By Ken Ryan As summer approaches, floor covering distributors are on heightened alert over a series of transportation issues that may impact deliveries and eat into their bottom lines. Among the most recent challenges are the double whammy of fuel surcharges—coupled with anticipated fuel demand—and reports of driver shortages.
According to the U.S. Bureau of Labor Statistics, gas prices are up 22.5% in 2021 from 2020 and were the biggest contributor to an overall increase in goods and services in the nation. And then there’s this: According to the National Tank Truck Carriers, the industry’s trade group, between 20% and 25% of tank trucks in the fleet are not operating. During the pandemic in 2020, many of the drivers retired or went to different industries, creating a shortage.
To varying extents, distributors are already seeing impacts in higher fuel prices amid a driver shortage. “We are definitely feeling the impact of increases in fuel surcharges and delivery costs,” said Pat Theis, vice president of sales and marketing for Herregan Distributors, a top 20 wholesaler based in Eagan, Minn., with operations across several Midwestern states. “The lack of drivers upstream in the fuel supply chain has to be one of the contributing factors. Our biggest challenge right now is getting accurate shipping and delivery information on products that come from overseas.”
The ongoing ocean/land freight slowdown has impacted wholesalers on a number of fronts as they look to fulfill customer needs. As Greg Vale, vice president of sales for Baltimore-based Fishman Flooring Solutions, explained, “The impact we are experiencing is primarily from lack of drivers from LTL carriers that ship products from vendors, which can cause missed appointments that can potentially delay customers shipments. We are checking our vendors’ backorder dates and ETAs much more frequently to stay ahead of any potential issues. For deliveries from Fishman, we are implementing a solution on our trucks so a customer can access the ETA and location of their delivery from us at any time to ensure our customers are well informed.”
In California, top 20 distributor B.R. Funsten & Tom Duffy are able to employ their own Class A drivers; for Funsten, turnover is not an issue as its average tenure is over 10 years. Instead, expense has reared its ugly head. “What we are seeing are higher fuel expenses with costs averaging around 25% more than last year (Q1),” said Anne Funsten, president. “We are also feeling the pressure in subpar performance with our common carriers based on the driver shortage. To help us navigate, we are doing more deliveries with our drivers and adjusting routes as needed. We are also testing new common carriers in all our territories.”
Furthermore, Funsten said it is experiencing late deliveries due to shortages in raw materials and lack of container availability overseas. “We are working with our suppliers to update ETAs every week, and we’ve hired extra staffing so we can quickly get material from container to customer as fast as possible once it does arrive.”
In Texas, which dealt with a crippling winter storm in February, it’s so far, so good for two of its major wholesalers. For Houston-based Swiff-Train Company, the fuel shortage/surcharge “hasn’t been a huge effect as of yet on our business,” according to Shane Calloway, president and CEO.
In the Dallas suburb of Carrollton, Adleta president, John Sher, said it is very difficult finding new drivers—although he does not currently have that issue. “Fortunately, we have some long-time employee drivers who understand the value of the ‘Adleta family atmosphere,’” Sher explained. “Our reputation as a great place to work with a profit-sharing program has helped. We had a couple of drivers recruited to another company and both asked to come back. They were just a number there; here, we are part of a family.”
On the East Coast, Willow Grove, Pa.-based Derr Flooring is grappling with a truck shortage, according to Rick Holden, CEO. “We are having trouble getting trucks from most of our suppliers, and lead times have extended and prices have gone up dramatically. Availability of flatbed trailers is very limited. A lack of drivers seems to be more of an issue for us and not a fuel shortage issue. In some cases, we have sent our company tractor-trailers to our suppliers to pick up our orders.”
A shortage of drivers has been an ongoing issue for sometime, not just a COVID-19-fueled challenge. Mike Welch, president of E.J. Welch, who has been doing consulting work for two flooring distributors in the Northeast, said: “There is a severe shortage of drivers, especially Class A drivers. Both companies I work with have increased their rate of pay. One of the distributors is considering paying a signing bonus after having lost applicants to other companies doing so.”
However, Welch acknowledged that the hourly pay—even with the increases—may not be enough as retaining drivers is also a big issue. “With so many available openings, drivers see opportunities to earn more all around them. Some show loyalty but many will leave to earn as little as $0.50 to $1.00 more an hour.”
Scott Rozmus, president and CEO of FlorStar Sales, Romeoville, Ill., said the shortage of truck drivers has impacted business for some time. “It’s hard for me to pinpoint how much that has affected fuel supply and pricing in a vacuum, but we certainly have seen inflation—both with respect to our inbound over-the-road freight as well as in our own fuel costs.”
As if the current crop of issues wasn’t enough, the nation’s largest fuel pipeline was hit by a ransomware cyberattack, taking the operator—The Colonial Pipeline—offline. The Colonial Pipeline carries 2.5 million barrels a day—45% of the East Coast’s supply of diesel, petrol and jet fuel.
On May 9, the U.S. government issued emergency legislation relaxing rules on fuel being transported by road. Drivers in 18 states can now work extra or more flexible hours when transporting refined petroleum products. At press time, U.S. fuel prices at the pump were largely unaffected, but some question if that will change if the shutdown is prolonged.