American Trucking Associations’ advanced seasonally adjusted Truck Tonnage Index rose 0.6 percent to 158.1 in September, the group reported. This increase followed a revised 1.8 percent drop in August. Compared to September 2003, the unadjusted index is up 6 percent. For the year to date, truck tonnage is up 7.0 percent compared to the same period in 2003.
Freight Transportation Services Index increased 0.3 percent to 126.9 in July from the June level of 126.6, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics. The increase follows two consecutive monthly declines beginning in April. The April Freight TSI of 127.1 is the all-time high, revised from the 126.6 reported in September. The June TSI for freight is 126.6, revised from the 125.7 reported in September. The July 2004 level of 126.9 is 6.9 percent higher than the July 2003 level of 118.7. The baseline year for the experimental index, which was launched in March, is 1996.
Freightliner has initiated a voluntary program to install retrofit kits on some engines produced by its subsidiary, Detroit Diesel, between October 2002 and Nov. 30, 2003. Freightliner dealers and Detroit Diesel distributors will install the kits – a five-hour job – on a “fix as fail” basis. As many as 30,000 engines could have an “integrity issue” with the coolers and piping involved in exhaust gas recirculation. If there is a problem, the truck owner might notice exhaust leakage.
Hino Motors has opened its first North American truck manufacturing plant in Southern California as part of parent company Toyota’s effort to expand market share on this side of the Pacific. Hino plans to build 10,000 trucks per year by 2006. Trucks from the plant will be shipped to the company’s 112 dealers in the United States and Canada. Hino plans to expand to about 150 dealers by March.
High-tech manufacturer Roper Industries of Duluth, Ga., is buying Harrisburg, Pa.-based TransCore Holdings in a transaction valued at $600 million. In the trucking industry, TransCore is best known for its load-matching service, formerly known as DAT. The company also provides other products and services to the industry, management software, mobile asset tracking and compliance services.
TravelCenters of America plans to acquire Rip Griffin’s 11 interstate travel centers in Texas, California, New Mexico, Arizona, Colorado, Wyoming and Arkansas. The acquisition expands TA’s network to 160 locations across the United States and Canada.
NATSO, the leading trade association representing truck stops, named Lisa Mullings president and chief executive officer. Mullings has served as the association’s acting president for six months, following the departure of William Fay. Prior to her appointment in April, Mullings served as the association’s vice president of public affairs and counsel.
Congress on Sept. 30 enacted an eight-month extension of highway development and safety programs and inserted a provision that keeps current hours-of-service regulations in effect until Sept. 30, 2005, unless the Federal Motor Carrier Safety Administration completes a new rulemaking before then. The action preempted a pending decision by a federal court on FMCSA’s request to keep current rules in place while it pursues new rules.
On July 16, the U.S. Court of Appeals for the District of Columbia declared that FMCSA had failed to consider the effect of its final rule on the health of drivers as required by Congress in 1995. The court also expressed strong skepticism of the agency’s rationale in other respects, including the additional hour of driving time, the 34-hour restart of cumulative hours, retention of split rest using sleeper berths and the failure to test and consider a requirement for electronic onboard recorders. The appeals court ordered a new rulemaking, ordering that the rules in effect before Jan. 4, 2004, take effect once again.
FMCSA chose not to appeal the decision to a higher court but instead asked the court to keep the current rules in place while it considers a new rule to address the court’s concerns. FMCSA’s motion for a stay of the court’s mandate received support from the trucking industry, shipper community and law enforcement agencies.
In its filings with the court, FMCSA said that requiring the trucking industry to return suddenly to the old rule would “produce a potentially uncertain and problematic patchwork of enforcement obligations, resulting in significant confusion and substantially hamper enforcement” of the hours rule. Public Citizen asked the court to reinstate the old rules, arguing that a stay of the court’s mandate likely would leave the current rules in place for several years.
