Journal – March 2004

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Pennsylvania Turnpike Commission approved an average increase of 5.3 cents per mile for trucks, effective Aug. 1, 2004. The new rate brings the average rate for trucks to 17.7 cents per mile. Commissioners approved an average of 1.8 cents per mile more for automobiles for an average of 5.9 cents per mile. The toll is expected to help the state double capital spending on road improvements through 2014.

AmeriQuest Transportation and Logistics Resources Corp. signed a letter of intent to acquire the assets and management talent of Complete Fleet Management, Inc. The deal will provide AmeriQuest with company-wide asset services, customer finance and national used truck, tractor and trailer remarketing capabilities.

Swift Transportation said last month that its board of directors had authorized the company to repurchase up to $100 million of its common stock, subject to criteria established by the board.

Wabash National Corp. said net orders in December 2003 exceeded 8,000 units or about 26 percent of total orders received by the trailer industry according to data reported by A.C.T. Research. Wabash is increasing its production rates early this year and is adding about 300 workers.

Bandag has acquired an 87.5 percent stake in Speedco from its founders and Shell Oil Products. Bandag, which supplies truck retread tires and tire management services, plans to operate Speedco as an independent business unit. Speedco will continue to feature Shell lubricants.

DOT Inspector General:
SafeStat should not be public unless fixed

The Motor Carrier Safety Status Measurement System, or SafeStat, is sufficient for the Federal Motor Carrier Safety Administration’s internal use but “its continued public dissemination and external use require prompt and complete action,” the Department of Transportation Office of Inspector General concluded. FMCSA needs to improve both the SafeStat model and, especially, the quality of data that drives that model, the OIG said in an audit report issued last month.

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FMCSA uses SafeStat to identify high-risk motor carriers so the agency can better focus its resources in compliance reviews and enforcement action. But SafeStat data is available on the Web and often is used by third parties, such as shippers and insurers, to determine carriers’ safety performance. “Because carrier safety data and the model’s rankings are publicly disclosed, a higher standard of quality must be met to ensure fairness to motor carriers who may lose business or be placed at a competitive disadvantage by inaccurate SafeStat results,” the OIG said. “FMCSA will need to demonstrate timely improvements if it is to continue to publicly disclose carrier results across all SafeStat categories.”

SafeStat generally calculated scores consistent with its design, the OIG concluded. Although a 1998 study supported the model’s validity, the model needs to be revalidated, it said, because changes have occurred since the earlier study. Those changes include the addition of serious moving traffic violations to the calculations, revisions in how fatal accidents are weighted and revised methods for calculating the number of vehicles used by carriers. In addition, more sophisticated analysis would optimize the model’s effectiveness, the OIG said. While improvements in the SafeStat model are important, getting better data is essential, the OIG general concluded.

FMCSA had reviewed a draft of the report and told the OIG that a number of improvements already implemented or ongoing address the audit report’s recommendations. These improvements include:

  • Hiring a contractor to conduct a new study to revalidate the SafeStat model;
  • Implementing an improved system for tracking public challenges to the accuracy of SafeStat data. The DataQs system was expected to be in place by the end of February;
  • Providing SafeStat users with comprehensive information on data limitations. In January, FMCSA began using a new website disclaimer. (See, “Read the fine print,” CCJ, February 2004, page 6.);
  • Assigning staff to review monthly state reports that address state data quality issues and to work with the states to resolve them;
  • Establishing goals for completeness, accuracy, and timeliness of data; and
  • Making state grant funding contingent on participation in certain data quality programs. FMCSA has notified states that they will receive a high priority for certain grants only if they participate in the DataQs system.

FMCSA did not agree with all the audit report’s assertions regarding data quality problems. For example, FMCSA said OIG had overstated the problem of out-of-date census data – the power unit and driver information reported on MCS-150 – in SafeStat. OIG stood by its conclusion, however, saying that 42 percent of the 643,309 active carriers had not met the requirement to update census data every two years. In fact, nearly 24,000 carriers had not updated their census since coming on file in 1974.

