Schilli Transportation News

Trucking Capacity for 2012

2011-12-06T11:51:00.005-05:00

Trucking Capacity Has Been Tightening, but Why?

Most transportation managers now understand that it is a different world today as compared to a year ago, when trucks were more plentiful. Have you had loads sitting waiting for a truck to appear for days??

Many transportation managers have felt this during 2011. So why has this been happening when all we hear about is the economy being sluggish?

The simple answer comes down to two words...... Driver Shortage. Many drivers are approaching retirement age and there don't seem to be enough new ones coming aboard. But is that all???

You'll want to listen to Jim Watson, the Driver Recruiting manager for Schilli Specialized, Wabash Valley Transportation and WVT of Texas. Jim has been with the trucking industry for numerous years and has one of the best handles on driver issues of anyone around.

Yes - CSA 2010 has helped to keep our roads safer. But it is costing transportation divisions a lot more money to get freight moved, as transportation providers are struggling to keep enough drivers moving their trucks.

Transportation Costs in 2012 - Could They Explode?

2011-11-28T09:41:00.014-05:00

Transportation Costs Have Been On the Rise - What About a Rail Strike in 2012?

There have been some major concern of U.S. workers in contract negotiations with railroad companies. There was a December 6th, 2011 deadline that if an agreement could not be reached, there would be a massive rail shutdown.

There has been a recommendation that the 132,000 negotiating workers reach tentative agreements to end a two year stalemate between workers and railroads. Unions that do not reach an agreement by December 6th may begin strikes and the railroads can lock them out.

According to the Association of American Railroads, a walkout on December 6th would cost the American economy approximately $2 Billion a day.

The Good News

The good news is that one of the unions that represent approximately 19 percent of U.S. workers still negotiating their contracts, said that it would like to continue talks at least through February

“We have no intention of striking” on Dec. 6, said Fred Simpson, president of the Brotherhood of Maintenance of Way Employes, which represents workers who build and maintain tracks and other structures. “We sent all the railroads a letter saying, ‘We’re not going to strike, we’d like to bargain until Feb. 10 to see if we can get something done.’”

Impact on Trucking Costs

Of course, any reduction in the supply of transportation means an increase in other sectors, such as truckload. Normally products and goods are shipped at a much lower rate across country when rail is used. Once the products are shipped to the rail yards, they are normally finalized by trucks.

Think about the impact, for example, if coal fired power plants cannot ship their coal via rail. The price of electricity would obviously go up considerably. How about the price of automobiles? Most autos are shipped via rail across the US then finished with car carriers. The impact on the auto industry could also be significant.

Companies would be forced to utilize long haul trucking to get their goods to their customers or face severe financial hardships. This would also drive the transportation costs "through the roof" as the simply rules of supply and demand dictate higher prices when more demand is placed on a commoditized service, such as transportation.

For now, it appears that the railroad strike may be averted. Let's keep our fingers crossed that a settlement can be negotiated - our county would have a difficult time rebounding from the past recession should this important part of the shipping equation shut down.

Trucking Capacity... Better or Worse for 2012?

2011-11-17T09:54:00.006-05:00

Trucking Capacity for 2012 Is On Every Transportation Manager's Mind

Let's face it... many companies are reviewing budgets for 2012 and transportation costs are one of the largest expenses any manufacturing or distribution company has. Trucking capacity is one of the biggest issues in transportation pricing.
Here are some articles around the globe that should give you a pretty good idea of what is going on and what is expected to go on in regards to the supply of drivers in the transportation industry. We may be able to make equipment, but it's hard to get a truck to move without a driver.
Click on any of the links below to read more.

Panelists agree driver shortage is 'going to get harder' | Truck Parts ...
http://www.truckpartsandservice.com/panelists-agree-driver-shortage-is-%E2%80%98going-to-get-harder%E2%80%99/11/14/11
The Aftermarket Authority – Truck Parts and Service.

Driver Shortage, Tight Fleet Capacity Fuel Growth of Intermodal ...
http://www.intermodalinsco.com/2011/11/14/driver-shortage-tight-fleet-capacity-fuel-growth-of-intermodal-shipping/11/14/11
By Rip Watson, Senior Reporter, Transport Topics The truck driver shortage and related fleet capacity constraints are driving strong growth in domestic.

FTR: Capacity to remain tight, driver shortage to worsen ...
http://www.ccjdigital.com/ftr-capacity-to-remain-tight-driver-shortage-to-worsen/11/8/11
FTR: Capacity to remain tight, driver shortage to worsen. By Jeff Crissey. Published November 8, 2011. During a presentation at Commercial Carrier Journal's Fall Symposium in Scottsdale, Ariz., Eric Starks, president of FTR Associates, told ...

Where are all the great tank truck drivers? - Modern Bulk Transporter
news.google.com
Where are all the great tank truck drivers?Modern Bulk TransporterThe continued driver shortage may very well be the most critical factor in the future success of tank truck fleets. Even with unemployment well above 9% and despite hefty hiring and re ...

Mike O'Connell on the Truck Driver Shortage
CVTA's Executive Director Mike O'Connell on the push to increase the number of truck drivers in the US

The driver shortage is already a factor in rising transportation costs. According to the experts above, it is likely to become a much larger problem for 2012.

How the Global Economy Can Affect Trucking Capacity

2011-11-03T10:44:00.005-04:00

The Global Economy Directly Affects Trucking Capacity

It's safe to assume that most transportation managers have felt the "sting" of a tightening truck capacity in the full truckload world. Flatbeds have been hard to find - rates have been increasing. Vans have also tightened and rates have increased.

Bottom line - if you want to attract a truck, it's probably going to cost you more than it did a year ago.

So what is driving the demand for trucks? Let's start with manufacturing and see what is happening.

