How Driver Recruiting Will Affect Shippers

Should CEO’s be concerned how driver recruiting will affect shippers? The short answer…. Yes.

Drivers are leaving their current positions to “go where the money is”. Many carriers, feeling the driver shortage crunch, are fighting hard for those seasoned drivers. According to Transport Topics, carriers are being forced to raise their mileage pay and many are paying sign on bonuses to attract top drivers. Six out of seven carriers are paying referral bonuses up to $1,500.

According to Jeff Davis of Jet Express, “There are so many motor carriers who are just holding their own and living from month to month.” He feels that the new CSA 2010 guidelines can be the “straw that breaks the camels back”, as the new safety system will disqualify drivers for violations that previously didn’t count against them.

Any prudent person can see where this is going. Carriers who are still fighting to regain losses from the recession face a tough decision. Either they don’t pay their drivers additional wages, signing bonuses, referral fees, etc. and keep their rates the same for their customers OR they pay higher driver wages to keep their fleets going and charge higher rates to their customers.

It’s a tough choice, but shippers need to be aware of what is going on in the transportation industry. Some industries are still slow while others have increased tremendously. The real problem is not if the economy expands, the real problem is keeping enough drivers in trucks to transport goods across our country.
CEO’s need to watch this closely, as transportation is normally one of the largest line item expenses on their income statements. Their transportation managers may be faced with a tough job ahead of them if no trucks will come to their doors. Without trucks delivering their goods to THEIR customers, the CEO’s may face a serious shortage of their own – satisfied customers.


_________________________
The driver shortage is very real. Companies are not only paying recruiting referrals, sign on bonuses, and increasing pay, but they are also marketing like never before.

Click here to see the Schilli website for Flatbed Jobs.

Below is a video that is also being distributed throughout the internet for potential drivers to review.

CSA 2010 Training

CSA 2010 Training is becoming critical for carriers who have staff that don't understand the ramifications of this new safety program. It's not just the drivers, but dispatchers and planners need to understand the ins/outs of this new program.

CSA 2010 is all about reducing the fatality rate with large commercial vehicles such as busses and trucks. Even though the current mortality rate is the lowest since the DOT began keeping records, the FMCSA still believes that there is room for improvement.

CSA 2010 is the FMCSA's program to more efficiently monitor carriers and be able to "intervene" when carriers data points to an increased probability of an accident. Moving violations (warnings or tickets are weighed the same), overweight, driver logs, etc. are being scrutinized like never before. These records will become public information, which can severely hamper a carrier's ability to provide service to customers - especially when those customers will simply be able to review each carriers risk.

Picture: Schilli CSA Training in St. Louis. Pictured from left to right: Tom Schilli - CEO; Larry Shaw - Terminal Manager Shoals, IN; Joyce Schilli - WVT of Texas General Manager; Mike Zachary - Business Development Manager; Cindy Bull - Planner; John Simms - CSA Presenter/Trainer; Charles Cassity - Terminal Manager St. Joseph, MO.

So what does this have to do with dispatchers and planners??? Here's the real impact this new system is going to have on both carriers AND SHIPPERS..... driver's will NOT do things that will add a risk to their public driving record.


This is going to pose a problem as planners will need to be able to communicate to the customers that their "emergency load" will not be able to be delivered until the driver can legally start up his truck and drive 1,000 feet to the dock - he's out of hours. In the past, many drivers would simply go the extra mile when needed to accomodate a shipper's request. Drivers are not going to want to do this any longer, as if they get caught they will be penalized and so will the carrier. They simply can't afford to take the risk.

Hours of service is becoming the key buzz word at Schilli Transportation Services. No longer can planners and dispatchers simply give a load to a driver and tell them it needs to be delivered at 2:00 am. Driver hours must be considered and, at times, the customer service group must make that dreaded call to the customer "Our driver cannot legally make your delivery requirements". All carriers are faced with this issue which means all shippers are faced with this issue - whether they want to hear it or not.

CSA 2010 Explained

CSA 2010 Explained

I'll apologize now for the length of this post, but CSA 2010 needs to be explained.

On June 23, 2010, the senate had a hearing on the implementation of CSA 2010. Keith Klein, representing the American Truckers Association (ATA), testified of the numerous flaws that CSA 2010 will be bringing about.