About 11 percent of active interstate carriers are on record as having no power units, and 15 percent have zero drivers – even though many of those carriers recently had crashes or inspections reported against their vehicles or drivers. Census data is especially important because many of the ratios used in the SafeStat methodology are based on data per power unit or per driver.

FMCSA also told OIG that it disagreed with any implication in the report that due to data problems SafeStat may incorrectly categorize some motor carriers as high risk. The agency argued that data quality problems such as late or missing accident or inspection reports are more likely to make a high-risk carrier look good than make a low-risk carrier look bad.

OIG acknowledged the point but noted that under the SafeStat model, good carriers can suffer relative to poor ones. The accident score in SafeStat, for example, doesn’t represent a crash rate for the carrier but rather a percentile ranking of that carrier relative to peers. For this reason, missing data may place a lower-risk carrier in a deficient category because data for a higher-risk carrier is not included in the calculation, the OIG said.

The audit found, for example, that five states – Florida, New Hampshire, New Mexico, Pennsylvania and Vermont – and the District of Columbia had failed to report any crashes for the six months analyzed. The OIG estimates that some states underreport crashes involving large trucks by as much as 60 percent while underreporting in others occurs less than 20 percent of the time. The OIG audit also found:

  • Missed reports for an estimated one-third of the large trucks involved in accidents annually, including 37,000 crashes involving interstate carriers;
  • Late reporting of 20 percent or about 19,000 of the crashes in fiscal 2002 by six or more months after the crashes occurred;
  • Underreporting of serious moving traffic violations – principally speeding – identified during roadside inspections. In one state visited, an estimated 29,000 serious moving traffic violations went uncounted over a three-year period. California reported only 115 serious moving violations to the FMCSA database during fiscal 2001 while Indiana in the same period reported about 25,000;
  • Based on the OIG’s test of FMCSA’s database, that an estimated 13 percent of the 21,000 crashes and 7 percent of the more than 1 million inspection transactions occurring in the six-month sample period contained carrier identification errors, such as failure to identify a carrier associated with the violation. In a smaller number of instances, the report identified the wrong carrier.

Problems with inaccurate data are compounded because no effective system is in place now to facilitate the correction of errors in data reporting, the OIG said. FMCSA forwards requests for state data correction to the states where the incidents occurred, and there is no system in place to centrally track the resolution of these requests. The new DataQs system is intended to address that problem.

The OIG said FMCSA should take steps to improve data quality, including imposing fines on carriers that fail to provide updated carrier census information as required by law. Other elements of the strategy would include minimum standards for data completeness, accuracy and timeliness; completion of a planned effort with the National Highway Traffic Safety Administration to improve completeness and timeliness of state-reported crashes; and incentives for states to provide more accurate, complete and timely safety event data.
– Avery Vise

SmartWay to be green
It’s not easy being green, but for trucking companies that are more environmentally friendly than their competitors, being green may soon result in real dividends.

That’s because the Environmental Protection Agency, through a program developed with the American Trucking Associations and key shippers and carriers, is offering a reward to carriers that produce fewer emissions and achieve better fuel efficiency than their industry average and commit to doing more. Called SmartWay Transport Partnership, the program is similar to the agency’s EnergyStar program, where manufacturers who produce environmentally friendly, energy-efficient, consumer and business appliances, can market their energy progress under a government-approved label.

In the trucking version, carriers that meet the EPA’s strict standards will be allowed to display the SmartWay Transport Partnership logo. But more importantly – from a monetary standpoint – those carriers will get access to shipper partners that must agree to ship half their loads with SmartWay fleets.

