THE GOOD NEWS: After hitting record highs last month, fuel prices have started to decline, a trend that analysts expect to continue through the summer. The bad news: They won't decline much.
For event rental companies, some of which have fleets of as many as 60 trucks, the price spikes sting. According to an informal survey by Special Events Magazine in June, the cost of operating an event rental truck fleet is 16 percent higher than it was a year ago, one more burden for an industry still fighting to bounce back from the economic doldrums of the past few years.
The Special Events survey also shows that while 43 percent of respondents have either started charging higher delivery fees or adding fuel surcharges in light of the recent run-up in fuel prices, fully 57 percent have simply absorbed the cost.
FLAT FEES
Chicago Party Rental, based in McCook, Ill., runs some 60 vehicles in its fleet, most on diesel fuel. The company is paying 55 cents more per gallon for diesel today compared with a year ago, notes marketing director Valerie Braun, leading CPR to review routes more carefully, increase the minimum order for customers, and resort to fuel surcharges periodically when fuel costs spike. But so far, increasing delivery rates has not been an option, she says. “Competitors wouldn't match them, thus our customers might simply drop us in favor of a competitor if we tried to pass on our increased fuel costs,” she explains.
Similarly, Pedersen's Rentals, with outlets in Vancouver, B.C., and Seattle running about 10 trucks between them, has been holding the line on delivery charges due to competitive pressure in both markets. Pedersen's has managed to avoid raising delivery fees by charging for special services, such as waiting on deliveries. But if the cost of fuel stays high, “We will be forced to put a fuel surcharge on our bills or raise delivery rates to compensate,” notes Rhonda Pedersen, vice president of customer services. “We feel people may be more willing to pay a fuel surcharge instead of a delivery increase because everyone is paying these fuel prices, so it should come as no surprise.”
MAKING IT PAY
In contrast, other operators believe the higher costs cannot be absorbed.
Edison, N.J.-based Miller's Rentals & Sales, which operates a fleet of seven trucks, puts a fuel surcharge on its rental contracts, a straightforward 20 percent of the standard delivery charge. Also, “We never in the past charged a client for additional trips if they added items after the trucks left,” says president Steve Kohn. “Now we are being more cautious about the fuel cost and informing clients that additional delivery charges will be incurred for additional items requested.”
Kirby Rental Service of Orlando, Fla., with a fleet of nearly 60 trucks, adds room charges and per diems to its out-of-town jobs, according to general manager Smitty Smith.
Indeed, caution in tracking and containing the true cost of delivery is the watchword for many event rental operators today.
Panache Party Rentals, Pompano Beach, Fla., runs 26 trucks in its main fleet, with more than 50 in operation in peak season. The company uses on-site fleet servicing from its fleet vendor to keep vehicles running efficiently, including a fueling service. “It comes to us, so as not to add the burden of our labor cost while fueling a truck,” notes president Kelly Murphy. Panache strives to keep its trucks full, delivering product early if possible, and turning to common carriers if needed. “So much of our business is last-minute, and that has a huge impact on the efficiency of the delivery schedule,” Murphy notes.
To keep operations efficient, M&M The Special Events Co., with outlets in Chicago and Dallas operating a fleet of nearly 25 trucks total, has added products and services to make the company a “virtual one-stop resource,” according to president Mike Berk. “If we can do tents and basic rentals — tables, chairs, dishes, etc. — and linens and floral and decor, we can deliver everything on one truck and make it more cost-efficient for the customer and for us.”
Rooney's Hire Service, based in Harare, Zimbabwe, is exploring new vehicle configurations. “We are looking at getting more horses [rigs] to move our trailers to various venues,” explains director of operations Niall Rooney. “Therefore, you have only a trailer sitting at a venue while installing equipment and not a whole rig. The horse will just move around picking up trailers and dumping them at venues,” enabling the firm to trim its fleet.
Although fuel costs have dominated headlines this year, several rental operators note that other cost pressures are far worse. “As a percentage of our overall expenses, truck fuel is still less than 1 percent of our budget,” notes Jack Luft, president of Hall's Rental, Chicago, far smaller than his costs for health, liability and workers' compensation insurance. “Those are the areas that have hurt us.”
RESOURCES
Chicago Party Rental, 708/485-8010; Hall's Rental, 847/929-2222; Kirby Rental Service, 407/422-1001; Miller's Rentals & Sales, 732/985-3040; M&M The Special Events Co., 630/871-9999; Panache Party Rentals, 954/781-5335; Pedersen's Party Rentals, 604/324-7368; Rooney's Hire Service, +011 263 4 748621 7
Avoiding jumps at the pumps
If you do nothing else, reduce the amount of time spent idling
According to the U.S. Environmental Protection Agency, this step alone can save up to 2,000 gallons of fuel a year. Turn the engine off whenever possible during loading and unloading. Consider buying electronic passes to avoid idling at tollbooths. If you do business where it is too cold to risk shutting down periodically, look into an engine-block heater rather than idling.
Maintain proper tire pressure
Under-inflated tires waste fuel. Automatic tire inflation systems installed on the truck-drive axle and trailer axles can reduce fuel consumption by at least 90 gallons a year, the EPA says, while extending tire life by 10 percent.
Go aerodynamic
Reduce the gap between the tractor and trailer, if possible, where turbulence creates drag. On flatbeds, secure loose tarps and arrange loads to be as low and smooth as possible. Buy or specify lightweight components (e.g., aluminum bumpers), which cut down on weight and drag.
Remember that speed costs money
The difference between driving 55 mph and 65 mph is about 3 cents per mile. Use the minimum rpm, minimum power and fewest shifts necessary when accelerating. Run the engine in its peak torque range.
Excerpted from Fleet Owner magazine, sister publication to Special Events Magazine.