Here is a synopsis of the issues that that ATA has according to his testimony before the U.S. House of Representatives, subcommittee on Highways and Transit.

Crash Accountability

The ATA is concerned over crashes that are not caused by the trucker. Under the CSA 2010 guidelines, all crashes are weighted the same. Even those that are not caused by the trucker. The ATA feels that this is not equitable and will penalize good drivers. There is tremendous concern that the FMCSA will make this public and shippers will have the wrong idea about carriers.

Exposure Measurement

The FMCSA currently uses the number of trucks to rate the exposure of a carrier. The problem with this is that there are those carriers who have tremendous utilization of those trucks and other carriers who have trucks that are parked. The exposure is rated the same for both, which is not equitable. The ATA feels that FMCSA should rate the exposure based on miles run, not the number of power units.

Warnings for Moving Violations

The FMCSA is currently counting all moving violations and warnings the same. The problem with this is that a warning is simply that – a warning. The driver has no way to go through due process to have the warning removed. The problem, of course, is that this will go on the driver’s record regardless of the validity and will be used to measure the carrier’s safety performance.

In many states law enforcement officers must have probable cause in order to stop a truck and perform an inspection. In these states, it is common practice for enforcement
officials to stop trucks for trifling speeding offenses (e.g., 3 mph over the limit), and issue
warnings as justification to conduct inspections. As a result, carriers operating in these states are disproportionately impacted and likely have worse driver violation scores than carriers who operate elsewhere. For example, based on data we obtained from one large, national motor carrier, trucks operating in Indiana – a probable cause state – are four times more likely to receive a warning for speeding than carriers operating in non-probable cause states.


Inequitable Treatment of Flatbed Carriers

An additional concern is the disproportionate impact of CSA 2010 on flatbed and other open deck carriers. These carriers have a far higher risk than other carriers of being cited for load securement violations since the violations are more evident (visible) and because they typically have far more load securement requirements. This problem is especially acute given the fact that, as mentioned earlier, all load securement violations bear the maximum severity weight in the scoring system.

Because open deck carriers are placed in peer groups with van bodied carriers, their relative performance is often seen as worse - simply because they comply with tougher requirements and because their violations are more evident. There is a very simple way to address this clear inequity; in order to measure their relative safety performance these carriers should be placed into a peer group of like-type carriers.


Representative Walz, a subcommittee member, asked the question “What does this program do as far as what you have to do to monitor and implement the program?”

Mr. Klein responded that larger trucking companies already have people in their safety departments, but their focus has to shift from accident reporting to safety monitoring and compliance. Smaller and medium sized companies will need to hire more people to monitor, train, and implement their program.


In summary, the goal of CSA 2010 is reduce the number of fatalities and accidents. Fatalities are currently at the lowest level since the DOT has been keeping records, but they feel there is still room for improvement.


Note to Shippers………

It was also brought up that many of the items that lead to violations can actually be controlled by the shippers. Shippers can often make demands upon carriers because their customer urgently needs something. Shippers are going to have to re-think, as drivers and carriers cannot afford to take the risk that they used to. If they do, there are likely to be “interventions” from the FMCSA and that is something that carriers just don’t want to have to deal with.

For a link to the full report, click here

New CSA 2010 Rules

New CSA 2010 Rules are making trucking companies and shippers nervous. There are many rumours floating around that 175,000 drivers will lose their jobs the day that CSA 2010 takes effect. While CSA 2010 does not actually give authority to the FMCSA to remove anyone, it is still unclear as to what actions state agencies will take (who DO have the authority).

As of May 27th, here is the updated timeline for the rollout of CSA 2010.

April 12 – November 30, 2010 – Motor carriers can preview their own data by seeing their roadside inspections/violations and crash events organized by Behavior Analysis and Safety Improvement Category (BASIC).

Summer 2010

June 30th – The Operational Model (Op-Model) Test will end.

July – The four “50/50” Op-Model Test states, Colorado, Georgia, Missouri and New Jersey, will join the five 100% Op-Model Test states in implementing the program.

August – Motor carriers will be able to see an assessment of their violations based on the new Carrier Safety Measurement System (CSMS) which will replace SafeStat later in 2010.