New EPA Administrator Mike Leavitt says member carriers will reduce emissions and fuel consumption by eliminating idle time, improving tire inflation and making changes in routing and scheduling. “The companies in this group will reduce carbon dioxide and nitrogen dioxide in the atmosphere all over the country,” Leavitt says. “The fuel savings from this partnership will result in a reduction of at least 33 million metric tons of carbon dioxide from the air. That’s the equivalent of six million cars being off the road.”

More than 50 carriers and shippers have already applied for the program and were present at the launch in February. Schneider National, Swift Transportation, Yellow Freight, Home Depot, UPS and FedEx Freight were among those early partners. Carriers that join must undergo a thorough evaluation of their fleets’ environmental impact.

EPA provides an elaborate evaluation program it calls the FLEET (Fleet Logistics Environmental and Energy Tracking) Performance Model. Using the model, carriers enter data on number of trucks, type of trucks, operation type, annual mileage, time spent idling, equipment specifications and whether the trucking company uses longer combination vehicles or intermodal containers.

The model calculates the tons of carbon dioxide, nitrogen oxides and particulate matter emissions produced from freight operations. It spits out an efficiency score, with items like aerodynamic fairings, idle reduction technology and tire inflation monitors improving a carrier’s score.

The program groups carriers based on their application, so that the score that determines a carrier’s eligibility for the program is independent of the carrier’s type of application or geographic area. That way a carrier hauling heavy loads in mountainous areas won’t be compared against a fleet hauling light loads on flat terrain, EPA says.

For some carriers, like charter member UPS, that already use fuel saving technology and have anti-idling programs in place, further environmental gains will have to come from better routing and scheduling as well as shifting loads from plane to truck and from truck to rail to cut down on fuel usage, says Mike Herr, vice president of environmental affairs for UPS.

“The things EPA wants us to do we’ve been doing a long time,” Herr said. “It’s part of our strategy to improve our business. We’ve set aggressive goals for reducing emissions and increasing fuel efficiency.”

While not every fleet can afford the technology and environmental efforts put out by UPS, Dave Berry, vice president for Swift, said the benefits of trying to qualify for the new program outweigh the costs. “The worst thing that will happen is you will save fuel, which means you will make more money,” he said.

The FLEET computer program is available for free download at the SmartWay Transport website.
– Sean Kelley

Making over trucking’s image
For the first time in years, the American Trucking Associations is undertaking a coordinated campaign to improve the image of truck drivers and their companies. Image building, never among ATA’s most pressing concerns, officially took a back seat during the tenure of former President Walter McCormick, whose overriding priority was legislative and regulatory advocacy.

ATA launched the new campaign last month at its annual winter leadership meeting, showing off colorful graphics that will be placed on member trailers and used in state association advertising campaigns and other outreach efforts.

The new logo for the image campaign combines a purple square, an orange truck and the phrase “Good Stuff – Trucks Bring It.” The campaign’s goal will be to instill pride and professionalism among truck drivers and improve the industry’s public image.

“What we’re doing is a tiny starting point,” says Bill Graves, ATA president and CEO.
Currently the program has a budget of $300,000 for 2004 and $200,000 for 2005.

But hard cash is not the only resource available to ATA and its supporters. Although outdoor billboards are part of the effort, so are trailer side advertising and decals for the backs of trailers. “We don’t have five million dollars like other major campaigns, but we do have five million trailers,” Graves said. Industry research has shown that rolling billboard messages can generate up to 10 million impressions per year, ATA says. ATA will look to its member motor carriers and their shipping and manufacturing customers to provide and display new graphics on the sides and backs of trailers traveling the nation’s highways.

The billboards and trailer sides will feature hip products that trucks bring: sporting goods, fashion accessories, guitars and electronics. ATA will approach the manufacturers of such products and ask for $10,000 product placement fees. Money from those efforts will help defer the costs of producing trailer side decals.

Graves will also hit the road promoting the industry’s image in a political campaign like media tour to top markets.

ATA brought in a Louisville, Ky., public relations firm that has worked extensively with transportation industry clients to design an image and advertising strategy. That firm, PriceWeber, interviewed drivers about the new campaign and surveyed its effectiveness. The company developed the logo, theme and an accompanying website.