Even though the global economy is playing a more critical role than ever before, such as the deficit crisis in Greece, freight demand has continued to be brisk, due to a bounce back of manufacturing activity.

According to data by the National Association of Credit Management (NACM), manufacturing increased in September from a dissapointing showing in August. The Credit Managers’ Index (CMI) jumped from 57.2 to 58.9. This seems to indicate that the summer slowdown appears to be lifting.

“The anecdotal evidence is that demand for new machinery is starting to pick up steam,” noted Chris Kuehl, NACM’s economist. “Many of the bigger trade shows in the manufacturing sector are reporting much larger attendance numbers than last year and those that are coming to these shows are far more interested in buying than before.”

That trend is reinforced by the CMI numbers, he added. “There is abundant evidence that business activity is ramping up again from the drops in August, and it is looking like much of the summer slowdown was prompted by all the political infighting,” Kuehl said.

Kuehl stated that the manufacturing activity isn't necessarily enough to indicate the manufacturing crisis is over, but that the manufacturing side of the economy is playing a big role in the freight markets.

"It has been noted elsewhere that outbound container traffic is about 8 points higher than this time last year, indicating that the export sector is still performing well in many categories,” he said.

According to a recent article in Fleet Owner, "the key “poker piece” for trucking in all of this is that capacity still remains well short of freight demand, Kenny Vieth, president and senior analyst at ACT Research Co., told Fleet Owner. “As long as freight volumes exceed capacity, then trucking companies can still achieve a reasonable profit,” he said. “Though we’ve changed our forecast, with freight demand now expected to plateau rather than accelerate into 2012, that plateau will still produce enough freight to exceed capacity. That means trucker profits should still remain up.”

For example, it has been reported that the number of trucks operated by the truckload industry is still down about 12% from the height in late 2006, yet tonnage levels are about the same as in late 2006; thus capacity remains tight.

According to Vieth, Greece still remains a wild card. The impact upon the world economy when Greece defaults could have a substantial impact on not just the eoncomy worlwide, but that also means that trucking capacity could be affected - just not sure how just yet.

Forecast Manufacturing - Where are We With Trucking Costs?

2011-10-19T10:07:00.007-04:00

Forecast for Manufacturing - Will Truck Prices Continue to Rise?

According to a report from KPMG, the global forecast manufacturing outlook is "growth while managing volatility".

OK - so what does that mean??

Here's an exerpt from their recent whitepaper:

Despite a generally profitable year, many leaders of global manufacturing firms face a
number of challenges. Just as the global economy looked like it was gaining momentum, the Japanese tsunami struck, unravelling many global supply chains. Since then, volatility has become a key watchword, as a wide array of macroeconomic risks – most notably the European and US debt crises – raise uncertainty over future demand and the spectre of a “double dip” recession.

Yet executives at major manufacturers – organizations polled in an Economist
Intelligence Unit survey representing firms with at least US$1 billion in revenue – are cautiously optimistic that they can realign their businesses toward top-line growth while managing the multitude of cost challenges.

It appears that KPMG's survey is indicating that there is still some optimism in the global economy that manufacturing will continue it's upward trend.

Of course, as this relates to transportation costs, the more demand that is placed on a constant supply can, and probably will, put upwards pressure on prices.

Click here to download KPMG's report, "Global Manufacturing Outlook - Growth While Managing Volatility"

Trucking Economy Still Growing

2011-04-19T10:44:00.003-04:00

The trucking economy of the US is still growing. Shipping managers have all known that it is harder to find trucks, but will this continue?

Below is an excerpt from the Institute for Supply Management and indicates that the ISM's index continues to grow.

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in March for the 20th consecutive month, and the overall economy grew for the 22nd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business^®.

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The recent trend of rapid growth in the manufacturing sector continued in March, as the PMI registered above 60 percent for the third consecutive month. The component indexes of the PMI remain at very positive levels and signal strong sector performance in the first quarter. While manufacturers are benefiting from strength in new orders and production, there is significant concern with regard to commodity prices. Many manufacturers indicate the prices they have to pay for inputs are rising, and there is concern about the impact of higher prices on their margins."

PERFORMANCE BY INDUSTRY

Of the 18 manufacturing industries, 15 are reporting growth in March, in the following order: Apparel, Leather & Allied Products; Transportation Equipment; Fabricated Metal Products; Machinery; Textile Mills; Computer & Electronic Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Paper Products; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Miscellaneous Manufacturing; and Printing & Related Support Activities. The two industries reporting contraction in March are: Wood Products and Primary Metals.

WHAT RESPONDENTS ARE SAYING ...

"Customer orders have picked up nicely. [This is] likely in anticipation of increasing prices due to commodity costs that will likely happen over next month." (Food, Beverage & Tobacco Products)
"New orders continue at a robust pace this month." (Miscellaneous Manufacturing)
"What will be the impact to the U.S. supply chain after the devastation caused by the Japan earthquake?" (Chemical Products)
"The building side of our business is mired with little hope of a rebound anytime soon." (Fabricated Metal Products)
"Steel and certain steel products causing concern over price increases and availability." (Machinery)

MANUFACTURING AT A GLANCE MARCH 2011
Index	Series Index March	Series Index February	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
PMI	61.2	61.4	-0.2	Growing	Slower	20
New Orders	63.3	68.0	-4.7	Growing	Slower	21
Production	69.0	66.3	+2.7	Growing	Faster	22
Employment	63.0	64.5	-1.5	Growing	Slower	18
Supplier Deliveries	63.1	59.4	+3.7	Slowing	Faster	22
Inventories	47.4	48.8	-1.4	Contracting	Faster	2
Customers' Inventories	39.5	40.0	-0.5	Too Low	Faster	24
Prices	85.0	82.0	+3.0	Increasing	Faster	21
Backlog of Orders	52.5	59.0	-6.5	Growing	Slower	3
Exports	56.0	62.5	-6.5	Growing	Slower	21
Imports	56.5	55.0	+1.5	Growing	Faster	19

OVERALL ECONOMY				Growing	Slower	22
Manufacturing Sector				Growing	Slower	20

*Number of months moving in current direction.