Fall/Winter 2010 - SafeStat will be replaced by the CSMS. CSMS will be available to the public, including shippers and insurance companies.

FMCSA/States will prioritize enforcement using the CSMS.

FMCSA will begin to issue Warning Letters to carriers with deficient BASICs.

Roadside inspectors will use the CSMS results to identify carriers for inspection.

Winter 2010 - Safety Fitness Determination Notice of Proposed Rulemaking (NPRM) is scheduled to be released.

2011 – Enforcement staff will be trained, and new interventions will be implemented State-by-State

Photo courtesy of Flickr Creative Commons

Truckload Freight Rates - Up or Down?

Given that almost no new capacity is being added to the market, any increase in freight volumes has to tighten capacity a bit. Truckload freight rates are on every shippers mind. Will they continue to rise, or will shippers be able to get them back to where they were a year ago - cheap!

We've noticed that trucking rates in certain sectors have been increasing for the past few months - especially the flatbed market. But what about van freight??

There certainly are a lot of opinions about how fast rates in the greatly depressed truckload and LTL sectors are likely to begin some sort of recovery along side a now growing economy.

Recently, transportation industry analyst John Larkin predicted that rates would stay low into 2012 even with economic recovery, for reasons ranging from increased use of technology by shippers in sourcing transportation to continued over capacity in both the TL and LTL markets.

There is, however, another opinion out there. Meet Charles Clowdis from IHS Global Insights. According to Charles, he believes that rates will rise more rapidly than many analysts have predicted.

According to Clowdis, the number of carriers and owner operators that went out of business has lowered the total supply of trucks in the US. He believes that this point has led to a straining capacity currently, and will force pressure to raise rates sharply higher if shippers want to get their freight moved.

Clowdis states that “Many carriers, both truck load and less-than truck load, have not replaced their fleets on a schedule that puts the most fuel-efficient equipment requiring less maintenance into service,” meaning fewer trucks will be available on any given day.

All told, Clowdis predicts TL and LTL rate hikes in the 7-10% range, “as capacity decreases and becomes more valuable to serve the released consumer demand.”

Of course, even rates hikes in those ranges would still leave shipping costs well below rates in 2007, but from a current year perspective, if Clowdis is accurate, it could lead to sharp year-over-year cost increases that could affect a shipper’s bottom line and ability to meet transportation budgets.


But Wait - There's More

Transportation companies are being pressured to adhere to "Green Initiatives" by shippers. Overall, many of the green initiatives combine reducing miles driven, which lowers shipping costs and greenhouse gases (GHG) at the same time. Sounds great, right??

Clowdis, however, feels that it is not as "rosy" a picture and feels that there are some challenges to this.

“Pressures to lower CO emissions will require investment in more fuel efficient engines to meet Green Initiatives that surely will be mandated by shippers,” Clowdis says. “Decreased fuel efficiency likely to result from added emission control enhancements can decrease the miles-per-gallon trucks currently produce and add to carrier costs that can be passed along to shippers.”

The cost structures of the carriers will simply be passed on to the shippers if the carriers wish to stay in business. Many carriers have heavily borrowed in order to ride out the past recession - and at much higher interest rates. The only way to stay going for many is to raise rates to service the added debt. According to Clowdis, freight rates “will also be driven upward by the need to service debt incurred by many of the carriers that resorted to borrowing to sustain themselves during the downturn”. This will no doubt lead to additional pressures to drive rates up.

“Terminal and infrastructure facilities also will require investment to restore efficiencies in operational areas and handle increased tonnage,” he says, adding that such investments must be financed in part by some increases in freight rates.

All this leads to the conclusion that sharp “rate increases are a certainty,” according to Clowdis.

To further illustrate, the American Trucking Association (ATA) tonnage index for March reported an adjusted month over month increase of .4%. However, there was a 7.5% increase in freight volume. There have now been 4 straight months of year - over - year tonnage gains.

Given that almost no new capacity is being added to the market, any increase in freight volumes has to tighten capacity a bit.

Last week, ATA Chief Economist Bob Costello was quoted “For most fleets, freight volumes feel better than reported tonnage because the supply situation, particularly in the truckload sector, is turning quickly."