Highway bill advances in Senate

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Freight Transportation Services Index increased 1.9 percent to 130.9 in January, up from 128.4 in December. That’s the biggest one-month gain since December 2003, according to the Department of Transportation’s Bureau of Transportation Statistics. The January 2005 level is 7.2 percent higher than the January 2004 level of 122.1, the biggest January year-to-year gain since 1998.

Average retail on-highway diesel price peaked at a record of 2.316 per gallon nationwide during the week of April 14 before moderating toward the end of the month, according to the Energy Information Administration. The level is about 65 cents higher than a year ago. According the American Trucking Associations, the trucking industry is on pace to spend $15.8 billion more on diesel in 2005 than in 2004, during which about $10 billion more was spent on diesel than in 2003.

Volvo Trucks North America announced that employees represented by the United Auto Workers have ratified new three-year labor agreements covering about 2,800 members of the local UAW unit at the company’s plant in New River Valley, Va.

Great Dane Trailers has recalled the more than 500 workers temporarily laid off in January when the Brazil, Ind., factory underwent a $5 million retooling project. The retooling enabled an assembly process that will produce a modular, lighter trailer, allowing the plant to focus on custom orders of dry-freight and refrigerated products. About 300 additional workers will be hired by summer for assembly and welding jobs.

The Senate in late April was poised to begin consideration of its own version of the highway program reauthorization bill. Funding authorization for those programs, including the Federal Motor Carrier Safety Administration, has been extended on a short-term basis numerous times and is slated to end again at the end of May.

The Senate Commerce Committee last month approved its version of the bill, which covers the motor carrier safety portions. Several weeks earlier, the Environment and Public Works Committee adopted provisions of the bill dealing with highway construction. The Senate bill doubles the authorization for the Motor Carrier Safety Assistance Program and calls for improvements to the commercial driver’s license program. It also establishes a Medical Review Board to recommend standards for the physical examinations of commercial drivers and a registry for qualified medical examiners.

As the Senate legislation goes to the floor, it omits some of the more controversial proposals out of the House and the Bush administration. The Senate bill does not include the mandatory truckload fuel surcharge that the House adopted (See “House passes truckload fuel surcharge,” CCJ, April 2005). Nor does it adopt the Federal Motor Carrier Safety Administration’s request that Congress codify the hours-of-service regulations currently in place.

Fuel surcharges
In testimony last month to the Senate Commerce Committee, FMCSA Administrator Annette Sandberg said the Bush administration opposes the mandatory fuel surcharge included in the House version of the bill (H.R. 3). “Although the price of diesel fuel has risen sharply in the past few years, the allocation of those costs among the buyers and sellers of transportation is best accomplished through the working of the marketplace, not by government prescription,” Sandberg said.

The Owner Operator Independent Drivers Association supports the fuel surcharge legislation as drafted in the House bill. The Truckload Carriers Association also supports a federally mandated fuel surcharge, although the House legislation conflicts with some elements of TCA’s policy. The association has drafted an amended version that includes, among other things, a surcharge for fuel used in a reefer unit and language modifying the mandatory pass-through in the House-passed language.

TCA has authorized the spending of a significant amount from its reserves to secure a mandatory fuel surcharge and is seeking additional contributions from the industry.

Hours-of-service regulations
FMCSA has until Sept. 30 to issue another hours-of-service regulation that addresses the concerns of the U.S. Court of Appeals for the District of Columbia. Sandberg told the Senate Commerce Committee that she is concerned that the new rules will not settle litigation but rather spark a new round. She asked the panel to include her proposal to make the current rules permanent, allowing FMCSA to revise the rules as needed.

Sandberg also expressed concerns over the number of proposed exemptions to the hours-of-service rules. The current rules already include the statutory exemptions from the old hours rules, she said. “New blanket statutory exemptions for various industries increase the likelihood that tired drivers will be on the roads endangering the driving public.”

The chances for codification of the current hours rules are growing dim. In theory, the issue won’t be on the table for negotiations between House and Senate legislators unless the measure is adopted as an amendment during Senate floor action. In practice, however, a conference committee still could insert the measure into a compromise version of the legislation.
–Avery Vise

Patterson to head Freightliner
DaimlerChrysler has tapped Rainer Schmueckle to be chief operating officer of the Mercedes Car Group, and the company named Chris Patterson to replace him as president and chief executive officer of Freightliner LLC, which builds Freightliner, Sterling, Western Star and other trucks.

