2003 Spring Volume No. 1
Operators Look for Answers with Escalating Cost
Steve McDonald–Sanitation Journal, April 2003
Spiking fuel costs coupled with hefty increases in general liability insurance and worker's comp has some operators rethinking pricing strategies in light of little hope costs will shrink. According to CFO Magazine, insurance costs are likely to continue upwards for the next two years with the hardest hit being businesses running large fleets of vehicles.
According to Mark Herring, a certified risk manager for Heffernan Insurance Brokers, costs have steadily risen, noting that a company paying $10,000 in 2000 could be paying $25,000 in 2003. Herring also notes that several insurance companies are no longer in business and that even fewer remain interested in writing policies for portable restroom companies. Still, other brokers claim that insurers are paying out about $1.10 in claims for every dollar collected in general liability premiums.
Overall, according to a survey conducted by Sanitation Journal in early March, about 40% of operators are collecting pickup and delivery charges on construction rentals. According to Eric Anderson of Anderson Rentals in Florida, the additional charge for pickup and delivery their company implemented earlier this year was a good decision, but notes that "recent increases have barely kept pace with the rising cost of fuel and insurance." Anderson acknowledged that a competitor had been collecting for delivery for over a year prior to his decision and emphasized that with more than 3,000 customers, Anderson Rentals recorded as few as ten calls and lost three - four customers. Anderson further noted that his company is considering backing off of delivery charges for some of their larger builders if they will accept subdivision billing, meaning one monthly invoice per subdivision.
Still, another operator claimed that charging for pickup and delivery would increase vehicle registration fees, as well as the motor carrier fee, and remains reluctant to implement a line item charge for delivery, but admittedly processes line item charges for rent, sales tax on rent, and a sewage disposal fee along with service and supplies.
Another operator running about 3,000 units says that his company had two levels of charges for delivery on construction sites, explaining that one is "on route" and the other is for a "special trip." "This is rarely a point of negotiation," he said, adding that the fee is collected most of the time.
Only 20 percent of the respondents to Sanitation Journal polling stated that they never charge for pickup and delivery, while 40 percent shared that they charged on an occasional basis for specific customer time requirements, special events, or short-term rentals. Collecting on a regular basis for construction held at 40 percent.
Damage waivers which address financial responsibility for damages incurred during rental are offered in some form by 80% of Sanitation Journal respondents, with 20% claiming to collect the imposed fee most of the time, 60% shared difficulty in implementing and collecting the fee, and 20% offer no damage waiver. Programs offered differed significantly from operator to operator, as did pricing structures. While some were as little as $1.00 and others as high as $10.00 per month, the average seemed to be in the range of $4 - $5 per month. One operator running around 8,000 units said they have had great success charging for the damage waiver up-front. The customer is automatically invoiced and it is up to them to contact the office should they elect to decline the offer. According to this operator, they collect the fee the "vast majority of the time." Many businesses claiming to collect the fee most of the time noted that their procedure required a customer's signature in order to decline the waiver. Terminology within the waiver varied considerably with some including a deductible and others excluding intentional or vandal-related damage.
You can obtain a sample of Damage Waiver forms directly from www.polyjohn.com/damagewaivers.html.
Click here for a listing of companies offering Trucks & Accessories, Decals, Financing, Restroom Trailers, Trade Publications, Marketing, Restroom Manufacturing/Sales, Billing/Routing Systems and Insurance.
Click here for more information on effectively marketing your business to special event coordinators, and construction and agricultural businesses.
Area Business Managers
Click here to find the PolyJohn Area Business Manager in your area.
Subscribe to JohnTalk
Click here to request a FREE SUBSCRIPTION.
Click here to download article reprint information.