Canadian Trucks Heading South

Canadian Trucks Heading South
July 28, 2008

Halfway between Detroit and Toronto, in southwestern Ontario, is the town of St. Thomas. It is a pastoral town of approximately 50,000 residents. In the mid 19th century, St. Thomas became famous as the "Railway Capital of Canada" as two major railways, the London and Port Stanley Railways, began operating from the town. This was the beginning on a new transportation era for the town. By 1914, eight different railways were operating from St. Thomas with more than 100 trains passing through the city daily. St. Thomas, Canada's Railway City, benefited from unparalleled growth, socially and economically.

Until the 1950's, the Railway was the dominant employer in St. Thomas. However, the end of the steam engine marked the end of the economic boom as the railways greatly downsized. Facing a massive employment crisis, the City aggressively pursued new businesses and successfully attracted other transportation ventures. Several major manufacturers opened new factories in St. Thomas including Ford's "Crown Victoria" assembly plant and Freightliner Truck's Sterling Manufacturing plant.

Almost 5 percent of the St. Thomas population is employed at Sterling, or so had been the case. Although the transportation industry saw a boom in 2005 and 2006 due to the huge demand for hauling goods, a major slump began in early 2007 with the slowdown caused by rising fuel prices. In the U.S., the major market for Freightliner trucks, fleets are downsizing and many vehicles sit unused, greatly reducing the demand for new trucks.

The Sterling plant was producing 75 trucks a day. They predict that production will be cut in half by the fall of this year. Sterling already has 600 workers on layoff and announced that an additional 720 employees will be cut from the payroll by November of this year. Adding to this situation is Freightliner's Mexican operations.

The cost of living in Mexico is below that of Canada. Unionized automotive workers in Mexico recently agreed to a new two-tier wage package. New workers will earn $2.25 an hour compared to $4.50 an hour for existing workers. Freightliner currently operates one factory in Mexico and a second is under construction, slated to open in early 2009.

Workers at the St. Thomas plant are extremely worried. In addition to the extensive layoffs of fellow employees, the current collective agreement is due to expire in March 2009. The union is concerned that they may have to make extensive and painful concessions, lest Freightliner decide to move its operations entirely to Mexico.

The end of the steam engine saw the end of the railway industry in St. Thomas. Will high fuel prices see the demise of its transportation industry?

Economy Down; Profits Up

Economy Down; Profits Up
July 28, 2008

If you're involved in the trucking industry today, it's a fact that everyone has a story to tell, especially if it relates to the economy. The rising price of fuel is a growing global concern, especially for those whose livelihood depends on daily consumption of this expensive commodity.

As America's economy continues its downward slide, due, in part, to the fuel crisis, the trucking industry has taken a beating. Many independent drivers, and small trucking companies, have been put out of business due to their inability to cope with the economic burden imposed by high fuel costs. However, all is not bleak for the industry. When the going gets tough, the tough get going. For some of America's leaders in the trucking industry, profits have never been better.

USA Truck Inc. is a dry van truckload carrier transporting general commodities throughout the continental United States and portions of Canada and Mexico. The Van Buren, Arkansas-based business, with a fleet in excess of 2,500 trucks, is traded on the NASDAQ and recently posted strong second quarter results.

As operating costs have skyrocketed over the last eighteen months, large fleet operators, like USA Truck, have learned the secrets to survival and success. Companies have adopted a different, far more economical, approach to managing their fleet.

Wall Street analysts predicted serious second quarter losses for the trucking industry. To their amazement, USA Truck's profits increased by 32 percent, compared with the same period last year. Their share prices have increased by a stunning 25.5 percent.

Their secret? The company became far more disciplined about its truck network. They placed trucks where they should be. Trucks logged shorter lengths of haul and improved the average miles per tractor per week. Careful planning shaved roughly 70 miles per trip from each truck. The company has begun to focus on serving the more lucrative shorter-haul market. They have slightly trimmed the number of trucks in use, thus maximizing the use of each vehicle. Optimum utilization has paid off, allowing the company to earn the greatest amount of revenue per hour of the driver's hours of service.

By achieving an acceptable balance between fleet capacity and freight demand, large operators, like USA Truck, are managing to keep ahead of expenses and show profits, despite the continual rise in expenses. Also, better freight selection is expected to help the carrier's improve their revenue per mile.