For a link to the actual article, click here.

Truckload Freight Rates

2011-04-04T11:17:00.011-04:00

Truckload freight rates have been going up - quickly. Since transportation costs are a large portion of expenses for most manufacturers, many shippers are wondering if rates will continue to increase or will it level off?

According to Mark Montague, a pricing analyst for TransCore, "While the spot market reacts more severely, the contract market has a lot of room for recovery of rates."

He mentioned that spot market rates have increased 8.9 percent year over year in January. Contract rates were up 3.4%

David Schrader, senior vice president at TransCore Freight Solutions stated "We've seen a material increase in the load-to-truck ratio. In December 2009, we had three loads for every truck posted, and by November 2010, it was about five loads for every truck. January was the strongest January in quite some time."

Longbow Research states that rate recovery is already underway and they predict that contract rates may rise up to 10% in the first half of 2011 - and that trucking companies may still come back for more.

Another part of the capacity crunch is that carriers are not willing to add trucks to their fleets. "There are a lot of barriers to growing capacity at the rate of a potential recovery, which means spot market rates could really climb." states Montague. "It will be more difficult given the tight credit markets to create capacity.

How Can Shippers Attract Trucks?

According to Tom Schilli, CEO of Schilli Transportation Services, Inc., "Other than price or rate, there are two ways that shippers can attract trucks - making sure your facility is driver friendly and carrier cash flow."

On driver friendly facilities, Schilli states, "No dispatcher wants to argue with his drivers to go into a shipper that fails to treat them with respect. On the other hand, if a shipper treats drivers with respect, has a place to sit down while waiting to get loaded, and generally welcomes drivers, the dispatcher's job is much easier. Given equal rates, that shipper will receive trucks over the shipper who fails to respect drivers and waste drivers' time. Most contracts allow for two free hours to load or unload. Since drivers are paid by the mile, delaying a driver costs him valuable driving time and hits his pocket. However, if a shipper can get a driver in and out in only an hour, that driver has effectively made another $15. That driver is going to want to come back."

Schilli continues, "We encourage shippers to spend a little money to create good, driver friendly facilities. If they do, the drivers will be more apt to represent those shippers in a way that the shipper's customers will also appreciate."

Providing a place that is driver friendly is a great way to help to attract drivers, but it still comes down to the "boss" making a decision to send a truck in or not. Another way that shippers can attract carriers is to provide better payment terms. "A company that takes 45 days to pay a carrier is at a serious disadvantage to a shipper that pays in 7 days," states Schilli.

Schilli continues, "Many companies don't realize that smaller carriers are still feeling the credit crunch of the recent banking crisis. Large, publicly held trucking companies can borrow money the same as large manufacturers. The smaller, entrepreneurial companies, however, still have concerns over cash flow. If a shipper is willing to step up and make a quicker pay to those small and medium sized carriers, those carriers are much more likely to send their trucks to them versus another shipper. If companies can figure out a way in which to speed up their payments, carriers will respond."

We hope that this article will encourage shippers to help themselves as the trucking capacity crunch continues and is likely to worsen over the next few months.

Photo from TransCore - click here to visit TransCore site

Trucking Industry Trends for 2011

2011-03-01T10:38:00.008-05:00

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Trucking industry trends for 2011 should be on the minds of every transportation manager. How should you strategize for this year? Will you have to pay much higher rates to get your goods moved? Will you be able to find trucks? How will CSA 2010 affect 2011?

These are all great questions. I ran across a survey put out by the Commercial Carrier Journal that questioned 41 commercial carriers on various topics concerning the "pulse" of the industry.

Here is what was found:

How Is Your Business Doing This Month Compared to the Same Month Last Year?

12.2% feel it is the same as last year; 63.4% of the companies feel that business is better and 17.1% feel it is much better

In the Next 6 Months, We Plan to:

* Increase the size of our fleet 56.1%
* Replace aging equipment 26.8%
* Make no change in fleet 17.1%

Top Concerns

* Freight pricing 36.6%
* Labor availability 20.0%
* Freight volume 17.1%
* Regulation 9.8%
* Energy Costs 7.3%
* Cash Flow 4.9%

Interesting Comments
I am cautiously optimistic that current freight demand will continue at least through half the year in 2011. Biggest concern I have is that diesel fuel costs could get back to the over $4.00 range and kill the economy again.

I hope shippers are prepared, with the price of oil, CSA, HOS......only the ones that pay a fair rate will get service because those elements will cause capacity issues in the second half of 2011......if we don't have a double dip which i think is still possible.

December was much better than expected. We are now in the traditional post holiday lull in January. Once we get past 1st Q, I expect this to be a pretty good year. We made great progress in 2010 in raising rates, but need to start all over again in 2011 as I anticipated rising costs in drivers pay, recruiting, fuel, and loss of productivity caused by Federal Regulations.

Turning down available freight because not enough drivers available. My recruiting dept. states that as long as they can get $500 per week unemployment..... that the drivers say they'll go hunting and fishing!

Trucking Industry Trends - Diesel Costs for 2011

2011-01-17T10:12:00.004-05:00

Trucking industry trends for diesel costs show that the global demand for diesel is far higher than the demand for gasoline. What does this mean for transportation managers throughout the US? You can read the article and judge for yourself.

