some employees to work from home. In addition, President and CEO Dave Mahoney states, “We’re trying to determine where we could combine routes and go to four 10-hour days a week, which would save us fuel.” Commuting to work only four days a week would also help employees conserve gas. The company serves the region from Albany south through the Hudson Valley with its 17 vehicles, eight of which run on diesel.

WESCO employees have turned to carpooling. “Carpooling helps our employees save some money by splitting the gas,” says Jenny McCall. Because some employees who carpool have different work schedules, WESCO is considering allowing employees to work four 10-hour days.

Gary Bertrand, Rockford Industrial Welding Supply
“Delivering freight is one thing, but when you’re selling gas and welding products and you want to charge for the additional cost of fuel, it becomes more difficult. Not impossible, but difficult.”
Gary Bertrand
Rockford Industrial Welding Supply
 
Scott Griskavich, Badger Welding Supplies
“The delivery charge is not a profit center. It’s merely a charge to help cover the expenses we incur in getting the product to the customer, like the cost of liability insurance, tires, maintenance, hazmat certification, drug and alcohol testing, all paid at our expense. Raising the delivery charge was not an easy decision, but it was a necessary one.”
Scott Griskavich
Badger Welding Supplies

Dealing with Customers
Part of the strategy for dealing with fuel prices at Lampton Welding Supply Company (Wichita, KS) includes communication with customers. Says President Guy Marlin, “We’re working hard to educate our customers and help them make good buying decisions as to how much they want to put on their shelves, knowing that prices are going to continue to go up.” The 84 company vehicles deliver to customers in three states, driving more than one million miles each year.

Liberty Supply (Leominster, MA) believes in the need to pass on fuel costs for their eight vehicles, five of which are delivery trucks, to the customer. The company has increased its delivery charge 30 percent in the past year as the vehicles drive approximately 1,000 miles a week within a 40-mile radius. “I think it’s foolish to absorb all those increases,” states President Pete Matarese. “It would come back and bite us. We have to pass them on.”

Penn Oxygen & Supply Company (Jeannette, PA) covers a 40-mile service area, and its five vehicles average about 10,000 miles per month. President William Secreto admits that the company lost some customers the first time he raised prices to compensate for the rising cost of making a delivery. “It’s tough when you sell a customer a $40 cylinder of helium and then charge him $20 to deliver it.” Secreto adds a delivery charge, but it varies depending on the customer. Customers range from bars that buy CO2 to florists who buy helium to universities and research centers. “The situation is causing us to plan better, watch everything and micro-manage; we’ve even eliminated emergency deliveries.”

The Right Route
At the two branches of Winfield Iron and Metal (Winfield, KS), the small service area of 10 miles requires one weekly run. The majority of deliveries are hotshots, covering roughly 5,000 miles a month. In an effort to save fuel, these deliveries have been consolidated between eight vehicles, four of them diesel. “It might be every other day we can make a delivery to the customer,” says President Craig Duncan of future changes. “If that doesn’t work, customers may have to pay a higher price.”

John S. Hanlon, S.J. Smith Company
“We’re unhappy about it when vendors do it, but so are our customers unhappy with us. At some point in time, you have to say enough is enough. You can only absorb so much before you have to take a stronger look at your individual customers.”
John S. Hanlon
S.J. Smith Company
 
Craig Duncan, Winfield Iron and Metal
“Customers understand the problem because they too are dealing with it.”
Craig Duncan
Winfield Iron and Metal

Customers at Jackson Welding are asked to call a day in advance when they want a product, or else they face an extra surcharge. “If we hit up customers with a special delivery charge one time, they don’t want to swallow it again, so they comply with our desired delivery schedule,” says Robert Jackson.

Liberty Supply is in the process of studying delivery routes to see if reassigning deliveries will result in more efficiency and reduced costs. Pete Matarese is trying to figure out how they can travel less and still get the job done. “People often call and ask for something the day after the delivery truck has gone by. We’d often respond with ‘no problem, we’ll be there tomorrow.’ Now we ask if it can wait until next week.”

Changing Vehicles
At Compressed Gases of Augusta (Augusta, GA), pick-up trucks are favored whenever possible, as gas for the pick-ups is cheaper than diesel. The company owns three route trucks and three pick-up trucks that serve an 80-mile radius and drive a total of 7,800 miles each month. Operations Manager Joe Muns says, “If it’s something that can be delivered in a pick-up truck rather than the big truck, someone, including the owner, a salesperson, or me, will deliver it to the customer in a pick-up.”

Distributors’ 10 Ways to Save Fuel
  1. Communicate with your drivers on driving methods.
  2. Avoid making special deliveries.
  3. Maintain your vehicles.
  4. Use GPS to map the most efficient route.
  5. Switch to four 10-hour days a week.
  6. Send a smaller car to take a part to a technician at a work site, instead of having the truck return to base.
  7. Consolidate routes where possible.
  8. Downsize your vehicles.
  9. Consider hybrids for your sales cars.
  10. Arrange deliveries with customers ahead of time.

Alternative vehicles are being considered at Sims Welding Supply Company (Long Beach, CA). Its 25-vehicle fleet, which is 90 percent diesel, covers a service area of 200 miles. To alleviate the stress of high fuel prices, the company may be looking toward hybrids. Executive Vice President Kelly Sims adds, “We are now verifying that a delivery is absolutely necessary. No more milk runs.”

AWESCO’s Dave Mahoney seriously considered hybrids when he was looking at new sales vehicles. “I chose not to buy them because at the time the choice was either pay more for fuel or pay more for the car up front. Looking back, buying the hybrids would have been a smart decision. Going forward, I will consider them.”