By going back to basics, and managing their businesses in a far more accountable manner, the larger operators will continue to keep America supplied, and their shareholders happy.

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.

The Price of Living in Rural America

The Price of Living in Rural America
July 20, 2008

Throughout the US, a common topic of conversation is the rising price of fuel. One can't escape it. Soaring gas prices affect virtually every American in one way or another. The Constitution of the United States grants equal rights to all citizens of the nation. However, in the current battle against rising fuel costs, rural Americans feel that carrying the burden is far from equal for all Americans.

It is a fact of life that vehicles and travel are an intrinsic part of life in rural America. With many services and places of employment located many miles from homes, there remains no alternative except driving from place to place.

According to figures published by the Federal Highway Administration, rural Americans drive an average of 3,100 miles more per year than urban dwellers. In a recent May 2008 survey conducted by the Oil Price Information Service, an independent fuel analysis company, figures showed that residents of rural areas spend as much as 16 percent of their available monthly income at the fuel pump. Counterparts in major urban centers spend as little as 2 percent.

It is not uncommon these days to hold down a second job in rural areas, simply to pay the gas bill. Salaries have not risen at the same pace as fuel expenses. Therefore, absurd as it may seem, extra income is necessary to cover the expenses of going to work.

With many people living distances from neighbors, carpooling has become a viable option, although not without its challenges. Due to the distances, travel must begun much earlier than it would in the city, sometimes well before sunrise.

Some employers have made accommodations by extending workdays and allowing employees to work a four day work week, thus reducing travel by 20 percent. Some, if few, are participating in fuel expenses.

Many city dwellers have been trading cars and purchasing hybrids in order to reduce fuel consumption. However, in outlying areas, where many gravel roads are difficult to traverse, smaller, more fuel-efficient cars are not realistic.

Leisure time has certainly been affected. The Montana Department of Transportation released figures showing that weekend leisure travel was down 8 percent in June, compared to the same time last year.

Bulletin boards, electronic and other, are filled with listings of people looking to share rides for shopping and doctors visits. Quite often, a medical specialist may be located hundreds of miles from home. The travel cost may exceed the cost of the visit or treatment.

Some families have changed the way they eat, how they dress, or how they manage their homes. Expenses do have to be regulated. As travel cannot be eliminated, the expenses must be offset elsewhere.

The price of crude oil is affecting the way all Americans live.

Casualty Count is Rising

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Casualty Count is Rising
July 20, 2008

They said it would never happen but it did. Gasoline prices have cleared $4 a gallon. Diesel fuel is approaching $5. Most anyone who drives a motorized vehicle has an opinion about these prices and few are favorable. Dig a little deeper, though, and one will see another level of collateral damage caused by gas prices. In the war at the gas pump, there are many casualties and the number is rising.

According to the oil industry trade publication, NPN Magazine, nearly 3,000 gas stations have closed in the last year due to a reduction in driving by motorists. The closures are also attributed to the fact that many drivers can no longer afford to support their independent, neighborhood station but are willing to travel a little further in order to save money at the pump.

Thinking of moving your home or office? The price of operating a moving truck loads has virtually doubled in one year's time. Someone has to make up the difference and the companies, primarily independent movers, are sharing the higher prices with their customers.

The moving industry is just one trucking industry in trouble. In the first quarter of 2008, 1,000 fleets of truckloads – roughly 40,000 vehicles – went out of business in the US. Some truckers have found work with other companies but many have left the industry.

Taxi drivers can tell stories, many stories. One of the most common ones is about their reduced income levels in 2008. Over the last two years, the cost of operating a taxicab has risen by 38%. As fares have not risen accordingly, lest passengers stop using taxis, drivers' income has dropped, on a national average, by nearly $4,000 annually.

When times are tough, more people need the help of charities. And, normally, Americans volunteer their time and resources to help others. Across the country, more than half of Meals On Wheels programs, which deliver meals to home-bound seniors, have reported a loss of volunteer drivers. Volunteers pay their own fuel and many can no longer afford to do so. Similarly, organizations with transportation budgets set their prices last year. The budgets have long since been exhausted.

