Entreprise

Gasoline prices upset small businesses — “it’s awakening me”

Soaring fuel prices are hitting small businesses, encouraging owners of everything from furniture retailers to pool service companies to cut back on services and amend their contracts in an attempt to mitigate the financial blow. increase.

Keon Enterprises, located in Harrisburg, Pennsylvania, has paid $ 3,180 for gas in recent weeks, starting at around $ 1,500 in mid-December. Under the name Keon Transport, we operate 32 vehicles that provide door-to-door transportation for people with disabilities. “I keep checking the price of gas.”

A March survey of more than 780 SMEs in The Wall Street Journal by business coaching and peer advisory firm Vistage Worldwide Inc. found that 52% of SME owners are impacted by rising energy prices. It states.

According to AAA, the national average price of gasoline on March 18 was $ 4.27 per gallon, up from $ 3.53 a month ago, with a pandemic low of $ 1.77 in April 2020. Diesel fuel prices now average $ 5.07 per gallon, up from $ 3.94 a month ago. ..

Gas prices at Keon Transport are steadily rising.

Soaring fuel costs are the latest obstacle for SMEs that have been blamed for inflation and supply chain challenges because they lack the weight and sophistication to thrive when demand is strong and supply is scarce. am. SMEs are also having a hard time. Rising interest rates, on the other hand, mean higher costs for companies that need to borrow for inventory or other purposes.

Chris Fleener, General Manager of Reno Carson Lumber, a dealer with 47 employees and offices in Sparks and Carson City, said: , Nevada.

Until recently, volatile timber prices and rising labor costs were the biggest challenges for sawmills. Recently, suppliers have begun sending notices warning of higher fuel surcharges. The company is considering whether it can offer free delivery to its customers within two years. Time radius.

“We want to keep it going, but we don’t know how long we can do it. This is something we’ve always been proud of and used as a competitive advantage.”

Omara Riech picked up the passengers in Harrisburg and drove to their destination.

Some SMEs are passing on higher costs as rising gas prices exacerbate other inflationary pressures. A swimming pool service, maintenance and management company with a history of 30 years.

Hastings expects to spend $ 110,000 on gasoline this year, up from $ 50,000 in 2021. Lifeguard payments hired by the company increased from $ 11 in May 2021 to $ 17 per hour. Pool Chemical Cost Hastings has increased by an average of 20% since November and continues to rise almost every week.

A company in Brecksville, Ohio has raised commercial rates by about 15% and housing rates by 10% this year. Hastings also asked some customers to accept an intermediate price increase of as much as 20% in the middle of a three-year contract.

“This is the first time I’ve said I need more money in the middle of a contract,” Hastings said. Hastings expects revenue to increase by 12% and profits to decrease by 10% this year. Eighty percent of customers agreed to pay a higher price; he said the company expects to complete an agreement with others in the next few weeks.

Reno Carson Lumber, Nevada, is considering whether we can continue to provide free delivery to our customers within a two-hour radius.


Photo:

Chris Freiner

Weekends Only Inc., a St. Louis-based furniture retailer with eight stores and approximately 400 employees, plans to raise shipping charges at the end of March. Average shipping charges are likely to rise by about $ 30 to $ 149, Lane Hamm said. Chief executive officer of the company.

“We are now losing a fair amount of change in delivery because we can no longer accept it,” he said.

Fuel surcharges for inbound transportation have been raised from 46 cents per mile in October to 72 cents per mile, Ham said. Rising energy prices are expected to increase the cost of mattresses and upholstered furniture. These products.

“It will be difficult to pass these costs on to consumers,” said Ham, who is seeing a slowdown in furniture purchases from low-income customers.

Blue Eagle Logistics Inc., a trucking company based in Breinigsville, Pennsylvania, finds it particularly difficult for small businesses that raised prices earlier this year to survive soaring fuel costs in February, before Russia’s invasion. Ukraine. Only 40% of Blue Eagle contracts allow fuel surcharges.

Omara Riechi, owner of Keon Transport, has filled the vans of a company in Harrisburg, Pennsylvania.

“You can’t continuously break contracts and raise interest rates, especially for small businesses,” said Andy Planck, president of Blue Eagle, who may have to wait three months before imposing the next hike. It states that there is. % Of my business. There are many risks there. “

Some small businesses are looking for ways to curb the rise in employee fuel prices. US Energy Development Corp., an oil and gas producer in Arlington, Texas, has recently begun adding $ 50 to workers’ salaries to offset rising gas costs.

HM Royal Inc., a 97-year-old specialty chemicals distributor in Trenton, NJ, brought workers back to the office in September. “We are firmly middle class people here and they will be hurt,” said Joseph Royal, president of the 50-person company.

Cutting Edge Elite Inc., a New York City-based hospitality staff company, offers additional gas bills when waiters carpool to work in remote locations. The price has decided not to do so as it has already passed some price increases.

Keon driver Dennis Pepperman says he can now carry more passengers on a single trip than before.

Omara Riech says his thoughts on the price of gas have awakened him.


Photo:

The Wall Street Journal Michel Gustafsson

Gas and tolls can consume 30% of after-tax payments for employees who have to travel to New Jersey for a six-hour job, Nathan, CEO and co-founder of a 14-year-old company. Perry said. Perry is expanding his recruiting efforts to find workers who live close to his customers, more than 60 miles from Manhattan, such as Ewing, NJ.

“We need to build a whole new workforce. This daily regular business where people have to commute only changes the dynamics,” Perry said.

Keon, a transportation company based in Harrisburg, Pennsylvania, has asked drivers to win more customers on certain trips and has quit their jobs far away. This year we had to raise the driver’s hourly wage. “The driver should fit on the existing route, so there is no need to travel an extra distance.”

Dennis Pepperman, who has been driving Keon for about a year, carried four to five passengers on a regular trip. “Currently, there are six passengers filling the van,” Pepperman said. Idle the car to maintain air conditioning and heating, but turn off the engine to save gas.

Write to Ruth Simon (ruth.simon@wsj.com)

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