Gas prices hit an all-time high in 2022. AAA marked the national average price for a gallon of regular gasoline at $4.86 in June — up $1.76 from last year.
The main reason for the price spike was a lack of spare processing capacity to turn available crude oil into usable fuels, according to The Washington Post. Officials blamed the price surge on a lack of refineries. Global instability was also to blame, with the war in Ukraine resulting in plans to embargo Russian energy exports, which drove the price of crude to more than $100 a barrel.
While the U.S. Energy Information Administration’s (EIA) Short-Term Energy Outlook in April predicted the average price of oil to fall by the end of this year, the EIA admits that the forecast is highly uncertain due to existing and future sanctions on Russia and how it will impact the global oil market.
The rise in gas prices is certainly affecting the landscaping industry. Worse, there is no end in sight to challenges at the pump. These costs can’t be avoided, but they can be mitigated through a variety of business strategies.
Chris Kujawa, president of Oak Creek, Wisconsin-based Kujawa Enterprises, spoke to the National Association of Landscape Professionals (NALP) for its digital publication, The Edge. He said his company and others are taking a closer look at how they use fuel and why. This includes:
•Reviewing routing procedures
•Operational efficiencies
•The timing of services in relation to jobsite travel
•Filling procedures
•Burn efficiency
•Fleet maintenance protocols that affect mileage such as tire pressure, axle and bearing lube, aerodynamics and reduced idling
Kujawa said that customers are aware of the pressure this puts on the landscape contractors.
“They understand the increase in gas prices, the pressure on labor, the supply chain woes, uncertainty and destabilization in the global markets, and so forth because it’s affecting them immediately and directly as well,” Kujawa said. “That doesn’t mean they like it or are ready to accommodate you and your problems. Much of the customer’s position will depend upon the prevailing position of the marketplace, i.e., ‘What are other contractors offering?’ This is where the relationship is tested. The strength of the relationship built over the past will be an indicator of where it’s headed in the face of market disruptions."
The reality is that landscapers are having to absorb the costs during this time, and it’s taking a financial toll, causing some companies to implement rate hikes. Blair Matthews, head of sales and marketing at American Turf and Tree Care in Greeley, Colorado, told the NALP that the company raised its rates for 2022 services and it has implemented a second price increase for new sales.
Rich Young, controller for Zeppa's, a full-service lawn maintenance and landscaping company in Louisville, said they knew in November that the company was going to raise its rates but underestimated the magnitude.
"We are evaluating and discussing how and when to raise our baseline service pricing,” Young said. “We can't just eat it or wait it out. This is just one of our rising costs, but for the next six months it will be more impactful than the increase in labor cost."
Like many industries, such as air travel, ground shipping, and even Uber and Lyft, some landscaping companies are invoking provisions that permit fuel surcharges when the price of gas goes up.
Aspire, a ServiceTitan company, offers a software platform for landscaping companies to help them manage their businesses, including making changes to their service contracts, and for example, adding fuel surcharges.
Cris Poggi is a solutions engineer manager for Aspire Software and said that it’s important for landscapers to include the capability to assess a fuel surcharge in times of need. According to Poggi, if your contract does not presently cover fuel surcharges, businesses can modify the terms and conditions by adding language to indicate a trigger for fuel surcharges once gas prices reach a certain threshold, such as over $3 per gallon or $4 per gallon.
These triggered surcharges should not be driven by the price at your local gas station, though. Poggi said companies need to reference the regional average price per gallon of gas or diesel, listed each week by the EIA, when speaking to customers.
Replacing the battery on a Pro-Turn EV.
Sebert Landscape’s marketing administrator and manager of customer experience, Laura Birtas, said the Illinois-based company would be implementing a monthly fuel surcharge in July, and she said customers have been receptive and understanding.
One way to cut down on fuel consumption is to move away from gas-powered equipment.
Sebert Landscape has been using battery-powered handheld equipment for several years and purchased 10 Gravely Pro-Turn EV mowers in 2021. The company also developed a unique way of maintaining efficiency in the field by incorporating solar panels on all maintenance trailers. The solar energy captured in the panels on the rooftops of the trailers is converted into usable power for recharging the batteries. Thus, the company can switch out the batteries on site without downtime.
“Three of our ground crews swapped out propane mowers for new battery-operated mowers with great success,” Birtas said.
The company also has the means to switch out gasoline-powered equipment for propane-powered versions, but it comes with a cost.
“Any Sebert vehicle purchased after 2010 can be converted but we'll need to install the fuel system to complete the process. This can be a costly transition, estimating about $8,000 or more per vehicle,” she said. “Infrastructure changes can be an obstacle and costly, but we continue to look into all new innovations in the commercial field that can be sustainable in our industry.”
Wesley Addington is the owner of Wesley’s Landscaping & Lawn Care in Carmel, Indiana, and he said he is looking to alternative energy mowers in the wake of the gas price hike.
“I have a strong interest in robotic mowers, as they will be our future in this industry in the next 10+ years,” Addington said.
He added that while he did not impose a surcharge, he did increase his prices to offset the rise in operating costs.
No matter how companies are dealing with fuel hikes, two things remain constant — a variety of strategies will be needed to offset the higher cost of doing business, and the challenge shows no sign of abating.
Arranging trips in the most efficient order possible saves drive times between visits and reduces the amount of money spent on fuel and maintenance. Minutes saved per day, multiplied by the number of crews, can add up to real savings. Many companies use landscaping software to help auto-arrange their routes for maximum efficiency.
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Using GPS software to track your vehicles can help give perspective on the routes teams are taking and how many unplanned stops they need to make. If crews are constantly going off route and making unplanned stops, it can have a significant impact on your gas consumption.
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Some companies apply hourly operating rates for each piece of equipment and bill customers accordingly. Adjusting rates helps recover additional fuel costs because companies are charging customers extra for the use of fuel-burning trucks and equipment, as opposed to labor.