Diesel Premium to Remain in 2011, Analysts Predict
By Dan Leone, Staff Reporter - Transport Topics

U.S. retail diesel has sold at a premium over gasoline throughout 2010, and petroleum market watchers saidglobal competition for the trucking industry’s main fuel likely means that will not change any time soon.

“There’s really one reason” for the spread, said Tancred Lidderdale, a Department of Energy economist. “Theglobal demand for distillates is rising faster than global demand for gasoline.”

Last week, the U.S. retail diesel average was 23.9 cents higher than the gasoline average. The spread narrowedsignificantly from just one week earlier as gas rose far faster than diesel, DOE reported Dec. 6.

The highest diesel premium so far this year came on Nov. 29, when diesel was 30.6 cents a gallon moreexpensive than gasoline. The gap had not been so pronounced since February 2009, according to DOE data.

Decades ago, diesel was a refinery byproduct and reliably cheaper than gasoline. Each successive federal cap onsulfur content for diesel resulted in higher refiner costs that got passed down the line to truckers.

Now, DOE data show, retail diesel is almost always more expensive than gasoline.

However, when DOE began its weekly survey of filling stations in 1994, diesel and gas prices tracked one anotherquite closely. It was not until 1996 that DOE’s weekly survey reported diesel prices were routinely higher thangasoline. The last time the diesel average stayed below the gasoline average for more than two consecutiveweeks was during the summer of 2009. Diesel has not been cheaper than gas since August 2009.

So far in 2010, the average spread between DOE’s weekly diesel and gasoline average has been 20.7 cents agallon, about in line with the agency’s 2010 estimate of 21 cents a gallon.

The latest official DOE projection for the 2011 diesel premium is 23 cents a gallon.

Diesel is coveted both by developed nations and industrializing giants such as China.

“In Europe or China, the growth in diesel fuel consumption is stronger and is expected to stay stronger thangrowth in gasoline consumption,” Lidderdale said.

“We’ve become a net exporter to these countries,” said petroleum analyst Phil Flynn, referring like Lidderdale to Europe and China.

DOE reported that distillate fuel exports for the week ended Dec. 2 were 777,000 barrels a day. That figure isunchanged from the prior four weeks, but it is more than 327,000 barrels a day higher than in the week endedJune 4, the earliest period for which data were available.

Europe has more diesel cars than the U.S., and China’s economy is recovering from the recession so quickly that,according to the most recent DOE data, year-over-year growth in demand for oil in that country was close to, orequal to, U.S. demand growth in August and September.

In those months, DOE estimated that the U.S. petroleum market processed 750,000 and 900,000 barrels,respectively. That level of demand growth was “approaching, or even exceeding, growth levels seen in China,”DOE said.

Chief among the domestic factors that contribute to the diesel premium are the United States’ ultra-low-sulfurdiesel fuel requirement and rising demand for diesel from U.S. buyers.
“Ever since we’ve gone to ULSD, that has always added to the premium,” said Flynn.

For a link to the article, click here.

Trucking Industry

2010-11-23T11:43:00.007-05:00

The Trucking Industry is about to be turned upside down. Truck drivers are anxious... trucking companies are anxious.... and shippers??? They will become anxious.

Why?

In the Fall/Winter of 2010 (right now), here is what will be happening:

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.

So why is this such a big deal to drivers? transportation companies? shippers?

It's Time for You to Meet "Bob"

Bob is your typical driver working to make a living to support his family. He has always picked up and delivered his load on time, taking care of the customer. Bob did what he needed to do in order to keep that customer happy. He also made sure that Schilli Transportation was happy with his performance and took care of his Driver Manager. Bob did what he needed to do. Sometimes that meant stretching his logbook out, running when he should be sleeping, and taking a chance he would go unnoticed. Sometimes he was stopped, inspected, and negotiated his way out of some sticky situations. A warning ticket here and there was worth the sacrifice.

Now along comes Uncle Sam with something called CSA 2010! The word on the street is that drivers will now be held accountable for their actions. Bob has always held himself accountable so no big deal or is it?

Now Bob wonders will companies “Do the Right Thing” and take care of all of the hard working Bob’s out there?

Bob had an experience recently that made him question if he is still willing to accept loads going to customers that often created delays. Bob was planned on a load and actually loaded and began driving towards his destination. Unfortunately the customer had moved back the delivery time from 10:00 am to 2:30 pm while he was enroute. Bob had to sit for 4.5 hours extra before he could unload. When Bob got unloaded, he only had 2 hours of service left and he had 3.5 hours to drive to get home for his son's birthday party that night (Friday).

Before the new CSA 2010 rules, Bob probably wouldn't have given it a thought to just drive a couple extra hours to go home. Now, Bob is concerned because if he gets caught in a road inspection, his log book will show that he stayed on the road over the 11 hour limit. This would appear on his personal record and seriously impact his chances to continue his career as a truck driver.

Bob had to call his wife and son and tell them the bad news. The real problem is that Bob is really starting to wonder if trucking is really for him and his family - this is the second time in three weeks that this has happened to him due to this customer delaying his unloading. The delays have hurt Bob's wallet, as it is not uncommon for him to lose 3-4 hours of driving time while waiting. Bob's been a good driver, but with the new CSA 2010 rules, he's now being more selective to take loads that go to consignees that are known to have frequent delays. He's no longer willing to take any more chances that cost him money or cost him family time.

CSA 2010 is a Game Changer but are we really prepared to cover Bob’s back? Think about this if you are a shipper. The "Bob's" of the world are going to be forced to say "no" a few times in order to protect themselves. Shippers are going to have to adjust the way they do business if they want "Bob" to continue to do a good job for them.

Truckload Pricing - Where is it Going?

