Loans May Soon Be Available to Truckers Affected by High Cost of Fuel

Loans May Soon Be Available to Truckers Affected by High Cost of Fuel
October 3, 2008

After meetings with many truckers to discuss their challenges associated with the rising cost of fuel; US Rep. Brian Baird (D-Wash) has proposed legislation to provide them with low-interest loans.

"Truckers provide the backbone of our nation's retail economy,” says Baird. In light of recent Wall Street disasters, Congressman Baird looks to support independent truckers and small businesses, not just the large corporations. “This legislation would...help keep them, and our economy afloat."

Under the proposed bill, transportation businesses affected by high fuel prices would be eligible to apply for emergency loans up to $250,000 via the Small Business Administration. This could prevent these firms from going out of business and serve to stimulate the faltering economy.

Rep. Norm Dicks (D-Wash.), Rep. Peter DeFazio (D-Ore.), Rep. John Salazar (D-Colo.), and Rep. Stephanie Herseth Sandlin (D-S.D.) have agreed to co-sponsor the proposed legislation in hopes that it should be included in the upcoming economic stimulus package. The Northwest Log Truckers Cooperative and the Owner-Operator Independent Drivers Association also support this bill.

Globalization vs. Regionalization

Globalization vs. Regionalization
August 6, 2008

The litmus test of the 21st century global economy is the clothing label inside the garment purchased at the local Wal-Mart. Chances are very good that the t-shirt with the popular television cartoon character emblazoned on the front does not carry a "Made in the U.S.A." tag inside.

Over the past quarter-century, the world economy became extremely integrated caused, in part, by the profits to be made through the lure of cheap oil and cheap foreign wages. However, oil that cost $10 a barrel a decade ago now costs more than $120 a barrel. Moreover, as more Americans are looking for work, the call has gone out to keep jobs at home. Many economists feel that globalization is about to undergo serious change.

There is no escaping the reality that rising prices throughout the economy will force America to re-assess the management of its economy. Transportation costs are now a major factor in pricing, especially of large ticket items. Previously, raw materials, like iron and wood, were shipped abroad for processing and manufacturing in countries where labor costs were a fraction of those in the U.S. Now, more companies are returning to regional manufacturing. Production close to the point of origin is the economic choice today. The higher cost of domestic labor is more than offset by the savings from lower transportation costs.

Some economists worry, though, that reverting to regionalization may not be a smooth transition. A generation of Americans has lost some of its manufacturing base and skills to the more dynamic production centers of Asia. A return to "Made in America" may not occur overnight. Other concerns, though, may outweigh these.

Americans have become far more environmentally conscious. Many American companies are doing their part to protect the environment and the effects of global warming by adopting green policies meant to reduce fuel consumption and carbon emissions. The same cannot be said of many companies in the far-east where emission standards are far less stringent than in the west.

The same worry about lax standards applies to food products. Lack of rigorous inspection at food production plants abroad may cause Americans, concerned about disease and health standards, to re-consider purchasing imported food products and may shift a large percentage of this market to domestic production.

Business executives and economists know that many factors determine the flow of international trade. The decision of where to invest in a new factory or from where to buy a product is determined not only by shipping costs but by exchange rates, labor costs, consumer confidence, government regulations, and availability of skilled management. But, as certain factors begin to outweigh others, the decision making process will change accordingly.

After years of buying products produced abroad, the day may soon be at hand when Americans will once again buy a traditional La-Z-Boy recliner with a tag stating "Made in America".

Will the Tax Stimulus Package Uplift the Trucking Industry?

Will the Tax Stimulus Package Uplift the Trucking Industry?
Monday, March 24, 2008

Starting in May, U.S. taxpayers will begin receiving stimulus checks from the U.S. government worth $100 billion in total. Congressionally mandated, the tax stimulus package aims at pushing the economy forward by encouraging consumers to indulge themselves in shopping sprees for clothes, travel, home appliances, and other luxuries. Trucking executives hope that the $100 billion economic stimulus package will improve the overall economy and break the deadlock of the supply chain caused by the increased cost of fuel.

Bob Costello, an economist for the American Trucking Associations, believes that the stimulus package will boost the overall economy, and consequently the trucking industry will see modest growth by the second half of the year. Based on Costello’s calculations, freight tonnage will see an increase of over 2 percent in the second quarter, 1.5 percent in the third, and nearly 3 percent in the fourth. Costello believes that this tax stimulus package is different from the $38 billion tax rebate enacted in 2001 in part due to its obviously much larger number and its built-in income caps, which ensure that it will go to those who are most likely to spend it.

On the other hand, Chaz Jones, Morgan Keegan & Company Inc. analyst, questions whether the stimulus package will ever boost the U.S. economy, believing that, in a $12 trillion economy, it will not have any noticeable effect. With more than half of the freight hauled by U.S. trucking companies coming from the construction, automotive, and retail industries, Jones believes that by next summer these sectors will not see any upturn in business. Jones states that inventories run short out there, and retailers are well aware of the prospects of the consumer and overall economy; a tax stimulus will simply not give much of a boost to sales.

While air freight may get some boost as consumers spend their tax rebate on line, the truckload and less-than-truckload sectors are expected to see big gains that could last up to three or four months at least.

Fuel prices, which as of March 10th saw an increase of 42% over last year, along with concurrent freight slowdown, which is hitting the trucking industry, are putting truck drivers out of work and at a near risk of losing their jobs. Mike Bruns, a Comtrak Logistics president, says what is likely to happen in the days ahead is that freight levels will increase, and drivers will continue to go out of business, resulting in a condition in which drivers are less than freight, and eventually an excess of goods will be out there with no one to haul it.

Facing increased fuel prices, shippers try to use fuel-efficient modes whenever they can. Truckloads are being diverted to the railroads, which are three times more fuel-efficient. Last week, Con-Way Inc. limited its trucks speed from 65 mph to 62 mph in an attempt to save both fuel and the environment. In this sense, the fuel savings will add up, and the trucking industry will be more sustainable and environmentally conscious.

Press Focuses on the Downside of Trucking

Press Focuses on the Downside of Trucking
March 24, 2008

The trucking industry is often surrounded by negative perceptions. Recently circulating news headlines about bald tires, faulty brakes, and out-of-service trucks draw a tainted image of the trucking industry. Only accentuating the negative, these headlines fail to capture the positives of the industry.

Between 1999 and 2005, the injury and fatal crash rate of large trucks in British Columbia has decreased by more than 16%. In addition, mechanical problems nowadays account for less than 5% of injury and fatal truck crashes.

The trucking industry is filled with efficient people, who do not make headlines. They quietly and safely push the economy forward by delivering bread and milk and hauling hospital supplies, consumer goods, and building products.

As in every other industry, the trucking industry is plagued with some people who run after easily earned money. Some negligent owners and drivers employ substandard trucks, which can endanger others as well as themselves. Such people should be duly denounced and punished. Moreover, they damage the reputations of efficient and conscientious men and women in the trucking industry who, having a strong sense of personal responsibility, choose to invest in maintenance and state-of-the-art equipment to grow their business.

Negligent and irresponsible companies opt to cut prices to increase business, a decision which leaves them with nothing to spend on maintenance. Consequently, the state of trucks is deeply compromised along with the quality of service. Shippers need to understand that not only does pricing cover a driver's time and fuel costs, but it is also indicative of the quality of service. As such, shippers should demand quality service and be willing to pay for it. When shippers care to compare the quality of service with its corresponding cost, both trucking companies and the public will benefit.