KEN ADAMS
Title: Owner Southern Cal Transport
Age: 69
Hometown: Terral Oklahoma
Education: Attended Stockton College in California for two years after ending a three-year stint in the Marine Corp.
Work History: Started working
for a trucking company while attending college in 1960. Moved to
Birmingham in 1978 as president of Eagle Motor Lines then purchased
another regional carrier Hall Systems in 1985. Sold Hall Systems and
acquired Southern Cal Transport in 1998.
About Southern Cal Transport: Birmingham-based
trucking company that operates 535 big rigs and 1200 trailers 950
employees. Delivers a variety of commodities consumer goods carpet
automotive and building materials to 30 states. Expects $135 million in
sales in 2008.

Trucking company owner Ken Adams has heard the consumer outrage over
the cost of regular unleaded gasoline at four bucks a gallon. But he
has never felt even greater pain as diesel fuel has climbed to a
record $4.71 per gallon in Birmingham.

Adams says skyrocketing diesel fuel costs are having a dramatic impact
on his company and on the economy as truckers are forced to pass on
delivery surcharges to customers who in turn raise prices on consumer
goods. He said it is making life tougher on trucking company owners who
are seeing profit margins pinched or eliminated entirely.

To get an idea of how trucking companies are being impacted consider
this: Adams say his big rigs have a 300-gallon capacity meaning at
$4.71 a gallon for diesel it can cost $1400 to fill their tanks.
That’s up from $800 a year ago at $2.70 a gallon.

Adams who has working in trucking company management for 48 years
shares his views on what he calls the biggest crisis in his industry’s
history and how he and other operators are responding to the rising
costs of fuel. Diesel fuel costs 75 percent more than a year ago while
regular unleaded has risen about 33 percent.

Why has the price of diesel climbed so much faster than regular gasoline?

As I understand it the refining cost is less for diesel than gasoline.
The biggest issue is demand for diesel in the world market has soared
even more than gasoline. Some third world countries use diesel to power
their manufacturing plants. As demand for diesel has grown worldwide
prices have climbed. I think a lot of it is due to speculators running
up the price. A year ago diesel was about 20 cents cheaper than
regular unleaded yet today it is about 80 cents higher. Is it unusual
for diesel to be so much more expensive than regular gasoline? In the
past diesel was cheaper historically than gasoline because as I said
before refining costs for diesel are lower. So yes it is unusual for
diesel to be so much higher than gasoline.


What impact has the rise in diesel fuel had on your company? How much
are you spending on average on diesel to fill up your trucks compared
to a year ago?

We buy about 1.3 million gallons of fuel a month. At current prices it
cost us $1.7 million more to buy diesel on June 1 that it did three
months earlier on March 1. We pass on some of those costs through fuel
surcharges but they don’t cover all of the extra costs of fuel. Plus
you can’t recover it until 30 to 45 days down the road after you paid
for it. That has hurt all trucking companies’ cash flow.

What steps is Southern Cal taking in reaction to higher diesel costs?

Besides fuel surcharges we are reviewing all of our routes to see where
we can reduce empty miles and operate more efficiently. We are trying
to reduce idling times to save fuel. We are having our drivers reduce
their road speed by three miles when making deliveries. Outside of
fuel we are also looking for other ways to reduce costs. We feel we’ve
been successful but it’s been a pretty rough time for the industry as
a whole.

What do you hear from others in the state and around the country?

Everyone is concerned. There are a lot of carriers going out of
business. There were 935 tractor trailer companies that filed
bankruptcy in the first quarter nationally the most ince the 2001
recession. Many truckers are in survival mode. It’s not how much you
can make but what can you do to survive.

Since our nation depends so much on the trucking industry to get goods
delivered give us your assessment of how higher diesel prices are
affecting consumers?

Seventy percent of our nation’s freight moves by truck. The high cost
of fuel will eventually be passed on to consumers in the way of higher
prices for goods that they purchase.

How have things changed since you first went in the business 48 years ago?

The biggest change has been in technology and management. We have the
ability to track where every one of our trucks and trailers are at any
point in time. It didn’t used to be that way. As a result of
technology we are able to make better management decisions. I remember
diesel being around 27 or 28 cents when I first got in the business. I
didn’t think we would ever get this high. I was surprised when it went
over $2 a few years ago.

What is life like on the road for truckers?

I have never driven a truck but I can tell you it is a difficult
lifestyle. They are away from home a long time and on irregular
schedules. They can’t plan times to be home with their families for
regular events. We at Southern Cal Transport appreciate what our
drivers do under the stress they have to deal with as well as the
families left behind who support them.

How does the current fuel crisis compare to the late 1970’s when the nation experienced another big run-up in fuel prices?

This is much worse. This run-up in prices is unprecedented and coupled
with the downturn in the economy it has made things really difficult.
We are dealing not only with the high costs of fuel but a decline in
freight markets. Over the last 18 months there has been less freight
available for shipping as companies have been cutting back.

In your view what must be done to bring fuel prices back down?

I feel the federal government has done a poor job when it comes to
energy policy. There are still places where we should be drilling and
producing our own oil so we won’t be so dependent on foreign oil.
Further the government must influence and reduce the amount of
commodity speculation that has added to the dramatic increase in costs.
Crude prices with production and demand at this level do not support
more than $70 to $80 a barrel for oil in my view.