2010-09-27T09:12:00.005-04:00

Truckload pricing has a big impact on the bottom line of our customers. Of course, truckload pricing also has a big impact on the carriers as well. There never seems to be a happy medium between shippers and carriers - if there is, just wait - it will certainly change with the market conditions.

This is a good article that we found on Transport Topics. We hope that it will give you a good feel for where the market is heading and why.

_______________________________________________

Transport Topics - 9/24/10
NEW YORK — Many carriers, particularly in the truckload sector, said they are winning rate increases from shippers that typically are at least 5%, reflecting the industry’s tight capacity.
As truckload fleets report rate increases, third-party logistics firms such as Transplace Inc. are trying to minimize them, and less-than-truckload carriers want more price increases, executives said at Dahlman Rose’s investor conference here Sept. 8-9.

“Shippers wouldn’t be giving 7% to 10% increases if they thought they could get someone to cover their freight [for less],” said Paul Will, chief financial officer at truckload carrier Celadon Group Inc. “We are able to lead the pricing discussion with our customers,” said David Jackson, chief financial officer at Knight Transportation, another truckload fleet after seeing rates fall 7% and 10% since the recession began. “In the end, [shippers] haven’t given back all that they took,” he said, noting that Knight is particularly focused on boosting profits on 30% of its freight that has the lowest margins. “They are at risk of not getting capacity,” he said, referring to shippers in that lowest margin group.

Third-party logistics companies acknowledged the price pressure. “The challenge we have with our customer base is setting their expectations that rates are going up, not down,” said Robert Bianco Jr., president of Con-way Inc.’s Menlo Logistics unit. “The pendulum has swung in favor of asset-based trucking companies. Our challenge is to be the middleman and limit those” increases.

“We have been moderately successful in holding off the increases,” said Matthew Menner, a senior vice president at Transplace Inc., Frisco, Texas. “We had to push the eject button for carriers that were pushing yield.”

Dana Burleigh, senior supply chain manager for Schneider Logistics, said, “We took advantage of double-digit decreases. Our goal is to try to mitigate the increases. Some carriers are asking up to 5% across the board.” Schneider Logistics’ parent company is truckload carrier Schneider National Inc., which declined to comment on the carrier’s rates.

Other sources confirmed the rising rate pattern. Transport Capital Partners’ August carrier survey showed 63% reported rate increases of 5% or more. Jason Seidl, a Dahlman Rose analyst, said a major less-than-truckload carrier has notified customers it plans to raise rates by about 5%.

“Now that someone has [raised rates], there is a higher likelihood others will follow suit,” Seidl said. “There is a better chance this increase will stick in this current period because there is a lack of capacity in LTL.” Seidl said such increases apply to 20% to 30% of freight and occur two or three months later in the year.

Some LTL executives welcomed the change without saying whether they also would boost prices. “The industry needs price increases,” suggested Richard O’Dell, chief executive officer of Saia Inc., Duluth, Ga. “Anytime someone takes a general rate increase out of cycle, that should be a positive.”

“There is an opportunity to move price,” said Richard Gaetz, CEO of Vitran Corp., Toronto, which raised rates 4% this year. “We are hearing a lot of good chatter in the marketplace. It’s a good opportunity for the LTL industry to catch up with the pricing initiatives of the truckload, rail and ocean carriers.”

Others were more circumspect.

“We haven’t seen any price increases on paper,” said Wes Frye, the chief financial at Old Dominion Freight Line Inc., Thomasville, N.C. “It will be difficult for competitors to have further wage and benefit cuts, so [margin improvement] will have to come from pricing.”

“ABF is not going to be a leader in [raising prices],” said Arkansas Best Corp. CEO Judy McReynolds, whose LTL carrier is based in Fort Smith, Ark. “It remains to be seen if someone will follow.”

While some shippers raised rates this year, Wal-Mart Stores Inc., Bentonville, Ark., wasn’t one of them. Greg Forbis, senior director of corporate traffic for Wal-Mart, said, “We gave a rate increase in 2009, but not in 2010.” Carriers that forgot about that increase and tried to raise rates more recently are finding that “their business is a lot smaller now.” Wal-Mart is moving to control inbound shipments from major consumer goods suppliers such as Procter & Gamble, intending to lower costs for both the retailer and its customers. He acknowledged that Wal-Mart struggled at times with volume surges when it did take over inbound shipments. “Any burp in the volume tended to take things into a tailspin,” he said.

He also noted that Wal-Mart is converting inbound shipments to intermodal whenever possible.

Click here for a link to the actual article from Transport Topics.

http://www.ttnews.com/articles/printopt.aspx?storyid=25200

Transportation Economy

2010-09-07T10:06:00.002-04:00

The Transportation Economy is affected by manufacturing.

According to Businessweek, the U.S. Economy shows that manufacturing is expandedat a faster pace than expected during the month of August.

Rather than creating an entire article that is going to tell you the same thing, I found a great report from Businessweek

Bottom line is that there are many people screaming "the sky is falling" (insert the word "economy for sky"). Have we heard this before? Does chicken little ring a bell from your elementary school days??

While there are people screaming that the end is near, why don't we look at the facts concerning the economy and make our own conclusions.

The article from Businessweek puts everything in perspective and you may be surprised to hear that manufacturing is still expanding.

___________________________________________
By Courtney Schlisserman
Sept. 1 (Bloomberg) -- Manufacturing in the U.S. expanded at a faster pace than forecast in August as factories added workers and cranked up production.

Stocks rallied as U.S. and China manufacturing figures tempered concern the global economic recovery will wane without more government stimulus. Production gains may partially compensate for a slowdown in consumer spending and sluggish housing market that are causing the world’s largest economy to cool in the second half of the year.

