Monday, March 29, 2010

US Truck Weight Limits - Can We do 97,000 lbs?

What is the effect if Congress allows trucks to haul 97,000 lbs? It was controversial when they voted to allow 80,000 lbs back in 1982. What are the ramifications if you are a trucking company? A shipper? A driver??

Below is an article from Columbus Business First. Enjoy and keep an open mind.


Congress to debate whether or not to increase maximum truck weight limits
Orlando Business Journal - by Andy Ashby and Richard Bilbao Staff Writers

Two competing federal bills which will determine whether commercial truck weight limits should be raised to 97,000 pounds will revolve around debates on safety, infrastructure impact and the environment.

Congress is expected to update the Surface Transportation Reauthorization Act, also know as the Highway Bill, this year.

When it does, it will have to choose between two competing amendments: HR 1799, which will allow states to raise weight limits to 97,000 pounds, and HR 1618, which would freeze weight limits.

Congress set weight limits at 80,000 pounds in 1982, although some states in the West and Northeast had higher limits grandfathered in, said John Runyan, executive director of the Coalition for Transportation Productivity and a proponent of HR 1799. “It was controversial at the time going to 80,000 pounds,” he said.

Critics of HR 1799 argue that higher weight limits will deteriorate the nation’s highways. Also, bridges are built to certain capacity.

“Most interstate highways can more than adequately carry the additional weight limits today,” Runyan said. “Where a state identifies a particular trouble spot, which might be a bridge or a stretch of road, this bill gives them the authority to exempt it, so that route would no longer be permissible for the heavier load,” he added.

A key part of HR 1799 is that it allows states to opt for the higher weight limit, but only if a sixth axle is added. Runyan said this is critical because it allows companies to add more weight without increasing the weight-per-tire. “You’re not creating any greater impact on any square inch of road surface and you’re running less vehicles as a result.”

Higher weight limits also would mean fewer trucks on the highway to deliver a fixed amount of goods, meaning safer roads, said Runyan.

Heavier trucks also could mean environmental and economic savings. “Companies are in a pretty tough global fight for survival right now, and they’re looking for ways to reduce costs and improve their performance records at every turn,” said Runyan. “This gives them a way to do that.”

Also, the 97,000 pound weight limit would be more in line with Mexico, Canada and much of Europe. “We really lag the rest of the world, and that has an impact on the competitiveness of American products,” Runyan said.

The coalition said it would cost $6,000-$8,000 to upgrade an existing trailer to add a sixth axle and braking capacity, but companies also could buy new equipment.

However, the coalition said that cost could apply to about 25 percent of the truck fleet because not every truck carries loads that heavy. The coalition also argues that this could spur investment in truck upgrades or trailer replacement.

However, the Owner-Operator Independent Drivers Association opposes “increasing weight capacity for commercial vehicles because we don’t think there is any fuel efficiency benefit and we don’t believe it’s safe,” said spokesman Norita Taylor. Instead, the group backs HR 1618, which keeps weight limits static.

The association has 158,000 members throughout the U.S., mostly people who drive and own their own trucks. The organization argues that its members would not benefit from HR 1799. “Those who are pushing for this just want to move more without paying more to the people who are hauling,” Taylor said.

Even with the sixth axle used for safety, the organization is opposed to HR 1799, partly due to the capital investments that would be placed on owner/operators and smaller trucking companies and partly because of maintenance. “It’s going to be more wear and tear on the engines,” said Taylor. “You’re still adding weight to the same engine, so there’s not going to be enough fuel efficiency to justify the added danger.”

Local trucking companies such as Tavares-based Sunstate Carriers aren’t keen on the idea of increasing the load trucks can pull because customers may take advantage of it, said Sunstate President Richard Baugh. Sunstate Carriers employs 130 workers and runs 115 trucks up along the East coast from Florida to Canada and as far west as Texas.

“This legislations wouldn’t help out us shippers to generate more business because [clients] would want us to haul more weight at the same costs,” he said.

