Talk about pain at the pump. Since 2000, the average price of a gallon of diesel in Mississippi has gone from $1.45 to $4.06.It's a big jump for a semi-truck that gets about five to seven miles per gallon.
"I think it's going to affect the business overall," said Jerry Scruggs, owner of Tupelo Transfer Inc., a trucking company that has been in town since 1979. "I think it's going to weed out a lot of truckers, a lot of independent truckers."
Scruggs has 11 drivers. His business involves hauling import/export containers within a 100-mile radius of Tupelo.
Two years ago, labor was the biggest expense for Scruggs' company, coming in at about 20 percent to 30 percent of gross revenue.
"Now fuel is the biggest cost," he said, with it accounting for about 40 percent of gross revenue.
On a good day, each Tupelo Transfer driver will make two trips to Memphis, burning about 35 gallons of diesel on each trip. With the diesel prices where they are now compared with a few years ago, Scruggs said he makes about $35 to $40 less per trip now.
On average, it takes about $1,200 worth of diesel to fill up a semi, according to Mississippi Trucking Association President David Roberts.
In 2007, he said the U.S. trucking industry spent about $112 billion of diesel fuel. In 2008, the number is expected to climb to $135 billion.
Roberts said 75,000 people in Mississippi are employed by the trucking industry, adding that trucks transport more than 85 percent of all consumer goods in the state.
"If you eat it, wear it or depend on it, a truck probably brought it," he said. "The trucking industry is an essential part of our economy... As the diesel price continues to go up, it's not only affecting our industry. It affects others as well. Because diesel prices are ultimately passed through the supply chain, it's the consumer who ultimately shares part of that cost."
Many trucking company implement a fuel surcharge, a fee paid by the customer that is based on the price of diesel.
Scruggs tries to recoup the extra diesel expenses with a fuel surcharge. He used to evaluate the surcharge monthly, but he said prices fluctuate so much now that he can't keep up.
"I can't get the fuel surcharges in place quick enough to catch up with the escalating fuel prices," he said.
Mark Hudson, an account manager for the Tupelo office of Southeastern Freight Lines, said the company has had to increase its fuel surcharge as the price of diesel climbs.
"Our customers complain but we have to pass it along to them," he said. "Some areas it covers, but in other areas it doesn't."
Cutting into profit Because of the climbing surcharge, Chase Massengill, the dispatcher for Ripley-based Barefoot Carriers, said customer service is even more important.
"We have to be good to customers and be on time so they'll keep coming back," he said.
Barefoot Carriers has 30 drivers and Massengill said there is no downsizing on the horizon for the company that runs trips all over the country. But the price is gnawing down on the profit margin.
"We have to pay the drivers the same no matter what it costs us," he said.
Southeastern Freight, Barefoot Carriers and Tupelo Transfer, along with other trucking companies in the state, are having to figure out ways to get more bang for their buck.
Many are implementing a speed governor and having their drivers go five miles under the speed limit. They also are encouraging their drivers to minimize idling their trucks, instead opting to turn off the vehicle when it isn't in use.
Scruggs is evaluating each load his trucks pick up and currently is looking at cutting back on certain moves that aren't as profitable as others.
"I've been here a long time," he said. "I don't really want to go broke over that."
And, he said business in general is slow now, noting that there are companies within 25 miles of Tupelo that are cutting their trucks, but didn't give any specific names.
In the end, though, Massengill said his company is being smart about fuel usage, but is really going about business as usual.
"There ain't much I can really do about it," Massengill said. "You just work hard and hopefully the prices will come down. The more you complain the more you dwell on it."