Manufacturing is “one of the bright spots,” said Hugh Johnson, chief investment officer at Hugh Johnson Advisors LLC in Albany, New York, the only analyst surveyed to predict the index would rise. Still, “you have to have increased demand from consumers and businesses for these numbers to be sustained.”

The Standard & Poor’s 500 Index increased 3 percent to 1,080.29 at the 4 p.m. close in New York, the biggest gain since July 7. The yield on the 10-year Treasury note rose to 2.57 percent from 2.47 percent late yesterday.

China’s purchasing managers’ index rose to 51.7 last month from 51.2, a government-backed report showed. A separate measure released by HSBC Holdings Plc and Markit Economics also increased.

U.S. manufacturers are benefiting from growth overseas. Caterpillar Inc., the Peoria, Illinois-based maker of construction and mining equipment, may add as many as 9,000 workers worldwide this year, Chief Executive Officer Doug Oberhelman said at a meeting with analysts Aug. 19.

Housing Weakens

While factories are helping extend the recovery, the housing slump keeps taking a toll on the economy. Construction spending in July fell twice as much as forecast, led by a slump in homebuilding that will depress growth, Commerce Department figures showed today.
The 1 percent drop brought spending to $805.2 billion, the lowest level in a decade, after a revised 0.8 percent decrease in June that wiped out a previously estimated gain.

President Barack Obama said yesterday reviving economic growth was his “central mission” after declaring the U.S. combat mission in Iraq over. The president, in a nationally televised speech, underscored that he’s focused on the economy at a time when voters are increasingly skeptical of his policies and congressional elections are a little more than two months away.
ADP Employment

Another report today raised concern about employment. Companies in the U.S. unexpectedly cut employment in August, data from a private report based on payrolls showed. Employment fell by 10,000, according to figures from ADP Employer Services.

Manufacturing, which accounts for about 11 percent of the economy, spearheaded the recovery from the worst recession since the 1930s as rising export demand led companies to ramp up spending on equipment and to replenish stockpiles. Estimates in the Bloomberg survey of 78 economists before the U.S. figures ranged from 49.9 to 56.

The group’s production index increased last month for the first time since April, while the employment gauge rose to the highest since December 1983.

Production may start to cool as the report showed a gauge of bookings fell in August to the lowest level since June 2009, while backlogs eased.

A gauge of factories’ inventories showed stockpiles increased for a second straight month.
Federal Reserve

Federal Reserve Chairman Ben S. Bernanke last week said the central bank “will do all that it can” to ensure a continuation of the economic recovery, and outlined steps it might take if growth slows.

“Investment in equipment and software will almost certainly increase more slowly over the remainder of this year, though it should continue to advance at a solid pace,” Bernanke said.
Intel Corp., the world’s biggest chipmaker, last week cut its third-quarter revenue projection, citing weaker-than- expected consumer demand for personal computers in mature markets as the reason for the adjustment.

Cisco Systems Inc., the world’s largest maker of networking equipment, in August forecast first-quarter sales that missed analysts’ estimates. Chief Executive Officer John Chambers said the San Jose, California-based company was seeing “unusual uncertainty” and getting “mixed signals” about the health of the economy.

Cuts in Forecast

Economists at BofA Merrill Lynch Global Research in New York today cut U.S. growth forecasts for the rest of this year and next. The world’s largest economy will expand at an average 1.65 percent annual pace from July through December and grow 1.8 percent in 2011, a half point less than previously estimated.

“ The two most important monthly indicators -- private payrolls and core retail sales -- have stalled,” the economists headed by Ethan Harris wrote in a note to clients. “At the same time, the post-tax-credit housing hangover has been worse than expected, and even the business equipment recovery shows signs of faltering. Our sense is that the growth recession is already here and it is likely to linger through the first half of next year.”

For a link to the article click here

How Driver Recruiting Will Affect Shippers

2010-08-09T16:49:00.011-04:00

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

2010-07-16T09:55:00.014-04:00

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

2010-07-07T12:41:00.006-04:00

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

2010-06-01T09:14:00.004-04:00

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?

2010-05-17T14:29:00.010-04:00

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."

Controlling Transportation Costs

2010-05-11T09:03:00.009-04:00

In order for shippers to control transportation costs, we thought we may help with some possible strategies. Of course, each shipper is different. Each shipper will have to consider many factors with methods to insure they get their shipments delivered in a timely manner during the current trucking capacity crunch.

Where Are We Today?

Currently, controlling transportation costs has been next to impossible with the current trucking capacity crunch. This loss of supply has been due to the many companies that have closed their doors or sold off un-utilized trucks during the recent recession. While many larger companies are starting to finally stop the losses, it is estimated that many smaller carriers are still in danger of losing their business. There is still a lot of uncertainty concerning the new safety regulations - many estimates are that over 175,000 truckers will no longer be eligible to drive once the new regulations take effect. See last week's blog article for more.

The Shipper's Perspective

Manufacturing is growing and has been expanding now for over 8 straight months - it looks like things are moving forward. This expanding along with the loss of trucking capacity (especially flatbeds and stepdecks) has created an environment where most shippers are being forced to "bid for trucks". This is not pleasant and most traffic managers are doing overtime to get loads moved.

What Can Shippers Do to Attract Trucks?

The market is going to demand that rates will be increasing (they already have been). There is little that anyone is going to be able to do to prevent the uptick in pricing just as no one could seem to keep pricing from going down during the recession.

Here are some "non-rate" items that shippers can do to attract trucks - especially if the rates are similar to the competition (competition is anyone taking your trucks from you!):

Make Your Facility "Trucker Friendly" - drivers appreciate the little things that make them feel welcome - clean restrooms, coffee pot, inexpensive snacks;

Improve systems for loading and unloading. - Time is money. If carriers are consistently delayed either loading or unloading, they will more than likely choose to go to a facility that does not delay. Detention is never the goal to collect an additional $100-200. Carriers and drivers are paid when the truck is moving, not sitting.

