Feeling Deflated By Inflation? Creative Solutions Are Needed

June 21, 2022

By the summer, New Year’s Resolutions tend to fall by the wayside. I started 2022 on a fitness tear, attending hot yoga and Pilates classes at least five days a week. The result was inches lost around my waist, a new pep in my step, and healthier eating.

Life and work can easily distract one’s focus, in my case from working out. I never allow my belly to stray too far afoul of healthy boundaries, but I was on a downcycle as I and the team made final plans for STN EXPO Indianapolis this month and STN EXPO Reno next month.

This time of year is also hectic for another reason. While the scale tilts in the wrong direction, my wallet shrinks, as my wedding anniversary, Mother’s Day and both of my children’s birthdays fall with one month of each other. Meanwhile, we all have seen 2022 bring near double-digit price increases, as inflation runs rampant.

Prices across the board have skyrocketed, with the Consumer Price Index flirting with a near 9-percent increase over the past 12 months. That’s the largest such spike in over 40 years. We are living through a perfect storm where all three of the main causes of inflation are at play. Demand far outpaces supply, just look at the housing and automotive markets for proof. Higher production costs are raising prices, courtesy in part to the supply chain shortages that have worsened over the past two years and the skyrocketing fuel prices. Rising prices leading to higher wages, the latter we have seen grow for several years now through government mandates and most recently the “Great Resignation.”

The big double-take occurred when looking at the latest CPI charts on the U.S. Bureau of Labor and Statistics website. While food, commodities and non-energy services all remained slightly under 10 percent at this writing, the energy sector had ballooned to 40 percent, with fuel oil unsurprisingly driving the increase amid 70-percent price spikes. Gasoline was nearly as bad with a 48-percent increase.

Meanwhile, energy services have also gone up, with piped natural gas services jumping by over 21 percent and electricity services increasing by 11 percent. Certainly, the confidence of companies engaged in this sector have been buoyed by historic federal funding, a fact revealed by looking at the exhibitor roll planned for next month’s STN EXPO Reno Trade Show.

There will be plenty of talk in both Indianapolis this month and Reno next month about electric and propane buses—as there was at last month’s ACT Expo in Long Beach, California—about the $5 billion Clean School Bus Program. But how soon will student transporters be able to receive new orders that are placed and at what price increase? Already, Blue Bird increased prices by over 25 percent since last summer, the school bus manufacturer stated last month in its second-quarter earnings report.

Then, on May 10, it announced another 10-percent hike. Readers at school districts and bus companies alike have shared that new bus deliveries have been and continue to be delayed. One school bus contractor said it is not anticipating receiving its latest vehicle orders for at least another year. Another contractor is turning down work because it doesn’t have enough buses to provide service.

Supply chain shortages, as well as driver shortages, appear to be a new-normal reality rather than a short term inconvenience. Let us hope that recent interest rate moves made by the Fed rein in inflation. Strong industry partnerships are necessary now more than ever before to ride out this storm as well as to successfully implement clean fuel and energy vehicles, and related infrastructure. That was one of the main themes at last month’s Advanced Clean Transportation Expo, which STN is a media sponsor of.

Solutions could come in the form of joint purchase agreements for equipment, fuel or vehicles, or sharing service with neighboring operations, just to name a few. There are lessons to be learned from states that have long operated under cooperative models. How can your operation be creative with a purpose to address today’s challenges?

While skyrocketing inflation and choking supply chains are largely outside of our control, there are things the industry can do and is doing. I for one look forward to sharing the many success stories being told across the industry. Some of these will be shared at our summer conferences. I hope you join me.

Editor’s Note: As reprinted from the June issue of School Transportation News.