Steve Constantine is steering his tow truck company along a marrow road these days--one that goes between rising fuel prices and stiff competition.
But things will have to change soon, says the general manager and co-owner of S&V Towing in Cambridge,
"With towing, it's such a competitive market. Rates should have gone up but they haven't."
S&V Delta, formed through a merger last June, has a fleet of 22 trucks, making it the largest towing company in Cambridge. It has plans to open a base in Kitchener this year.
The price of diesel fuel for it's trucks has climbed about 50 % in 18 months - to 72 cents a liter from 48 cents a liter.
Fuel costs now account for 13 % of expenses, up from between 7 and 8 % a year ago, Constantine says. "But it's not as if we have a choice. All we can do is fill up and go."
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For now, the company is trying to cut costs with a more efficient dispatching system.
"We're trying not to send guys out of their way. We're trying to be more efficient, and we're doing more planning," says S&V Delta's operations manager, John Kranjec.
"If we can't raise prices, then we'll have to do something to save fuel.
"This is a crazy business," he says. "In other industries, there's sort of a bond between competing companies, an understanding between them. But not in the towing industry. It's the worst for that sort of thing."
About 75 % of the company's business is in the local areas. The rest is long-distance calls where prices can vary widely.
"The days of undercutting the other guys are over and anybody that's trying to do that is only killing themselves," Constantine says.
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"If you undercut the competition, you might increase your volume. But if you're loosing money on every call, then all your doing is loosing money."
Towing prices will have to go up, he says.
We'll all have to go with it. Either that or close down. We can't keep this up.
"When your a company this size, you can set the standard. If we raise our prices, the others are going to have to follow because they can't afford not to."
"But in the towing, you've got to know your business," Constantine says.
"You've got to know your operating costs and the margins you need to live on.
There is a lot of variables that have to be taken into consideration."
Article from the Waterloo Record
by Peter Lee
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