Completing a new rulemaking within a year will be challenging given the pace of previous efforts. Sources said trucking industry advocates initially sought a two-year reprieve, but key legislators were willing to grant only one.
In the legislation holding current rules in place, Congress did not overturn the appeals court’s opinion as to the rule’s flaws. In fact, the legislation refers to “a new final rule addressing the issues raised by the July 16, 2004, decision” of the appeals court.
Speaking at the annual meeting of the American Trucking Associations in early October, FMCSA Administrator Annette Sandberg acknowledged that the agency would have to address the five areas identified by the appeals court if it is to issue a viable rule.
Capacity crisis seen continuing indefinitely
Forum envisions steep increases in driver pay
The capacity crisis forcing up freight rates is unlikely to ease for the foreseeable future, say economists and industry-leading trucking companies. As the industry approaches volume of virtually 100 percent capacity level, shippers are feeling the pinch in higher rates, accessorial charges and declines in on-time performance and customer service. And there is little they can do about it, industry experts told manufacturers and shippers at the Freight Transportation Capacity Crisis Productivity Summit sponsored last month by Schneider National and Georgia Tech’s Transportation Logistics Institute.
“This market is going to get much tougher and more volatile moving forward,” said Jim Miel, an economist with Eaton Corp. “We’ve had a growing economy for several quarters, and good times will continue for the next four to six quarters.”
Miel and other analysts said carriers couldn’t grow capacity because they don’t have enough drivers to man additional power units. Other factors, such as federal hours-of-service regulations, have reduced overall productivity and challenged capacities. Shippers are bearing the costs in higher rates, fuel surcharges and new fees for stoppage and delay.
Shippers also are having trouble shifting freight to rails because the railroad industry is just as hampered by capacity issues, said Chris Lofgren, president and CEO of Schneider National. “The rail network is much smaller today than it was in 1991.”
But the driver shortage remains the biggest barrier to growing capacity, carriers said. Officers with J.B. Hunt, Crete Carriers, Covenant Transportation and Schneider National said driver pay would have to increase dramatically before new drivers would enter the market.
“I don’t believe you can pat a driver on the head and put candy in the terminal and draw in drivers,” said J.B. Hunt CEO Kirk Thompson. “Treating them well is only the price of admittance. Pay and home time – if you’re not paying drivers and getting them home on a frequent basis, you’re going to be out of business. Driver wages are inadequate to attract enough qualified drivers.”
How inadequate? While the average driver in truckload earns about $40,000 a year, Covenant Transportation founder and CEO David Parker said $60,000 to $65,000 a year is the level to which fleets need to raise pay in order to draw in new applicants. Parker expects to raise driver pay again in the first quarter of 2005 – as many fleets did in 2004 – but per-mile incremental pay raises may not be enough to draw the tens of thousands of drivers to trucking that the industry needs.
“Should we go up to $65,000 tomorrow?” Parker asked. “I don’t have the guts to do it.” But he noted that LTL carriers pay about $65,000 and have less than 20 percent turnover. “We’re paying $42,000 and have 100 percent turnover.” Parker predicted industrywide increases of 5 or 6 cents per mile in each of the next five years.
“Pay is important,” declared Duane Acklie, chairman of Crete Carrier Corp. “We don’t have a shortage of drivers, just a shortage of drivers willing to work for what we pay.”
Trucking firms are competing for the same laborers as construction and manufacturing companies, but they can’t compete on lifestyle issues, carriers and economists said. Other industries can offer jobs with fewer hours and more home time. But pay remains the dominant motivator.
“We are outstripping our supply (of drivers) over any period of time you look at,” said Freight Transportation Research’s Erick Starkes. “Even if things ease back, we will still have a driver shortage, and demand for drivers will still outpace supply. This problem is putting a strain on the industry’s ability to add capacity in a hurry.”