In addition, the increased loads would cause companies like his to have to pay more operational costs, because trucks would use more fuel to haul an extra 17,000 pounds, said Baugh.

However, Matt Ubben, spokesman for the Florida Transportation Association, sees several benefits from an increased load for local trucking companies. “Allowing for additional weight basically allows for less freight movement, which saves on fuel, the time a driver is on the road and maintenance.”

Ubben has heard the argument that safety will become an issue for both the truck driver and other drivers on the road. But he stressed that many Florida trucking companies make highway safety their main priority. “We got a pretty good track record here in Florida. The number of fatalities per vehicle miles traveled is down, so we feel very good about what we’ve been able to achieve so far.”


In brief
• HR 1799, the Safe and Efficient Transportation Act of 2009What it does: Allows a state to authorize the operation of a vehicle with a maximum gross weight of 97,000 pounds, as long as the vehicle is equipped with at least six axles, and the weight of any single axle does not exceed 20,000 pounds or the weight of any group of three or more axles does not exceed 51,000 pounds. In addition, it establishes a safe, efficient vehicle bridge infrastructure improvement program and apportions amounts from the Safe and Efficient Vehicle Trust Fund to states for eligible bridge replacement or rehabilitation projects. Versus• HR 1618, the Safe Highways and Infrastructure Preservation ActWhat it does: Freezes the maximum truck weight limit set by Congress in 1982 at 80,000 pounds beyond the 46,000-mile-plus Interstate System to encompass the entire 161,000-mile-plus National Highway System.

To view this article in full - click here.



Monday, March 22, 2010

CSA 2010 Explained - 175,000 Truckers Could Lose Their Jobs

CSA 2010. What is it? And why would 175,000 truckers lose their jobs the day it takes effect??

Here is an article that was posted in the "Trucking Forum". Whether 175,000 truckers all lose their jobs the day CSA 2010 starts is unknown. What is known, however, is that CSA 2010 is going to have an impact on not just truck drivers, but shippers as well. You will be reading more and hearing more about this in the months to come.

********

175,000 Truck Drivers could lose there job starting in July, 2010.

Have you heard if CSA 2010? If not you will be hearing a lot about it beginning next year (2010).

CSA 2010 could cost you thousands of dollars in fines and lost revenue due to "truck drivers" being declared “Unfit”. An estimated 175,000 truckers will lose their Jobs when CSA 2010 is implemented.

RIGHT NOW DATA ABOUT YOUR DRIVING Record is being recorded by D.O.T. for YOUR DRIVER SAFETY RATING when FMCSA's New CSA 2010 goes into effect.

Most motor carriers and drivers haven't heard of CSA 2010, yet it is quite massive in its scope, and represents a major change in the way the FMCSA audits companies.

Perhaps the most profound change, and how this affects individual drivers are going to be audited and each will be given a personal safety rating. This personal safety rating will determine weather or not the driver is considered eligible to continue driving or requires some sort of intervention.

Data used to calculate your safety rating comes from Roadside inspections, traffic violations (citations) and crash data. A new Driver safety rating will be determined EACH MONTH!

CSA 2010 intends to use new data--such as information from police accident reports about driver-related factors contributing to a crash--and improve existing data sources--by, for example, using its database of licensed commercial drivers to identify all drivers with convictions for unsafe driving practices, as well as the carriers they work for--to enable a more precise assessment of safety problems.

It is anticipated that full implementation of CSA 2010 by FMCSA will begin on or around July 1, 2010.

For a link to the Trucking Forum, click here.

Monday, March 15, 2010

Trucking Industry Trends

The meeting of the Truckload Carriers Association (TCA) was recently held in Las Vegas. There has been a lot of uneasiness the past couple of years, as freight rates had been going down to what seemed to be an impossibility for carriers to be profitable - many were not and are no longer in business.

Here is an article written by Ahern and Associates concerning the trucking industry trends.









