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.

O&S Trucking Inc. to Open in Ohio

O&S Trucking Inc. to Open in Ohio
March 24, 2008

O&S Trucking Inc., a worker-owned firm based in Springfield, Missouri, said that plans of opening its first branch hub in Springfield, Ohio are afoot, and the company is expected to be fully operational in Ohio by the 1st April.

Brian Underhill, vice president of Ohio operations for O&S Trucking Inc., spoke in a release of the company’s initial plan of opening a branch in Columbus. The company said that such a plan was later ruled out due to the 11-hour dispatch time from headquarters, which, if the law limiting 11 hours of driving in a 14-hour time period changes, could prevent a driver from reaching Columbus in one shift.

Underhill and a fleet manager will take charge of Ohio operations. By the end of the year, a third employee will possibly be hired along with 50 drivers.

O&S Trucking Inc., which currently has 100 employees in Missouri and 300 company drivers, owner-operators and lease-purchase drivers, hauls refrigerated trailers. Its business extends from Oklahoma City in the west to Maine in the east and from North Carolina in the south to the Great Lakes states in the north. Its clients include Dole Food Company Inc., Kraft Foods Inc., Tyson Foods Inc., and Reckitt Benckiser PLC.

Driver Competence Essential to Safe Driving

Driver Competence Essential to Safe Driving
March 24, 2008

The most important safety feature a car or truck can have is the presence of a safe and attentive driver behind its wheel. Most traffic accidents happen due to a lack of attention on the driver’s part. Driving under the influence, drowsy driving, phone use and other electronic distractions, and emotional strife contribute to most accidents on the road.

Although a safe car or truck is vital to safe driving, it is inherently not to blame for accidents on the road. While most new vehicles are safe, within the parameters of engineering and design intent, too many drivers behind the wheel are not; their lethargy and less than perfect commitment to the act of driving are the cause of much trouble.

Safety technology only serves a competent driver well; an incompetent driver can never put the design intent of any safety device to use.

Owner-operators Struggle to Keep Business Afloat

Owner-operators Struggle to Keep Business Afloat
Wednesday, March 19, 2008

Trucking’s owner-operators have been hit with high diesel prices, cut loads, and lower shipping rates. The self-employed drivers are almost going bankrupt and seem to be at the risk of losing their jobs.

The housing decline and less consumer spending have cut into loads, and the extra trucking capacity at hand is causing freight rates to spiral downward. In addition, diesel prices, which are always higher in winter, have experienced an astronomical spike, doubling over the past four years.

According to the Department of Labor, nearly 9% of the nation’s 3.4 million truck drivers are independent owner-operators. John Saldanha, who teaches logistics at Ohio State University, said that trucking will be deeply affected if owner-operators ever lose their jobs; the trucking scene will turn into a group of regional and national oligopolies that, once the economy revives, would send shipping prices higher.

On the other hand, business looks far more promising for the large public trucking companies as they have had their stocks climb since January. Big trucking companies, like J.B. Hunt Transport Services Inc. and YRC Worldwide Inc., tend to buy everything from fuel to tractors in bulk; as such, thousands of gallons of diesel are bought at a time on the commodities market to be stored later on.

In the end, owner-operators are left feeling neglected and on the fringe more than ever. In order to survive in the business, truckers call for caps on diesel prices, or tax credits for them and further constraint for intermediaries who broker truck loads.

Annually, rumors of a nationwide truck strike circulate. In January, some truckers kept their trucks off the road for a week in the hope that a week’s strike might be what they need to not ultimately lose their jobs.

Harbor Trucking Capacity in Southern California to be Cut in Half

Harbor Trucking Capacity in Southern California to be Cut in Half
March 19, 2008

The harbor trucking capacity in Southern California could experience a shortage of around 8,350 trucks and owner-operators by October due to conflicting Clean Trucks programs and the federal Transportation Worker Identification Credential program.