Remember the old pictures of kindly firemen rescuing the family cat stuck in the elm tree? Reports have begun to surface of a few volunteer fire departments that have closed. Others are responding to fewer emergencies. They need to save expensive fuel for major emergencies only.

America will continue to move. It is a way of life. But, what will be the price?

Fuel for the Truck; Fuel for the Trucker

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Fuel for the Truck; Fuel for the Trucker
July 20, 2008

Ever heard of Breezewood, Pennsylvania? If you're a trucker traveling through the state, you're probably familiar with this quarter-mile strip located at the junction of I-70 and the Pennsylvania Turnpike – places to eat and places to re-fuel. But, there's more than meets the eye in Breezewood. Nestled between the rigs is one tractor trailer that doesn't seem to move much. It is the mobile chapel of Rev. Shannon Rust. Truckers can re-fuel their rigs and also re-fuel their souls.

According to the Trucker's Friend National Truck Stop Directory, an industry publication, there are more than 230 chapels located at truck stops across the nation. This number has almost doubled in less than a decade.

Long hours on the road, alone with one's thoughts, can leave a person anxious and searching for answers to the milieu of problems that have become all too common today in a troubled industry. While truckers employed by major companies still enjoy a relative degree of job stability, the independent truckers are going through rough times. Meeting expenses is the task at hand. Many truckers are spending longer tours away from home in order to make ends meet. However, the price of these trips is steep emotionally as well as financially. Problems at home have to be addressed long distance. The worry of bills in arrears always looms. The question of the next job is continually on the horizon.

Seeking peace of mind has become an intrinsic part of traveling the road. Helping the truckers deal with loneliness and worry is the task of these mobile preachers. The number of truckers visiting these truck-stop chapels is growing. Truckers are making time for prayer as well as food and maintenance. Preachers like Mr. Rust are serving an important role in keeping America moving.

Next time you're traveling the Interstate and your personal fuel gauge is starting to run low, keep your eyes open for one of America's soul re-fueling stations. The service is friendly and efficient, and you can always afford to fill your tank.

Railroad Superiority?

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Railroad Superiority?
July 20, 2008

In the age of rising fuel prices, there is much scrutiny of the nation's transportation system. As the saying goes, desperate times call for desperate measures.

Although many Americans feel that they are hostage to foreign powers that control the flow of crude oil, they are yet to widely endorse alternatives. One school of thought promotes alternate fuel sources. Other opinions support re-examination of the ways America moves people and goods. In either case, as America's dependence on foreign produced items continues to grow, transporting these goods is major business.

A prime example is the transport of container goods. Short haul transport is best managed by truck. However, as distances grow, and America is by no means a small country, so do the options. When time is the primary concern, air freight is the preferred mode of transport. However, air transport is far too prohibitive, both in terms of cost and capacity, for large loads. The choice is either truck or railroad.

The US interstate highway system is quite extensive and is home to thousands of transport vehicles, as well as private. However, the number of trucks is continually growing, requiring expansion of the roadways due to sheer capacity and the necessary maintenance. Construction of additional lanes, to accommodate the increased volume, will cost taxpayers billions of dollars. As transportation bonds are but one of a plethora of proposed legislations that are presented to the voting public, choices have to be made and questions are raised. Could alternate modes of cargo transport serve the needs of the American consumer? Does an increase in road traffic have negative environmental effects? Are other resources being under utilized?

Proponents of railroad transport have the answers to these questions. They feel that America lags far behind European nations in terms of railroad usage. While it is true that the distances are far greater between points in the US, it still does not negate the fact that railroad lines are dedicated modes of travel, virtually undisturbed by other vehicles. Supporters state that rail transport is far more efficient than trucks and certainly would save taxpayers money. Industry analysts claim that increased train usage could greatly reduce the number of trucks on the nation's roadways, thus reducing fuel consumption and contributing to a healthier environment. Similarly, the costs associated with increased rail usage are far less than the costs necessary for upkeep and expansion of the roadways.

What is clear is the need for increased joint studies by legislators and industrial leaders to define where America is going and how it is going to get there.

Smugglers – Beware!

Smugglers – Beware!
July 20, 2008

There was a time, not too long ago, when smuggling into the United States via the state of Texas was a commonplace occurrence. The Tex-Mex border was a common entry point for illicit drugs and illegal aliens. The common border has been a favorite gateway for smugglers and a cause of concern for law enforcement officials.

