PSI Fall Conference: On the Move

The rising cost of diesel fuel has made moving product by truck an increasingly challenging and expensive process, and the domestic trucking industry has more challenges ahead, according to Mark Martin of Swift Transportation, who spoke on the Transportation Panel at the Paper Stock Industries (PSI) Fall Conference held recently in Arizona.

In the past two months alone, the increase in the price of diesel fuel has lead to a 0.10 cent per mile increase in operating costs, Martin said. “It’s destroying budgets.”

High fuel costs are also likely to drive consolidation in the trucking industry as well as lead to an increase in companies that are forced to file bankruptcy, he added.

Another factor to consider is rising freight costs, Martin said. Weakness in the automobile manufacturing and housing sectors have contributed to an overall soft market, he said, which tends to lead to excess truck capacity and higher freight rates.

Fuel is also one of the biggest challenges facing the shipping industry, according to fellow panel speaker Greg Dixon, Zim Line. Dixon said the cost of bunker fuel has risen, and for a company that uses 1.6 million tons of bunker fuel per year, that has meant a significant increase in the overall cost of shipping material. “We’re at the mercy of the energy market,” he said, adding that bunker fuel represents approximately 60 percent of the operating costs per vessel.

The rail industry is facing its own challenges, said Steve Potter of CSX, who also spoke on the panel. Rail infrastructure is aging, he said, and will require a significant financial investment in the next couple of decades to address its needs.

Challenges on the highway could benefit the rail network, however, Potter added. For instance, growth in vehicle miles traveled has increased, but available lanes of highway have not grown to match that demand, leading to highway congestion that could benefit the rail industry, Potter said.

Problems extend further than the modes of moving material from buyer to seller, added Mario Bruendel of Fr. Meyer’s Sohn North America. Bruendel said many warehouses are also operating at full or near-full capacity, which has driven their rates up as well. “They can pick and choose whatever the want,” he said.

Changes in port routes to major export destinations like India are also causing logistical challenges. For instance, Bruendel said that certain ports of call in India aren’t deep enough to accept ships with full capacity.

PSI, a national chapter of the Institute of Scrap Recycling Industries Inc. (ISRI), held its 46^th Annual Fall Conference Nov. 14-16 in Scottsdale, Ariz. More information is available at www.paperstockindustries.org.