In Trains We Trust

In Trains We Trust
August 20, 2008

With the end of the current business sessions of the 110th U.S. Congress on the horizon, farmers across America and their representatives are doing their utmost to bring pressure on U.S. lawmakers to grant one more vital bill.

The average consumer has surely noticed that prices of food, both domestic and imported, have been on the rise. There are various reasons for the price hikes. However, one factor that has been common to most markets is the effect of high fuel prices.

How does the price of a barrel of crude oil from the Middle East affect the price of hamburger rolls made from U.S. grown wheat?

In factoring the wholesale and eventual retail prices of food items, transportation is a key factor. Local grown tomatoes sold at a farmer's market will have a much lower price than produce that has been shipped halfway across the country. On the other hand, supplying fresh daily produce to all corners of the nation is a luxury not enjoyed by many countries on this globe. Luxury, though, has its price tag.

Truck transport was the most common mode of long haul transportation until recently. The flexibility of routes, combined with the affordability of the transport mode, made trucking the choice of many farmers and suppliers. However, as trucking companies have been re-thinking the economic viability of long haul transport, railroad freight has become a realistic option. In many cases, trucking combined with rail freight has proven to be a successful combination.

Farmers across America have been relying more on rail service to ship their crops to the designated markets. Washington, D.C., though, has been making the economic reality of rail freight difficult for the farmers. In order for food prices to remain reasonable, rail prices must be reasonable. Antitrust exemptions granted to the freight rail industry allow the rail companies to charge farmers exorbitantly high prices. Removal of these exemptions would force the rail companies to become competitive and, thus, would reduce the rates and provide better service, also a complaint of the farmers. The lower rates would be passed on to the consumer. As many farmers rely heavily on the railroads, they feel that they are being held captive with no place to turn, and no other options.

The American Farm Bureau Federation has been pressuring members of the House and Senate to eliminate the Freight Rail Antitrust Exemptions. Senate bill 772 and House bill 1650 are companion bills that would make the antitrust exemptions obsolete. Farmers, growers, and consumers hope that the bills soon find a favorable place in the nation's law books.

Changing With The Times

Changing With the Times
July 28, 2008

"Necessity is the mother of invention," wrote the Greek philosopher, Plato. Long before our "modern" world was even a glimmer of a thought in someone's imagination, Plato coined this phrase that still has much meaning. Centuries later, another writer, Mark Twain, penned a variation of Plato's words, when he wrote, "Necessity is the mother of taking chances." In retrospect, both Plato and Mark Twain seemed to envision the 21st century.

The global fuel situation has affected virtually every one of us in one way or another. For those whose livelihood depends directly on fuel, the impact has been ever more severe. The trucking industry in America is a prime of example of both making changes and taking chances.

Clyde M. Fuller (1926 – 2002) will long be remembered as a prolific entrepreneur and innovator in the trucking industry. In the 1970's, Mr. Fuller revolutionized long haul trucking through the introduction of cross-country driving teams, enabling freight to cross the country in 48 hours. Employing their father's long haul techniques, Fuller's sons built their own fortunes and competing companies, U.S. Xpress and Covenant Transport, both based in Chattanooga, Tennessee. While both companies contributed greatly to establishing their hometown as one of the leading trucking hubs in the U.S., events of recent years have forced the owners to re-examine their father's business strategy.

U.S. Xpress is one of several long-haul companies that are seriously examining their target market. They believe that the future of cross country drives is limited. They have begun to cut the drivers' length of haul, and are greatly increasing their regional fleets for shorter routes. Additionally, U.S. Xpress has shifted a large percentage of its long haul business to shipping via railroads. Some trucking executives believe that railroads will eventually come to own the long-haul marketplace.

Other companies, like Covenant, are not rushing to abandon a market that has proven to be quite lucrative. They hope that better control of expenses will enable the companies to remain competitive and profitable. Covenant has introduced new policies that cut down on truck idling time, reduced empty miles, decreased its number of long distance teams, and limited the traveling speed of trucks to 65 m.p.h. for better fuel efficiency. Covenant has also concentrated some of its business in regional trucking. Rather than abandon the long haul routes, they have added short haul routes through a regional company that they recently purchased.

The question, of course, is which of Clyde Fuller's legacy is correct? The answer is still unclear. Only time will tell if it is possible to retain and modify the past, or if change will be the way of the future.