ATA freight index hits record high
The American Trucking Associations said its seasonally adjusted Truck Tonnage Index surged 14.6 percent to an all-time high of 164.2 in December. The previous high point was December 1999, at 157.2. December’s jump followed a revised decrease of 6.5 percent in November. The index has grown from a base of 100 in 1993.

“I believe that inventory rebuilding likely added to December’s strength in addition to stronger volumes from an improving economy,” said ATA Chief Economist Bob Costello. “I’m also hearing several reports that January freight volumes are quite strong. If true, it is a good sign for the industry since the first month of the year tends to be weak, too.”
ATA has calculated the index, based on member surveys, since the 1970s. This is a preliminary figure and subject to change in the final report.

From November to December, the index, unadjusted for seasonal factors, rose 5.6 percent. Compared to December 2002, the unadjusted index rose 7.2 percent, which was the biggest year-over-year growth rate since December 2002.

Transportation index debuts in March
Beginning in March, the federal government will produce a monthly transportation index to measure the health of the industry, U.S. Transportation Secretary Norman Mineta announced Jan. 29. The Transportation Services Index (TSI), to be administered by DOT’s Bureau of Transportation Statistics, will join other economic indicators, such as employment and consumer prices. Government agencies and trade associations will supply the data.

The TSI will be a comprehensive, multimodal, seasonally adjusted economic measure of transportation calculated monthly. It will use 1996 as its base year. The index will measure volume of services by for-hire transportation – freight carriers, for-hire passenger carriers and the two combined. It will measure ton miles, passenger miles and other physical measures of transportation activity. The index also will use other economic indicators to gauge current and future economic health.

Initially, the TSI will not include the entire for-hire transportation industry and sometimes will use tons as a proxy for ton-miles. It will not include transportation-related businesses, such as third-party logistic providers.

Mack chief expects strong sales
No matter how fleet managers try to figure their strategies in light of the 2002 and 2007 emissions regulations, an improving economy and aging equipment will drive higher truck sales in the near term, the head of one truck manufacturer said last month.

“Call it what you want, there are people out there who need to buy trucks,” Paul Vikner, president of Mack Trucks told CCJ editors. “People are spending a lot more money on maintenance than they used to.”

Mack recently has been enjoying strong orders – 3,100 in January and 2,800 in December – and now has a healthy backlog, Vikner says. “We are building as many as we can.” Vikner sees strength during 2004 in Mack’s three principal market segments – refuse, construction and highway. “We used to say we are ‘cautiously optimistic.’ Now we say we are ‘cautiously enthusiastic.'”

Even so, Mack has no intention of getting into the overselling that led, in part, to the collapse in truck makers’ sales and fleets’ equipment values several years ago, Vikner says. “This industry has done about as much to hurt itself as anyone else. We don’t want to sell trucks anymore and lose money doing it.”

Volvo and Mack recently announced that they will continue to use cooled exhaust gas recirculation to meet the Environmental Protection Agency’s emissions standards for 2007. The two truck makers, both part of the global Volvo Trucks organization, will at that point produce an engine based on a common architecture. As for the current Mack EGR engines, “overall, we’re pretty satisfied,” Vikner said. He said that the fuel economy impact has been in the 1 to 3 percent range projected.

Volvo and Mack also have been integrating their dealer organizations over the past couple of years. Mack has 214 parts and service-only outlets and 252 full-line dealer locations, of which 133 carry both brands. Added volume from the Volvo franchises allows many dealers to stay open 24-7. “From a customer support standpoint and a parts standpoint, it’s a win-win,” Vikner says.