Addressing the 8th Annual Trans-Pacific Maritime Conference, John Husing, a Southern California economist who studied the harbor trucking scene in 2007, said that at present nearly 16,800 trucks arrive regularly at the ports, but this capacity is expected to be cut in half by this fall for three reasons: many drivers will fail to qualify for the TWIC biometric identification card, Clean Trucks programs of the ports of Long Beach and Los Angeles are conflicting with one another over the use or non-use of the employee-driver model in the harbor, and all trucks built before 1989 will be banned from the harbor by this fall as they no longer meet the ports’ new emission standards.

Qualifying for the TWIC certification requires drivers to demonstrate proof of legal residency in the United States, a requirement which, according to recent surveys conducted by Husing on behalf on the ports, may drive 15% to 22% of the drivers to not even apply for a TWIC card at all.

Confusion further surrounds the harbor trucking scene. In February, a Clean Trucks program that does not require the use of employee-drivers was approved by the Port of Long Beach. Having paired up with the Teamsters Union and pushing for the unionization of harbor trucking, the Natural Resources Defense Council has threatened to seek legal ramifications against the port over such an issue.

On the other hand, the Port of Los Angeles is expected to release, in the next few weeks, its own version of Clean Trucks program, which is expected to require the use of employee-drivers. Curtis Whalen, executive director of the American Trucking Associations’ Intermodal Motor Carriers Conference, said that thousands of owner-operators will lose their jobs if Los Angeles adopts such an employee-driver model. If the Port of Los Angeles ever releases a Clean Trucks program that requires licensed motor carriers to use only employee-drivers, the trucking industry will take legal action against the port. Whalen stated that ATA could sue the Port of Los Angeles under the federal preemption clause that asserts the federal government’s authority to regulate rates, routes, and services in interstate transportation. ATA could also resort, in its dispute with the Port of Los Angeles, to the Federal Maritime Commission, which holds the responsibility of preventing discrimination in port transportation.

To cope with such an expected shortage, Husing said that more than 1,000 trucks will be added to the harbor later this year. Husing, who previously thought that compromise was within reach, is now no longer optimistic that the ports can work out their differences and agree on a joint Clean Trucks program by the Oct 1st deadline.

Clean Truck Program Requested Agreement Opposed by the IMCC

Clean Truck Program Requested Agreement Opposed by the IMCC
Sunday, March 16, 2008

An agreement being sought after by the ports of Los Angeles and Long Beach and their terminal operators, aiming at implementing the ports' Clean Truck Programs, has been opposed by the American Trucking Associations' Intermodal Motor Carriers Conference (IMCC), which has filed written comments before the Federal Maritime Commission (FMC) calling for the rejection of such an agreement. The agreement would grant anti-trust immunities to both parties, which would enable them to discuss and settle on the criteria and procedures upon which they determine whether trucks, cargos, and equipment are to be admitted or not to any terminal at the port.

The IMCC has opposed the agreement on the basis that it would be unreasonable under the Shipping Act to let port tenants abuse such a “blockade provision”, which would leave the door open for them to enforce an unlawful concession on passers-by. The IMCC has further stated that such an agreement between the ports and their terminal operators should also be rejected on the foundation that it fails to include or mention motor carriers with a lawful right to access the port by authorizing terminal operators to unlawfully block port drayage operators.

On February 19th, the Port of Long Beach approved its own version of the Clean Truck Program, which does not require port trucking companies to use only employee-drivers. On the other hand, the Port of Los Angeles has been on behalf of the idea that port trucking companies should use only employee-drivers, and the IMCC says that including such a requirement in the Clean Truck Program of the Port of Los Angeles is not out of the question. With its own Clean Trucks plan, the California Air Resources Board is already taking certain measures to ban high-polluting trucks.

The IMCC believes that the ports may claim their role as sole proprietors in an attempt to be exempted from preemption by federal law. The IMCC has argued against such a claim stating that the goals of the ports' Clean Truck Programs are not proprietary in nature as they do not take into account the ports’ obtainment of goods, but instead seek to affect broader social regulation such as the income, health, and well-being of truck drivers.

The above comments filed by the IMCC only seek to convince the FMC to reject the requested agreement between the ports and terminal operators. However, they also provide a further insight into the kind of argument to which IMCC can resort in case of any future litigation.