Rockford Industrial Welding Supply (Rockford, IL) circumvents having the company’s suppliers deliver to them. “We pick up at the plant whenever possible,” relates President Gary Bertrand, “eliminating the supplier’s fuel surcharge.” The 68 company vehicles, including 48 trucks, deliver throughout a 250-mile radius, costing $60,000 in fuel for the 132,000 miles driven per month. The company may install bulk fuel tanks, and is running predetermined routes where it will make a difference in efficiency. Explains Bertrand, “We want to deliver to customers when we are in their area, even if it’s before they really need product.”

Jenny McCall, WESCO
“Customers see the price at the pump and understand we have to charge them something to deliver. We recommend they pick up their products if they can, in order to avoid these costs.”
Jenny McCall, WESCO
 
Robert Jackson, Jackson Welding Supply Company
“One good thing that’s coming out of these high fuel prices is that they provide a really good reason to insist customers comply with your desired delivery schedule.”
Robert Jackson
Jackson Welding Supply Company

Alternative Methods
Badger Welding Supplies (Madison, WI) has found a way to reduce stops made by the drivers of its 18 vehicles, including 13 trucks. “We call the customer and they tell us exactly what they want, rather than our drivers stopping and checking,” says President Scott Griskavich. The company fleet is driven 10,000 miles a month throughout southern Wisconsin.

Vehicles at WESCO adhere to a strict maintenance program. Jenny McCall describes it, “We’re changing the fuel and air filters on a timely basis, doing regular tune-ups, keeping tires at a proper pressure, those types of things—trying to maintain our vehicles so they are more efficient.”

The 25 vehicles at the two branches of Central McGowan (Saint Cloud, MN) may become smaller in size. “We are considering downsizing vehicles,” says Vice President of Sales Jeff Skumautz. One step the company has already taken to cut back on the average 180 miles each vehicle drives per day in a 100-mile radius is shipping some smaller items to customers via UPS. The cost of doing so is less than delivering the items by company truck. Customers are urged to increase their cylinder inventory in order to reduce the number of deliveries.

Shutting off the trucks is essential at Lampton Welding Supply. The company conducted a study in conjunction with Roberts International on saving fuel by turning off the engine. With gas at $1.20 per gallon at the time the study was done, it was revealed that the two hours of shutting down the truck each day saved $680 in fuel costs per vehicle and added 14,000 miles to the engine. “Shutting the truck off at customer sites can save us a significant amount of money,” states Guy Marlin.

Jackson Welding, a propane seller, is considering taking advantage of the fact that it buys propane at a wholesale price by using propane fuel engines. Robert Jackson maintains, “We have 30,000 gallons of propane sitting on our property at any one time, so fuel wouldn’t be a problem as far as availability.”

Read More Online

You can read the complete letter urging Congressional action to ease fuel prices written by GAWDA and other national trade associations by clicking here.

No Answers on the Horizon
In late Spring, truck drivers across America staged protests about the country’s high fuel prices and their impact on the cost of doing business and the economy. On June 18, GAWDA was one of 42 groups that signed a letter to the U.S. House and Senate encouraging their immediate action to address rising energy costs. The letter read, in part, “The skyrocketing cost of oil and gas is now impacting every industry sector, large and small businesses, and every American who relies on gasoline or diesel fuel for work and family needs. Congress needs to act now to increase domestic oil and natural gas production and to adopt policies which will reduce our nation’s dependence on foreign sources of oil.” In response, President Bush issued a four-part plan to develop the domestic oil supply, including allowing offshore drilling, increasing oil shale access, investigating oil in the Arctic National Wildlife Reserve and increasing the amount of domestic refining.

By August, fuel prices had begun to decrease slightly. But until prices go down and stay down, distributors will continue to search for their own solutions to this national problem.

Pursuing Propane
The GMC 7500 propane system was developed by CleanFUEL USA.
The GMC 7500 propane system was developed by CleanFUEL USA.
 
The Roush Ford F-150 liquid propane injection system operates solely on propane while providing the same horsepower, torque and drivability of an F-150 equipped with a gasoline-powered 5.4-liter, 3-valve Triton V-8 engine.
The Roush Ford F-150 liquid propane injection system operates solely on propane while providing the same horsepower, torque and drivability of an F-150 equipped with a gasoline-powered 5.4-liter, 3-valve Triton V-8 engine.

Natwel Supply Corporation in San Antonio, Texas, is trying something new to save money on fuel: propane vehicles. In early June, the company purchased a Ford F-150 and a GMC 7500 with liquid propane injection (LPI) systems. Roush Performance, known for its custom Mustangs and other specialty vehicles, converted the Ford F-150 to dedicated propane power. CleanFUEL USA developed the GMC 7500. Instead of converting propane into gas, the LPI system replaces the gasoline fuel tank, fuel pump and fuel injector rails with a pressurized system that delivers propane to the engine ports as a liquid. The LPI system controls fuel mixing and keeps the propane from vaporizing before injection.

For Natwel Supply, there were several incentives to buying propane vehicles. In certain Texas counties, the state offers grants to companies that trade diesel vehicles for propane vehicles. Tax credits are also given to companies that make the switch. Propane suppliers are given a rebate worth 50 cents per gallon. “I’m buying propane for $2 a gallon and getting a 50 cent rebate, so I’m paying $1.50 a gallon,” says Natwel Supply President Steve Mulder.

Propane vehicles have two disadvantages. The first is that the vehicles can be difficult to find, as they are not available at all locations. The second is that mileage is decreased with propane vehicles. However, according to Mulder, “When you’re cutting the price of fuel so drastically, even with reduced mileage, propane vehicles still save money.”

Gases and Welding Distributors Association