Be Flexible - Do You REALLY need a flatbed?? Flatbeds and stepdecks are the trucks that are the most affected by the capacity crunch. Can you make some minor changes and utilize vans? Vans, while still affected by capacity, are more abundant and you can possibly have your items shipped for lower rates than the flats.

Does the Load REALLY need to be tarped?? Drivers prefer to take loads that do not require tarping. Tarps can weigh 100 pounds and typically take 2 tarps to cover the typical load. Imagine if you had to lift 100 pounds of hard to work with material over your head - it can get old after a while. We're not advocating you take chances on cargo claims, but if a load really doesn't need to be tarped you may be more successful in moving it versus a load that does require tarping.

Offer "windows" to pick up loads versus strict appointments - flexibility in pickup and delivery times can make it easier for carriers to put trucks into your area. When they can "work them in", the freight is more valuable to the carrier and you may not have to pay as much as strict appointment freight.

Try to be understanding if a truck is not able to make your pickup or delivery parameters - We all understand that everyone has customers, and sometimes customers can be a little demanding (anyone ever heard of JIT?). It may go a long way for shippers to make an attempt to educate their customers concerning some potential issues with the current capacity crunch. Carriers need to do their best to communicate problems to their customers, but being delayed at other shippers can sometimes not be avoided. Trucks are getting older due to the financing squeeze put on carriers - they can't buy new trucks yet. There are going to be more truck break downs. If a transportation manager screams at a poor load planner if a truck is delayed, sooner or later that planner will make a decision to load with someone else. Not trying to excuse lack of performance - just trying to educate on the reality of the current truck supply;

Summary

We hope that this blog post will help transportation managers and company executives not only to understand the current trucking environment, but also to minimize their rate increase exposure.

Freight Rate Forecast

2010-05-04T11:41:00.012-04:00

News Flash... Freight Rate Forecast Is In.
Fasten Your Seat Belt - It's Going to Get Rough out There!

Just this morning, I received e-mails from numerous shippers pleading for trucks. Yes, I said “PLEADING” for trucks. Shippers are faced with either increasing rates to compete against their competition or they face the problem of losing business to other companies who can find a way to get the product delivered.

What Is Going On???

According to research, I’ve found a few factors that seem to explain and then forecast what will happen in the future. Let’s start out by figuring out the cause.

Supply of Trucks

Trucking Bankruptcies

Some have already forgotten the greatest recession since the Great Depression. Trucking companies have not. According to Transport Capital Partners, Bankruptcies have idled 445 companies and 21,000 trucks in the 4th quarter of 2009. More than 170,000 trucks have been idled over the last six quarters.

Limited Speeds

Fuel has increased more than 38% today versus a year ago. It is estimated that fuel surcharges are only covering 75-80% of the actual costs incurred by the carriers - especially for long hauls. Carriers have resorted to limiting their truck speeds from 68 mph to 62 mph. This reduction in speed equates to approximately another .5 MPG. The problem? It takes longer to deliver loads and is estimated that drivers will fill up their log books quicker, resulting in an additional 2-3% loss of trucking capacity.

The Result - A Much Smaller Supply of Trucks

The graph shows what has been going on. We simply don't have the trucks on the road that we once did.

Demand For Trucks

While the supply of trucks has dwindled, what about the demand for them??

If you've been following along this blog at all you know that we are under an economic recovery that appears to be sustainable. Of course, that means more manufacturing, more retailing, etc.

That means more demand for trucks.

We all know what more demand and less supply equates to - higher rates.

Certain segments of trucking are in much more demand than others - such as flatbeds vs. reefers. Flatbeds are becoming very difficult to find.

So What About the Future?

There are a few capacity problems for the future.

Loans for New Equipment

Banks are not loaning money to companies that haven't shown a profit. This means that trucks are getting older and older and they are going to be breaking down more and more. This means that there are going to be more loads "piling up" due to truck breakdowns.

Attitude Towards Buying New Equipment

According to Transport Capital Partners, their survey shows that 45% of carriers polled indicate that they will not purchase or add equipment until their fleets are fully utilized and rates have increased. In 2009, 32% felt this way. Another 16% aren't making any plans until they feel the economy has improved and is stable.

CSA 2010

The new safety system will be taking effect at some point this year (exact dates have not yet been determined). It is estimated that up to 175,000 current drivers will become ineligible as soon as the new monitoring system takes effect. This will further put a short term strain on the overall trucking supply.

The Botton Line: If you are a shipper, be prepared for a rough ride the next few months.

Environmental Trucking - Is this Possible?

2010-04-26T11:03:00.009-04:00

Environmental Trucking is not a term that most people think is reality. The conception is that trucks tremendously pollute our air and are tremendously hurting our planet.

While it is true that heavy duty trucks do use a lot more fuel than an automobile, let's look at some facts and then we can see what the trucking industry trends are with respect to protecting our planet.

The chart below shows the Top Ten Sources of U.S. GHG Emissions in 2005.

Coal burning, such as power plants, are the highest polluter of our air and represent 29% of the GHG emmissions. Passenger Cars are second with 17%. Medium and Heavy trucks represent 5%. Power plants also represent a large portion of the stationary gas and stationary oil segments.

The American Trucking Association (ATA) has announced that their new sustainability program has the capability to reduce trucking's carbon footprint by 19% or 900 million tons over the next 10 years.

The more fuel efficient and lower sulpher emitting engines, as well as better truck idling practices will make up the majority of these improvements.