Truck Driving No Longer Canadian Males’ Top Drawing Job

Truck Driving No Longer Canadian Males’ Top Drawing Job
Sunday, March 16, 2008

Over the five-year period between 2001 and 2006, a number of changes in Canada’s labor force took place. According to Statistics Canada's 2006 census report on Canada's labor force, trucking, for the first time in decades, is no longer Canada’s largest employer for Canadian males. Replacing truck driving as the most common occupation among males was being a retail sales clerk with reportedly 285,800 men working as retail salesmen. Truck driving came in second with 276,200 men working as truck drivers.

In terms of absolute numbers, the retail sector was the fastest-growing occupation as it saw its numbers increase by 132,300, the largest increase of all occupations. The second fastest-growing occupation belonged to construction and health care industries. Coming in second place, construction trades helpers and laborers saw an increase of 52,300 in their number, with much of the growth coming from British Columbia and Alberta, the former of which is experiencing a hot real estate market due to the preparation for the upcoming 2010 Olympic Winter Games. Cashiers increased by 43,300, a number which, according to Statistics Canada, reflects the growth in consumer spending in retail stores.

In terms of percentage, the oil and gas industry in Alberta, though still relatively small in numbers compared to other sectors, saw an increase of 78% in its numbers of oil and gas well drillers, testers, and related workers to 11,500, the largest percentage increase of all occupations.

On the other hand, a number of occupations showed depreciation. For instance, textile manufacturing saw sewing machine operators decline by 18,300 or 32.7%. Declining as well, over the past five years, was the number of metal fabricators and steel workers.

Data on labor mobility showed that 563,000 people, or 3.4% of the total labor force, moved to a different province between 2001 and 2006, with the highest mobility rates coming from the territories and Alberta.

Due to the increased tendency for older workers to continue working, data showed that, in 2006, those aged 55 and older constituted 15.3% of the total labor force as opposed to the 11.7% they represented back in 2001. Additionally, for the very first time, the median age - the middle value in a sequence of numbers - of the labor force surpassed 40 years, rising from 39.5 years in 2001 to 41.2 years in 2006.

Truck’s Loose Wheel Paralyzes Local Hockey Coach

Truck’s Loose Wheel Paralyzes Local Hockey Coach
March 16, 2008

Best Transfer, a trucking company based in Puslinch Township, south of Guelph, Ontario, has been charged with “wheel separation from a commercial motor vehicle” under the Highway Traffic Act after a tire from one of their trucks came loose and crashed into a vehicle, paralyzing 47-year-old Marshall Hogan, a long-time minor hockey coach and a former sportsman of the year in Smiths Falls.

On February 1st, two rear wheels came free from one of the company’s tractor-trailers, striking a pair of vehicles on Highway 15 north of Smiths Falls. While the first tire just bounced off some woman’s Ford Focus, causing her no injury, the second tire smashed Marshall Hogan’s Kia, paralyzing him in the process.

If convicted, Best Transfer could face a fine of up to $50,000. The driver of the truck, 40-year-old Michael Vanier of Carleton Place, has already been charged with operating an unsafe commercial vehicle and, if found guilty, could be fined between $400 and $20,000.

Rising Fuel Costs Suspend General Delivery’s Trucking Service

Rising Fuel Costs Suspend General Delivery’s Trucking Service
March 16, 2008

Trucking business across the country is being hit hard by high diesel fuel prices, and Fairmount-based General Delivery Inc. is no exception. GD president, Chip Thompson, says that with last week’s diesel prices of $3.67 a gallon, the company was paying between $8,000 and $10,000 a day just on fuel for 40 trucks, keeping in mind that a gallon allows trucks to travel 6 miles only.

As a result, the company had to shut off its over the road trucking service, which has been a part of its business since 1950, and the 29th February witnessed the company’s last trucks on the road. Thompson has expressed his sorrow over how the company’s trucking service has come to a halt after 58 years, but the high fuel prices forced the company to come to such a decision.

Although the company is currently working on some restructuring, it is still in the business of repairing trucks and trailers.