Special Edition - Capacity Begins to Tighten


I recently attended the TCA and had an opportunity to meet with many of the "movers and shakers" in the industry. Many of these companies have been friends of mine for many years, so they were kind enough to share their thoughts on the capacity issue. The major concern;


  • Is the pendulum starting to swing?
  • Is the supply versus demand starting to change?
  • Does the industry expect freight volumes to rise?

I took the opportunity to speak to every segment of the market, and a common response was that----capacity is starting to tighten!

  • Some carriers are experiencing as much as a 20% increase in freight demand.
  • Some carriers have been able to obtain (slight) rate increases, and;
  • Shippers are going to have to start rethinking their thought process, if they believe that our industry is going to continue to haul cheap freight.

However, with that stated, don’t start buying more trucks because, even when the pendulum does swing, you have to remember that we’re a cyclical business. We all have to remember that trucking is a dollars business;

  • The supply and demand pendulum continues to shift, and;


  • The last recession should be a good lesson for all of us.

I was amazed hearing some carriers’ state that they’re starting to activate more equipment and buy more equipment. That’s the "kiss of death"!


  • Focus on your customers.


  • Focus on their needs, and;


  • Focus your energies on the customers that worked with you through the very difficult times


  • Start re-evaluating your shipper base and where you want to commit your equipment to achieve the highest rate of return.
The tone of the TCA meeting was upbeat.


However, at the same time, the TCA had Bob Costello, the Chief Economist for the ATA, panel a discussion with shippers. Bob indicated:

  • He is starting to see some increase in demand, but stressed;


  • Don’t get too excited, because;


  • The ATA believes that the market is going to continue to suffer for a period of time.

As an analyst, I will agree that we still have many financial challenges to deal with!

  • The United States (still) has a substantial amount of financial problems that they need to resolve.


  • The world economy, (still) has not adjusted, although imports into the United States are increasing, but;


  • All in all, it’s going to take time.

It was also interesting that there were a group of shippers, on the panel, with Bob Costello who indicated that;


  • It’s very difficult for them to provide loyalty to trucking companies, when they’re dealing with cost, and;


  • Shippers are going to continue to drive down cost, wherever possible, regardless of the relationships.
To me, that sent a very important statement; they just don’t get it! I recognize that, in a competitive environment, you need to be competitive, but when you’ve had a relationship with a trucking or logistics company for 30+ years and you leave them, (simply for money), in my thoughts process, that’s the "kiss of death". You don’t penalize someone, for being loyal to you for a long period of time.

Unfortunately, today, that’s becoming prevalent as the American way. However, it’s certainly not the Ahern way and it’s certainly not the way of many of my customers. Shippers need to change their mentality, if they want to survive a very difficult time in the future;

"As capacity continues to shrink, the shippers that have
continued to pummel the trucking industry, are going to be the ones that are
going to be affected the most."



From a trucking companies perspective and from the industry’s perspective;

  • Relationships are (still) important in our industry;


  • We all recognize that price is an important component, but;


  • So is service, and so is a relationship.

In closing, the conference (in my personal opinion) was a success because it sent a positive statement to the industry, that there are better times ahead. However, as stated; Be very cautious, because the industry is still struggling and it’s going to be a long time before we’re "out of the woods".

For a link to Ahern and Associates, click here.

Monday, March 8, 2010

Flatbed Freight Pricing Affected by Growth in Steel

6 months ago, we warned shippers that demand pressures would force flatbed freight pricing up. Looks like we were right - AND wrong.

Our reasons for price increases were that there were many carriers going out of business, which lowered the overall capacity in the market. Lower supply means increased demand (at least that is what our college econ teachers taught us). We were right in this prediction.

Another prediction that we made back in October of 2009 was that financing (or lack thereof) would keep small and middle privately owned companies from being able to purchase new trucks. We were also right on, as finance companies are still reluctant to lend to trucking companies, since most have not shown a profit for a very long time.

So how were we wrong??

We didn't see the rebound in steel throughout the midwest coming on so strong. We knew there would be a comeback, but we weren't expecting it to be this powerful.