“We have to take an abnormal share of the labor pool” to meet the current demand, said Scott Arves, president of transportation, Schneider National. Arves says the only way to take that share is to raise wages significantly, but fleets are reluctant to do that. “If we move driver wages today, we feel the full effects tomorrow,” he says. “Most people have focused on $60,000 or more to attract new entrants to the driver pool. We may not be able to reap the benefits of that move quick enough. Publicly traded trucking companies may not be able to survive Wall Street scrutiny.”
But many carriers recognize that increased pay could bring other benefits in the areas of safety, productivity and customer service. Says Acklie, “At $65,000 with a cost-of-living index to it, you’d probably have a quality-of-driver increase as well.”
Study finds energy, environmental benefits to heftier trucks
A recent test has found benefits in energy consumption and emissions to operating commercial motor vehicles at weights exceeding existing federal limits. The study, which was conducted by the American Transportation Research Institute (ATRI) and diesel engine manufacturer Cummins Inc., recorded benefits in fuel consumption and emissions per ton-mile in five of six vehicle configurations and four gross vehicle weights (GVW), each tested over a representative route.
The decreases in fuel consumption and emissions per ton-mile ranged from four to 19 percent at 100,000 pounds GVW, to 22 percent at 120,000 pounds GVW, to 27 percent at 140,000 pounds GVW. The only scenario that did not produce benefits resulted from the payload weight being insufficient to offset the fuel consumption demands of the heaviest vehicle. The tests were conducted using engines equipped to meet current emission standards.
“This research shows both trucking industry leaders and federal highway regulators that higher productivity vehicles continue to be a sensible option for not only meeting the freight demands of the future but also for easing traffic congestion,” said FedEx Freight President and CEO Douglas Duncan, a board member of ATRI, which is the independent research arm of the American Trucking Associations.
Trucking image website launched
ATA has launched the trucking industry’s image campaign website at this site. The site offers users the ability to download the “Good Stuff. Trucks Bring It.” logo and promote it aggressively on such items as invoices, paychecks, newsletters and company uniforms. The logo already has been used creatively on postage meters, interstate billboards and truck stop menus. The site also sells a variety of “Good Stuff” merchandise such as mudflaps, scale model trucks and T-shirts and provides resources to help carriers promote a positive image of the industry.
CCJ Equipment Demand Index
Ohio, Illinois lead the way
Ohio and Illinois should continue to be the richest source of spot-market freight for van and flatbed equipment in December, according to the CCJ Equipment Demand Index. In December 2003, Ohio nudged Illinois out of its usually dominant position for equipment searches for van equipment for that month. Ohio typically places second, but last December Ohio edged out Illinois by less than 1 percent more searches.
For flatbed demand, Illinois stayed at the top for the second consecutive month. Historical data showed that Illinois has been moving steadily up the ranks, from third place in 2001 and second place in 2002. Ohio ended up in second position with 9 percent fewer flatbed searches than Illinois after topping the list in 2001 and 2002.
Wisconsin maintained the No. 1 spot for reefer demand. Data for the past three years showed that it is not typical for Wisconsin to hold first place in reefer demand. Georgia came in at second place with 22 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.
Study: Trucks dominate U.S. grain shipments
The truck is the main mode for transporting grain in the United States, according to a U.S. Department of Agriculture report.
“Transportation of U.S. Grains: A Modal Share Analysis, 1978-2000” is an update of a 1998 study. All transportation modes showed an increase in absolute tons moved since 1998, but rail and barge shares decreased while trucking’s share increased, the study said. In 2000, the most recent year covered by the study, trucks transported 68.4 percent of all U.S. grains.
“There is a reason that trucks now move the majority of all the major agricultural and food commodities transported in the United States,” said Charles Whittington, vice chairman of the American Trucking Associations. “Shippers see us as highly efficient, cost-effective and able to provide problem-free service.”
The report covers changes in the competitiveness and relative efficiencies among trucking, rail and barge – the major transportation modes for grain. The report is posted at this site.