As if the housing slump isn't enough, the 50% jump in diesel fuel prices over the past year has given dealers and distributors another headache. But while there's not much they can do about the slump in home sales, they can–and are–taking action to combat the fuel price hikes.
An exclusive online survey of ProSales Business Update readers that concluded last month found dealers and distributors were responding to higher prices several ways. Nearly 88% of the 853 responses to one particular question said they were working harder to consolidate deliveries. Nearly half said they had raised prices since Sept. 1, 2007, while a lesser percentage increased delivery or fuel charges. A fifth reduced the number of deliveries, and about 10% trimmed the distance they'll go to make deliveries.
A total of 958 people began the online survey, and 864 completed it. More than two-thirds of the participants work at a building material dealership, while 13.6 are from wholesalers, and most of the rest work at molding/millwork companies or short-line dealer/distributors.
As a group, wholesalers were more likely to raise prices and reduce the number of deliveries, while lumberyards were more disposed to consolidate deliveries.
As with a previous survey on the subject, conducted last year, fuel surcharges remain a sensitive issue among lumber dealers. Somedislike fuel surcharges on principle, and others fear they will lose business if they impose them.
"Builders are telling us that delivery is a cost of business, and surcharges are not acceptable, but they understand fuel increases since they are seeing it with their supers," one dealer wrote.
Said another: "[We] don't think we can add a fuel charge. At this time, we look at it as if we were to charge an amount for health costs on our invoices to our customers, because our health costs have risen just as much as our fuel costs, or a charge for the higher taxes we are paying."
Lumberyard executives' views about fuel surcharges also might stem from the fact that they're feeling similar pain. 96.3% said at least one vendor was adding fuel surcharges to the invoices they present to dealers, but only 88.1% said they pay those surcharges.
"I really wish the vendors would just raise prices, instead of charging a percent of the invoice," one LBM exec wrote. "If our people forget to add the surcharge in and quote the job, that's a mistake that is getting too hard to absorb."