Wallingford CEO on fuel price surge: ‘Everything simply costs more to move’
By Jessica Simms
WALLINGFORD — Thurston Foods Inc., like other distributors, is grappling with the recent doubling in cost of diesel fuel.
The Wallingford-based food service distribution company uses approximately 13,000 gallons of diesel a week, according to CEO Peter Malone.
The company sends out roughly 50 trucks a day, five days a week during the summer months and during the school year, about 55 trucks a day.
Malone said the price per gallon of diesel, close to $6 as of Monday, has widespread impact on companies like Thurston, as well as their customers and ultimately the average consumer. According to gasprices.aaa.com, in Connecticut, the diesel price per gallon was about $3 a year ago.
“We’re in the transportation business as much as we’re in anything,” Malone said. The price of diesel fuel “has the biggest effect on everybody from our own customers to their customers. Everything simply just costs more to move.”
Thurston Foods serves institutions such as schools, hospitals and country clubs. As a result of the increase in diesel prices, the company has had to impose fuel surcharges, while also consolidating loads.
“We try to manage our routes a little bit better, we try to consolidate loads,” Malone said. “We try to encourage customers to maybe deliver once or twice a week instead of two or three times a week. At the end, they’re still a customer and you have to satisfy the customers.”
Impact on overall economy
Diesel prices impact various types of businesses as products are typically shipped by trucks, said David Cadden, professor emeritus of entrepreneurship and strategy at Quinnipiac University.
“So if there is an upping in the price of diesel, eventually that has to be carried down throughout the system,” Cadden said. “So the truckers have to raise their prices, those that are shipping through truckers then have to raise their prices. Finally it hits you with the retail market.”
Cadden said the pool of diesel on the East Coast is down to about 52 million barrels, when it would normally be about 62 million barrels. This means the diesel needs to be shipped either from the Midwest by truck or through the Colonial Pipeline from Houston, Texas, which takes about 18 days.
“In that time with the fluctuating prices, people tend to be very nervous about the risk that’s involved so there’s really a decline in the amount of available diesel here,” Cadden said.
In order to work with the increase in prices caused by the increase in diesel and gasoline prices, some businesses are doing something that Cadden said is called “shrinkflation.”
“As an example, I guess the family size of Lays potato chips used to have 18 ounces of potato chips. They charge you the same amount but now you get 16 ounces, so what they do is they downsized the size of the product so they don’t have to adjust the prices,” Cadden said.
Smaller businesses are also dealing with inflation, said Garrett Sheehan, president of the Greater New Haven Chamber of Commerce.
“Everything gets passed on at some point from the largest company on down and eventually it adds to the consumer,” Sheehan said. “As we’re dealing with lots of things that are at increasing prices, especially seeing a big spike in gas prices, that makes it more difficult to do business ... What we hope is that we can continue to keep economic activity going despite all of these increased costs.”
Reporter Jessica Simms can be reached at firstname.lastname@example.org.