According to the USGS (United States Geological Services) Metal Industy Indicators February Report, the Primary Metals Leading Index increased 1.4% in January to 142.2 from a revised 140.3 in December 2009. The 6 - month "smoothed" growth rate continued to rise, climbing to 19.2% from a revised 18.3% in December.

Will this continue??

The 6-month smoothed growth rate is a compound annual rate that measures the near-term trend. Usually a growth rate above +1.0% signals an increase in metals activity, and a growth rate below -1.0% indicates a downturn in activity. The leading index has increased every month since March, 2009 and its high growth rate is indicating that activity growth in the primary metals industry should continue. This is reflected by the high growth rate in the coincident index. Increased domestic manufacturing activity and the high metals demand from emerging economies appear strong enough to underpin a recovery in U.S. primary metals industry activity.

So Now What? What About Transportation Costs?

To translate what this means to shippers. Shippers have two options at the moment.

1) Play the spot market for pricing (remember that rates attract or scare away trucks during times of demand crunches). When demand for trucks increases, these shippers will be paying the highest rates in order to attract trucks;

2) Get trusted carriers to agree to "fair" pricing and take care of those carriers. Many shippers have changed their philosophy of trying to get the lowest priced carriers to taking a core group of carriers, giving them modest increases now, and saving on higher costs later compared to only doing spot rates.


Transportation managers are going to have some rough roads ahead for the flatbeds. Even vans are beginning to become a little more in demand, as some shippers are doing everything they can to convert some of their flatbed shipments to vans, where the demand is not so high - yet.


For the complete report of the USGS, click here



Monday, March 1, 2010

The Stimulus Plan for Infrastructure Spending

The Stimulus Plan for Infrastructure Spending


This is a great article that tells about the Stimulus Bill and how the funds are FINALLY going to be spent in 2010. This article was written by Kent Hoover, of the Memphis Business Journal.

About 23,500 infrastructure projects funded by the economic stimulus bill will begin this year, according to a study by Onvia, Inc., a Seattle company that tracks stimulus spending.
These jobs will put $76 billion in the hands of contractors and create 480,000 construction jobs, according to Onvia.

“Despite all of the talk about the stimulus working, our research shows most of the funds have not left Washington, although they will in 2010,” Onvia CEO Mike Pickett said.

“We also expect competition for these contracts to be fierce as more businesses seek to capitalize on the irresistibly large market created by government spending,” he said. “It will remain a buyer’s market as more companies follow the money and competition keeps a lid on costs.”
Last year, most infrastructure projects came in below estimated costs, Onvia found, which enabled government officials to expand the scope of some stimulus-funded projects.
Small businesses see little benefit from stimulus bill.

The $787 billion economic stimulus bill may have created or saved 2 million jobs, but most small business owners haven’t seen much of an impact from the legislation.

A February survey of small business owners by Discover Financial Services found that 70% said the stimulus bill had no impact on their businesses.

Only 10% said it helped, and 17% contend it hurt their businesses.

A separate survey conducted for CIT Group Inc. in December and January found that 90% of small business owners said they haven’t benefited from the economic stimulus bill.

The Discover survey, which focused on businesses with five or fewer employees, found lots of skepticism about the federal government’s ability to help them.

More than 75% said they were “not very confident” or “not at all confident” that the federal government and Congress could address the needs of small business owners, up from 62% a year ago.

Nearly 70% said it’s unlikely they would hire a new employee if Congress passed a proposed tax credit for businesses that increase the size of their work force.

The stimulus bill helped revive Small Business Administration lending by increasing the government guarantee on these loans and reducing or eliminating fees.

But 91% of the small business owners surveyed by Discover said they had never applied for an SBA loan, and 61% said it’s unlikely they would do so in the future, even if they were easier to get.

The CIT survey focused on larger small businesses, companies with annual revenues of $1 million or more. Nearly 60% of these business owners said small businesses would benefit from a proposed increase in the size limit for SBA loans.

Kent Hoover is Washington bureau chief for American City Business Journals. He can be reached at (703) 816-0330 or khoover@bizjournals.com For a link to the article, click here.