Vikner believes the benefits of dealer integration are especially apparent in the West, where major new sales and service dealerships have opened in Salt Lake City, Phoenix and Portland. “Mack and Volvo have nothing to be ashamed of in the West anymore.”
– Linda Longton and Avery Vise

Schneider’s Duley: ’07 engines’ cost could escalate
The life-cycle cost for new, lower emissions 2007 engines may be as much as $25,000 more than for 2002 models, claims Steve Duley, vice president of purchasing for Schneider National. Duley spoke in Atlanta during a panel discussion on the impact of 2007 emissions regulations at the recent Heavy Duty Dialogue 2004, presented by the Heavy Duty Manufacturers Association. Duley’s cost projection includes increased purchase price, lower fuel economy, increased maintenance costs and the higher price of low-sulfur diesel mandated by the Environmental Protection Agency.

Beyond cost, Duley is also concerned about whether he’ll be able to get “production-like product” early enough to make an informed decision about the new engines. Most engine makers Schneider is talking to say they will have engines available for testing the first half of 2005. Bob Wessels, a Caterpillar representative on the panel, confirmed that Cat engines will be available in 2005.

Even if test engines are available in time to allow adequate testing, Schneider will still pre-buy some trucks, “mainly because of cost,” Duley said. Fleets face not only higher equipment costs, but also rising insurance rates and increased driver wages. “We have to be very careful managing that cost creep,” he said.

In the past, Duley said, increased equipment costs always came with a benefit. That changed with the ’02 engines, where fleets saw “a tremendous increase in costs with nothing on the benefit side,” he said.
– Linda Longton

Veto threatened on highway bill
White House threatened to veto legislation (S. 1072) that authorizes $318 billion in spending on highways, highway safety and mass transit over six years. The authorization is $62 billion above the Bush administration request. Despite the veto threat, the Senate passed the bill 76 to 21 – a margin large enough to override a veto. The House, which still must consider the measure, voted last month to extend the current authorization through June.

Repos drop 56 percent
Truck and trailer repossessions dropped 56 percent overall last year, according to a Nassau Asset Management report released Feb. 17. The New York-based asset management provider said trucks and trailer repossessions were the only equipment category of the five tracked by Nassau to consistently improve throughout 2003.

Other industry entities reported good news, as well. Paccar Financial Services, which lends to Peterbilt and Kenworth buyers, noted a decrease in truck possessions in its third-quarter report, released Nov. 7. It attributed revenue improvements to higher earning assets and finance margins and lower credit losses. The latter reflected a drop in truck repossessions and higher used truck prices, according to the report.

Also, the Truck Renting and Leasing Association reported commercial trucks sales increased in late 2003. The group expects that trend to continue this year.

For more information, visit this site.

Sleeper berth, restart top questions about HOS
Truckers contacting the Federal Motor Carrier Safety Administration about the new hours-of-service rule appear to be committed to following it but still have questions about it. The majority of questions concerned the sleeper-berth exemption, the 34-hour restart provision, the definition of a 14-hour workday and procedures for recording hours in log books, FMCSA says.

The agency reviewed almost 5,500 calls commercial drivers made to a 24-hour, toll-free help line, (800) 598-5664, established to answer questions about changes made to the 60-year old regulations. The new rule became effective Jan. 4.

“Despite some dramatic predictions about the impact of the new rules, drivers are telling us they are working to comply,” says FMCSA Administrator Annette Sandberg. “We’re hearing thoughtful questions and witnessing a sincere desire to follow the new regulations.”

Eighteen percent of calls concerned the 34-hour restart period. Another 16 percent of callers wanted to know more about the sleeper berth provision. Nine percent asked about the 60/70-hour workweek change. Five percent called about record keeping. The remaining calls varied widely, including questions specific to unique driving scenarios, questions on the difference between drive time and on-duty time, and inquiries into the use of electronic on-board recorders.

Delo Truck rolls to MATS
ChevronTexaco Global Lubricants’ Delo Truck will complete the first quarter of its North American tour with a stint at the Mid-America Trucking Show March 25-27 in Louisville, Ky. The truck, in service for more than five years, serves as a rolling exhibit to educate the transportation industry on the importance and proper use of heavy-duty engine oils, lubricants and coolants to improve reliability and reduce operating expenses. For more information, visit this site.