In yet another move towards cleaning up the environment and the relationship of trucking, Navistar recently announced their new electric truck that can go 100 miles on a single charge. Once the charge has been spent, it takes 6 hours to recharge, and the batteries can be switched out in 15 minutes with it's "cassette" like construction.

For a link to the ATA website, click here

It looks like we are on the way for a cleaner environment. For an example of a currently heavy duty electric truck, see the video below.

CSA 2010 Basics

2010-04-19T10:38:00.005-04:00

This post is the third in a series concerning CSA 2010 Basics. CSA 2010 is the new safety rating system by the FMCSA. There is a lot of concern over what will happen to shippers and carriers when this new system goes into full effect.

Today's post will discuss the effects on truck capacity as it relates to driver retention and driver recruitment. The information is gathered from FMCSA information.

What Happens if a Driver Incurs the Rating of "Unfit"?

If a driver receives the rating of "unfit", he will no longer be allowed to drive a commercial vehicle. The only thing that the driver can do is wait for some of his points to drop off in the 36 month "history" that will affect his driver score. At this point, most drivers would have to quit.

If a marginal driver is getting close, they CAN lower their overall score with a clean inspection.

The FMCSA has speculated that up to 175,000 current drivers would be declared "unfit" when CSA2010 goes into effect! This is going to put a strain on the current capacity of trucks on the road.

How Will CSA 2010 Affect Carriers Driver Recruitment Efforts?

Carriers will more than likely have a minimum safety rating requirement for hiring and firing drivers. This minimum rating could be mandated by their liability insurance companies. It is speculatated that insurance companies will require a minimum safety score or they will not insure the carriers. Should a driver fall below this minimum requirement, he/she would have to be terminated in order for the insurance company to continue insuring the carrier.

New drivers recruited would also have to follow the same guidelines in order to joing with a new carrier. The driver's safety record will need to be part of every carriers' background check.

Overall - it is anticipated from many sources that there will be a shift in capacity once CSA 2010 takes effect. This WILL affect carriers and shippers alike. The most like effect? Less trucks means higher rates to attract and maintain carriers.

Manufacturing Recovery Bolsters Transportation

2010-04-12T11:43:00.005-04:00

Manufacturing recovery now appears to be here for good. There have been a lot of concern as to whether or not this recovery would be short lived and we could dip back into a recession. Shippers and carriers have both been waiting to see - now it appears that we have our answer.

The ISM Manufacturing Index has once again risen in the Month of March. The rate of 59.6 exceeded all 77 of Bloomberg's economists' predictions. Many manufacturers are realizing that their regular transportation carriers are now demanding higher rates in order to keep up with demand - there simply aren't enough trucks to go around.

This raise in the ISM is now the 8th month in a row. Not only is this a sign that our recovery is really happening, but the growth in the number of industries has broadened. In the past few months, 11 or 12 industries were growing while the remaining industries were still struggling. March showed that 17 of the 18 industries in manufacturing showed positive signs of growth. According to Norbert Ore, chairman of the Institute for Supply Management's survey committee, "We have to go back to 2004 to find numbers that are similar to that".

Ore warns that this high growth will be hard to sustain and that it may actually not be desireable for us to continue at this pace. He also indicated that the housing industry is still struggling and will probably still remain slow.

Consumer confidence will continue to play a large part of the economic growth and that comes with the addition of jobs. Mr. Ore indicated that many manufacturers are beginning to hire and the "numbers will come as production picks up". He feels that there will be a dramatic increase in jobs in the later part of the year. Ore goes on, "We have to keep in mind that manufacturers lost about 2.1 million jobs, so there's a lot of ground that's been lost."

For the actual interview with Norbert Ore, watch the video below.

CSA 2010 Information - How Much Will This Cost??

2010-04-05T10:40:00.008-04:00

CSA 2010 will be one of the most pronounced changes in the trucking industry since the 1980’s and trucking de-regulation. There’s still a lot of questions going around – most companies don’t understand what CSA 2010 is and how it will affect them. On the surface, this program has very honorable intentions - but at what price??

Let’s start out be figuring out what CSA 2010 is all about. The DOT (Department of Transportation) is introducing a new process for determining a carrier’s safety rating. It’s called CSA 2010. The ultimate goal of CSA 2010 is to reduce the large truck and bus fatalities.

According to the Federal Highway Administration, 1979 realized 6 fatalities per 100 million miles traveled. In 1984 the Roadside Inspection program began and fatalities dropped to just under 5 per 100 million miles. In 1986 the Carrier Safety Rating program was launched and the fatalities gradually decreased to slightly over 2 per 100 million miles. It’s been a pretty remarkable improvement since 1984. CSA 2010 is trying to continue the improvement.

The key differences between the current “Safestat” system and the CSA 2010 system are listed as below:
If you will notice, there are more areas to do inspections on, all roadside violations will count against the driver, results of an inspection may lead to intervention for the carrier, violations are "weighted" as to the riskiness, and this now means that a single driver can severely damage the carrier's rating.

When a single driver can have serious consequences for an ENTIRE carrier, this means that carriers are going to be weeding out non-performing drivers. On the surface this sounds great!

Think about that for a moment, however. If you are a transportation manager, and you have less drivers in the marketplace, does this mean your job is easier or harder to find enough capacity to get your goods moved?? When you do find the carriers and trucks, will this mean a lower or higher rate to get everything moved???? How much will it cost each carrier to keep a more watchfull eye on their drivers?? How much more will it costs carriers to keep up with compliance?? Who is going to pay for all the added administrative costs???

Now you know why CSA 2010 is so important to not just carriers, but everyone who uses transportation to get goods to the market. This doesn't leave too many people out!

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

2010-03-29T11:04:00.006-04:00

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.

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

2010-03-22T16:33:00.004-04:00

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.

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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.