The hot topic at a meeting of yard managers and owners of Anaheim’s Ganahl Lumber Co. last week: gas.
Ganahl, which runs eight hardware and lumber stores in and around Orange County, spends $400,000 a year on diesel for its 60 delivery trucks. These days, the going rate for a gallon of diesel is more than $3.
The owners and managers took all of 10 minutes to hear presentations on rising diesel costs, and then promptly voted to up delivery fees 11% to $50 per load.
The rate still is $5 to $15 less than transportation costs charged locally by Home Depot Inc. and Lowes Cos., according to John Ganahl, chief financial officer of the family-run, 800-worker company.
The vote to raise delivery costs was a no-brainer, Ganahl said. The owners and managers spent more time,an hour,debating whether to buy red vests for cashiers and salespeople.
“Fuel is an economic issue that is easy to define,” Ganahl said. “The uniforms, which we’ve decided to buy, were our biggest, and lengthiest discussion.”
The chain is feeling the sting of fuel surcharges it pays on “incoming shipments from other vendors,” Ganahl said, prompting it to raise its own rates.
The company isn’t alone as oil flirts with $70 a barrel. High oil prices are working their way through everyday life at businesses across the county.
Roger Chen, owner of Tawa Supermarkets Co., the Buena Park-based parent of the 99 Ranch chain of Asian supermarkets, said he’s seen ripple effects.
“For sure, it’s a bigger impact on transportation costs,” Chen said.
Tawa has absorbed higher transportation costs without raising prices at its stores, Chen said.
The hit has been more direct for the county’s plastics makers, which make products from petroleum derivatives.
“As costs have increased, we and others in the chemical industry have had to pass those costs through, or absorb them into the system,” said Ken Gordon, a spokesman for Kentucky’s Ashland Inc., whose General Polymers division is based in Santa Ana.
Trucking companies also are on the front line.
Christopher Logan, senior vice president of marketing with Santa Ana-based GeoLogistics Corp., said his transportation company has passed along fuel surcharges from global air carriers and ocean shipping lines.
“When the fuel prices fall back, the surcharges disappear for our customers as well,” Logan said. “So it’s completely neutral to our company.”
GeoLogistics employs about 250 people locally and recently was bought by Kuwait’s PWC Logistics.
Surcharges have risen steadily since last year on air freight and containers, Logan said.
“From what we’ve seen, the economy has been quite resilient, and it continues to be strong in the U.S., and internationally,” he said.
GeoLogistics ships consumer electronics, computer products and “anything else sold in retail stores,” according to Logan.
Truck traffic is getting hit the hardest with regulated fuel surcharges now at about 12% of the total cost of moving goods from one state to the other, said Gordon Schick, owner of Schick Moving & Storage, an Allied Van Lines agency in Tustin.
“Any time things get more expensive, it adds to the cost of doing business,” Schick said.
But the higher prices don’t seem to be putting the brakes on Schick’s fleet of 20 long-distance and 15 local moving trucks, he said.
“Summer is always busy for us. It’s not like people aren’t moving because fuel is up,” Schick said.
Doug Hill, president of the Los Alamitos-based Moving and Storage Association of California, which represents upward of 100 movers locally, called high oil prices the new workers’ comp.
“I’m surprised I’m not getting more calls,” Hill said. “This is getting close to the level of problem the industry had with workers’ compensation.”
Soaring workers’ compensation insurance premiums have been the bane of employers here for the past few years, though the problem has eased somewhat with competition and state reforms.
Others contend they’re insulated from pricey oil.
Garth Blumenthal, general manager of swanky Newport Beach Mercedes-Benz dealer Fletcher Jones Motorcars Inc., said he hasn’t seen any slowdown in buying.
“I haven’t heard much about anyone complaining about gasoline prices,” he said. “It’s more likely coming from somebody buying a car for $50,000 or less.”
Sales of Mercedes-Benz S600 sedans and CL600 coupes,at $130,000 to $140,000 each,are brisk, according to Blumenthal.
“Our volume is up 8% over last year during the first seven months,” he said.