Long-distance trucking revenues increase in 2002
In long-distance trucking for 2002, for-hire general freight revenues increased 2 percent, according to the U.S. Census Bureau. Those figures were included in the report “2002 Service Annual Survey: Truck Transportation, Couriers and Messengers, and Warehousing and Storage,” released Feb. 10.

The combined industries represented revenues of $269 billion. Truck transportation revenues were $198 billion in 2002. Sixty-five percent of all trucking revenue was represented by general freight trucking, with $111 billion in revenue. Specialized freight such as flatbeds, tankers or reefers constituted the revenue remainder at $59 billion.

For-hire long-distance general freight trucking experienced a 2 percent revenue hike to $95 billion. But long-distance specialized freight trucking revenues decreased 7 percent to $19 billion.

For-hire trucking firms indicated two-thirds, or $106 billion, of their motor carrier operating revenues were from long-distance trucking. Also, warehousing and storage revenues grew 12 percent over 2001 to $15 billion.

CCJ Equipment Demand Index: Texas tops vans in April
After months of domination by Illinois and Ohio, don’t be surprised if Texas proves to be the richest source of spot-market dry van freight in April. According to the CCJ Equipment Demand Index, Texas traditionally holds the first or second spot in April van demand. Last year, Illinois was second with about 13 percent fewer van searches.

Illinois continued to maintain the top position for flatbed demand for the second month in a row. Historical data showed that Ohio finally moved up after being in third position for two consecutive years in April 2001 and 2002. Ohio came in second again, with 23 percent fewer flatbed searches. Florida took first place for reefer demand in April just like it did last year. California came in a close second, with less than 1 percent fewer reefer searches.

The index, based on equipment searches performed by TransCore customers, shows the top 15 states in terms of demand for trucks in the spot market in the three most common equipment types: dry vans, flatbeds and refrigerated units. The index is intended to help fleet operators identify the most promising opportunities for backhaul and other spot-market freight in the month after its publication.

30 seconds with …
Bill Graves
President and CEO of the
American Trucking Associations

Bill Graves left his job as governor of Kansas a little more than a year ago to lead the American Trucking Associations. We spoke with Graves during ATA’s Winter Leadership Meeting in Washington, D.C.

What do you consider ATA’s biggest accomplishment
in the past year?
We have been pleased that we have been able to guide our Highway Watch initiative through its infancy. A number of people were interested in those funds and the opportunity to be part of the Transportation Security Administration’s effort. I think we’ve successfully got it all focused back towards ATA.

What prompted ATA’s new image campaign?
I was surprised when I joined ATA that there wasn’t one in place. The reason we didn’t have one was because we didn’t have a budget for one. I’m committed to not only the new program and the funding for the new program but to growing that funding. I inherited some very good news on the safety side with the fatality data. That’s nothing I’m taking credit for. But it’s a big part of the story.

How do you think the fight over the highway
funding bill will play out?
I think there will be a reauthorization bill developed, passed and signed by the president. We obviously support conceptually what the White House has proposed and to a certain extent the approach the Senate has taken in coming up with a bill that doesn’t have any new taxes in it, doesn’t index existing taxes and to the greatest extent possible minimizes taxes totally. I do believe a day is close at hand – most likely the next reauthorization – where everyone in this country is going to have to figure out in what way they want to pay more to have an improved, expanded infrastructure.

Are carriers satisfied with the new hours-of-service rules and their implementation?
Clearly there are still differences of opinions among motor carriers. We think the rules were a dramatic improvement over what was originally proposed and that the Federal Motor Carrier Safety Administration will continue to work with us to resolve some of the concerns. We appreciate the initial soft-enforcement roll out. Everybody is trying to learn – drivers and law enforcement. So far, so good.
– Sean Kelley