Over the years, authorities have increased efforts to curb and curtail smuggling over the border and have become adept at catching smugglers through increased information and more effective surveillance and patrols.

One of the transport methods employed by smugglers has been commercial trucks traveling between Mexico and the US.

Smuggling of drugs and humans is a federal offense punishable by fine and possible short jail sentence. Illicit transport of illegal aliens and drug smuggling in your rig could have your truck confiscated until after the fine was paid. In all, the benefits may have outweighed the risk – until recently.

Changes in federal laws have greatly increased the penalties for illegal transport. However, the strange irony is that the trucker involved in these illegal activities still had a degree of protection under state laws. After paying the fine, or serving a short sentence, the same trucker could get behind the wheel and it was back to business as usual. Texas legislators have put the brakes to this strange turn of events.

Texas has initiated tough new measures to curb illegal transport of humans and drugs. Under the new initiative, federal records of offenses will be made available to the state. The goal is to alert state officials who have the power to revoke and cancel state issued driver and transport licenses. Texas officials have made it clear that their state has declared war on truck drivers involved with illegal activities. A first offense will cost a driver his license for one year. A repeat offense will cost a driver his license permanently.

Since September 2007, seven drivers have been caught smuggling and five licenses have been permanently revoked.

Smugglers – beware. The Texas Border Patrol is open for business.

ATA Presses for a Cap on Diesel Fuel Prices

ATA Presses for a Cap on Diesel Fuel Prices
Sunday, April 6, 2008

On March 27th, the American Trucking Associations (ATA) urged the Bush administration to quickly take measures to ensure that affordable supply of oil is available to the 3.5 million truck drivers and consumers in the U.S. The ATA said as truckers currently face the highest prolonged fuel prices in history, and some motor carriers believe fuel has surpassed labor as their largest expense, the federal government must step in to help bring the price of diesel fuel down.

The ATA recommended the federal government to: stop filling and instead release oil from the Strategic Petroleum Reserve, work with the states’ attorneys general to fight the likelihood of any fuel price overcharge, require all new trucks to install electronic speed limiters set at no more than 68 mph, and set a national maximum speed limit of 65 mph. ATA President and CEO Bill Graves expressed his concern over how increased fuel prices affect the trucking industry as well as the nation’s economy as a whole. Although the trucking industry is doing its best to conserve fuel and limit its consumption, the federal government’s help is still very much needed.

Pressing for immediate action for what is described as a crisis situation, the ATA said it issued letters of late to President Bush, the Department of Energy, U.S. Environmental Protection Agency (EPA), the Federal Motor Carrier Safety Administration, Department of Transportation (DOT), the National Highway Traffic Safety Administration, and the Treasury Department.

The ATA, which represents more than 37,000 member motor carriers, said that the trucking industry is expected to spend a record-high $135 billion on diesel fuel this year, some $22 billion more than last year.

Safe Trucking Companies to be Awarded Fleet Safety Certification

Safe Trucking Companies to be Awarded Fleet Safety Certification
Sunday, April 6, 2008

Aon Risk Services, the retail brokering and risk management services unit of Aon Corporation, has developed the first nationwide fleet safety certification for trucking companies.

SafeFleet Certification, developed by the company's trucking practice, is a performance-based safety certification. The safety performance of trucking companies is measured by comparing a fleet's safety performance to national averages for the trucking industry based on several safety performance criteria, including out-of-service violation percentage, DOT-crash rate per million miles, crash-related injury and fatality rate per 100 million miles, and injury rate that results in lost workplace time per 100 workers.

SafeFleet Gold Certification is awarded to fleets whose safety performance is at least 35% better than the trucking industry average, whereas SafeFleet Silver and Bronze Certifications are awarded to fleets whose safety performance is 25% and 15% respectively better than the national average.

David Mitchell, director of risk control and safety for Aon's trucking practice, said that only about 15% of trucking companies would be able to meet such rigorous certification standards. Trucking companies that do meet those standards, however, are expected to experience improved claims defense and reduced claims costs, better treatment from insurance and reinsurance underwriters, higher driver retention, and increased sales to shippers.