Gas hikes hit vendors
ELYRIA, Ohio - Invacare raised its free freight threshold from $1,000 to $1,500 in August - with some exceptions - and implemented a 1% fuel surcharge on all shipments as the company seeks to combat record fuel costs nationwide.
"Our fuel costs have gone up 32% since Jan. 1 and 15% since May 1," said Lou Slangen, Invacare's senior vice president of worldwide market development in an interview before Hurricane Katrina jacked fuel prices even higher. "After we do this [raise fees], Invacare is still paying more than three-quarters of the freight bill out there."
Other companies - Pride Mobility and Medline - say they've already responded to rising fuel costs and that so far, there are no plans to raise freight charges.
"A year ago, in Sept. 2004, we updated our freight policy," said Kirsten DeLay, senior vice president of sales management and operational planning at Pride. "Our freight policy revolves around quantity by product category, not dollar volume."
DeLay couldn't say by what percent that policy revision increased freight costs to customers. She said the company's freight partners have agreed to keep freight costs as-is as long as the order volume continues at current levels.
Likewise at Respironics, where Dave Zerishnek says recent reductions to their fleet of transportation vendors have made the remaining vendors too grateful to push for higher fees.
"We've had some fuel surcharges but nowhere near what the market is bearing," said the logistics manager. "Essentially, our carriers are bearing the cost."
At Medline, the company still offers free freight at the $750 threshold. In response to rising costs, Medline is expanding its warehouse base "so we keep getting closer to the customer," said Tom Tucker, vice president of sales for DME and respiratory.
Medline also launched a scheduled shipping program whereby deliveries are made to the customer on the same day every week.
Invacare forecasted plans to boost shipping fees for customers in late July when the company turned in its quarterly financial report. Invacare spent about $60 million on freight in its HME division in the past year, a doubling of cost over the level two years ago.
"We're now at the point of trying to stabilize that without having a different order pattern from the provider," said Slangen.
For orders less than $1,500, Invacare charges a 5% shipping fee. Invacare will also continue to provide free freight for patient-specific orders (i.e. custom chairs, cushions, parts) that HME suppliers can't readily build to $1,500.