Patterson most recently was senior vice president-service and parts for Freightliner LLC. He previously has served as president of Freightliner of Canada and as senior vice president-sales and marketing for Freightliner Corp. Patterson also has held senior-level positions at Volvo Trucks North America and Canadian Kenworth Co.

Schmueckle joined Freightliner as CEO in 2001 to lead a turnaround of North America’s largest truckmaker. He soon announced a plan to improve results by $850 million by 2004 by closing plants, reducing purchasing and materials costs, cutting the work force and making changes in pricing and business practices, such as renegotiating the major buyback deals that created many of Freightliner’s financial problems. By the end of 2003, the company had met virtually all of its cost-cutting goals – an achievement Schmueckle credits to Freightliner employees.

In an interview with CCJ, Schmueckle described renegotiating the guaranteed value commitments with major fleet customers as “psychologically one of the most difficult tasks” of the turnaround plan. However, “we realized soon enough that despite customers not being too happy asking for reconsideration, they understood our problem. My feeling is that we have done as good as we possibly could, and our relationships [with customers] have not been impaired.”

Truck Tonnage Index falls in February
American Trucking Associations’ advanced seasonally adjusted for-hire Truck Tonnage Index fell 2.2 percent to 115.7 in February. The decrease followed a revised improvement of 5.0 percent in January, which was the largest month-to-month increase in several years. Compared to February 2004, the index was 3.9 percent higher.

“February’s decrease, while quite large in historical terms, needs to be tempered with January’s extremely strong gain,” said ATA Chief Economist Bob Costello. He said that while one month’s experience doesn’t make a trend, he expects the rate of growth in truck tonnage to decelerate. “Nevertheless, we still expect tonnage to grow solidly in 2005.” February may be the beginning of the deceleration trend, he said.

ATA calculates the tonnage index based on surveys from its membership and has been doing so since the 1970s.

CCJ Equipment Demand Index:

June ’04 ’03 ’02
Texas 1 1 1
Illinois 2 4 3
Georgia 3 3 2
Ohio 4 7 5
Tennessee 5 2 4
N Carolina 6 6 8
Indiana 7 11 10
S Carolina 8 10 11
Missouri 9 8 7
California 10 5 6
Alabama 11 9 9
Louisiana 12 14 14
Wisconsin 13 16 15
Kentucky 14 13 13
Arkansas 15 12 12
June ’04 ’03 ’02
Texas 1 1 1
Alabama 2 2 2
Ohio 3 7 5
Arkansas 4 3 3
Illinois 5 4 6
Georgia 6 6 4
Tennessee 7 5 9
Indiana 8 8 10
Louisiana 9 15 17
Mississippi 10 9 11
S Carolina 11 10 8
N Carolina 12 11 7
Michigan 13 18 19
California 14 12 14
Kentucky 15 14 12
June ’04 ’03 ’02
California 1 1 1
Texas 2 3 3
Georgia 3 2 2
Illinois 4 5 5
Missouri 5 4 4
Arkansas 6 6 6
Ohio 7 8 9
Florida 8 14 11
N Carolina 9 12 7
Wisconsin 10 11 14
S Carolina 11 10 13
New York 12 23 19
Tennessee 13 13 12
Arizona 14 9 8
Kansas 15 18 15

California breaks the streak

Texas should be the richest source of spot-market freight for dry van and flatbed equipment in June, but California may be tops for refrigerated trailers, according to the CCJ Equipment Demand Index.

Data for the past three years showed that it is typical for Texas to hold first place in van demand during June. Illinois took second place in June 2004 with 31 percent fewer van searches than Texas. For flatbed demand, Texas also took top position in June 2004 as it did in the two years before it. Alabama was in second position with 35 percent fewer flatbed searches than Texas. California replaced Texas in the number one spot for reefer demand in June. As shown in past years’ data, it is typical for California to be in the top spot in June. Texas came in second with 21 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.