Although the housing slowdown is a greater cost to the United States economy than the rise in oil prices, the cost of fuel is no small matter for rental companies, nor is it for rental customers. It's obvious that fuel prices are far more likely to go up than come back down in the foreseeable future, and most rental owners I've talked to are not taking the issue lightly.

Passing costs on to customers is one approach that needs to be incorporated. Some rental companies are simply adding a fuel expense surcharge and saying customers understand the need for it, just as some rental company owners understand suppliers that add fuel surcharges to the cost of equipment. Some companies just charge more for fuel used by customers and charge more for deliveries, although there are limits to what the market can bear. Some owners say some customers refuse to pay the fuel surcharge. They say trucking is simply not a profit center and if customers refuse to pay delivery charges, depending on how much business they do with them and how they pay, the rental company can't always recoup those costs.

I think it makes good business sense to pass on the costs as much as possible but as we all know, this is a highly competitive business and a lot of factors go into what you can get away with charging without losing customers.

The consensus I'm hearing from rental companies is that up to this point the increase in fuel costs is relatively manageable. For the most part, the economy is still strong, customer demand is solid and the rise in fuel costs is not crippling. But imagine another 50 cents per gallon or $1 per gallon and multiply it through all your vehicles. It starts to look pretty serious. And the costs of outsourcing delivery will continue to rise as courier services raise their rates along with everybody else.

Rental companies are going to have to find ways to cut down on transportation costs. For example, one owner said his company is looking at smaller and more economical pickup trucks to put their salespeople and managers in. It reminds me of the mid-'70s when Americans began looking seriously at Japanese compact cars with significantly higher mileage per gallon and the old ultra-large American-made sedans went out of style quickly.

This is a good time to look at the efficiency, or lack thereof, of your dispatch and delivery systems. Quite a few rental companies have looked into various new centralized and computerized dispatching systems and if you haven't, I'd at least be analyzing what delivery is costing you and if you're doing it efficiently. There are ways to organize deliveries to minimize the amount of miles you are traveling. There are various technologies that can help rental companies no matter the size and pocketbook. You need to find the way that works best for your company. If you aren't looking at this seriously, I'd make sure this is high up on your list of business New Year's resolutions because the problem isn't going away any time soon.

Those rental companies that outsource delivery know trucking companies are struggling also, with some trucking industry experts saying trucking company closures could hit a five-year high in the first quarter of 2008.

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