DOT tries to clear hurdles to Mexico

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Environmental Protection Agency’s regulations cutting the sulfur content in off-road diesel engines kicked in June 1. Sulfur content now must drop to 500 parts per million (ppm), which is the same as the on-highway standard before the new requirements for ultra-low-sulfur diesel took effect last year. In 2010, sulfur levels in most non-road diesel fuel will be reduced to the same ultra-low requirement now in effect for highway diesel.

TravelCenters of America has acquired the operating businesses of Petro Stopping Centers, which operates and franchises 69 travel centers along the U.S. interstate highway system in 33 states. Prior to this acquisition, Petro was majority-owned by a Texas family and minority-owned by affiliates of Exxon Mobil and AB Volvo of Sweden.

National Motor Freight Traffic Association and the National Classification Committee have requested the Surface Transportation Board to extend by 14 months the effective date of its recent decision terminating NMFTA’s approval of NCC’s Section 5a classification-making agreement. STB on May 7 issued a decision regarding motor carrier bureaus that would, among other things, eliminate antitrust immunity for NCC’s classification-marking activities, effective Sept. 4. (For more on the issue, see “Law,” page 38.)

Ray Kuntz, chief executive officer of Helena, Mont.-based Watkins & Shepard, began a 16-month term as chairman of the American Trucking Associations on June 12. He succeeded U.S. Xpress Co-Chairman Patrick Quinn, who had filled the position since October 2005. Normally, ATA officers hold one-year terms, but Quinn and Kuntz served longer to fill the term of Mac McCormick, who died in a plane crash last year

American Highway Users Alliance announced that Bill Graves would become chairman of the group’s board of directors. Graves remains president and chief executive officer of the American Trucking Associations.

All diesel sold in Portland, Ore., now must contain at least 5 percent biodiesel, a mandate approved by the City Council a year ago. City-owned diesel vehicles must use fuel with a biodiesel content of more than 20 percent. The rule also mandates that all gasoline sold in the city must contain at least 10 percent ethanol. City gasoline-powered vehicles that can operate on 85 percent ethanol will be required to do so.

Freight Transportation Services Index fell 0.1 percent in April to 108.9 from its March level of 109.1, the U.S. Department of Transportation’s Bureau of Transportation Statistics reported. The April decline was the fourth in the last seven months. The Freight TSI is down 3.5 percent from its peak of 112.8 first achieved in January 2005, but up 1.8 percent from its recent low of 107.1 in November 2006.

Enforcement of a new requirement by the Canadian Food Inspection Agency started June 1 for produce truckers who haul leafy green produce originating from California into Canada. CFIA now is requiring shippers to fill out Box 22 on a “Confirmation of Sale” form, which documents the origin of the goods. For more information, call CFIA at 613-221-7153.

Celadon Group Inc. announced that one of its wholly-owned subsidiaries purchased the truckload business and certain tractors and trailers of Air Road Express Inc. Air Road will continue to provide asset-based logistics services with its LTL consolidation and warehousing operations.

Menlo Worldwide, the global logistics subsidiary of Con-Way, will purchase Cougar Express Logistics, which maintains logistics operations in Singapore and Southeast Asia, for $33.9 million. Singapore-based Cougar Express covers 12 operating locations in the region with a client base of nearly 200 Asia-based and global businesses.

President Bush signed into law emergency Iraq War funding legislation (H.R. 2207) that included language requiring the Department of Transportation to make various disclosures and assurances before it can launch a pilot program to allow Mexico-domiciled carriers to operate beyond the U.S. commercial zone.

The new law merges many of the provisions Congress passed originally in late April as part of the emergency funding bill and overwhelmingly by the House on May 15 in H.R. 1773. As provided in the original version of the funding bill, the law requires “simultaneous and comparable authority to operate within Mexico” be given to U.S. carriers in Mexico.

The Federal Motor Carrier Safety Administration responded to the legislation a couple of weeks later by publishing information required by Congress before the program could move forward. The agency also announced that it had appointed a panel of three transportation experts to assess the safety performance of Mexico-domiciled carriers in the program: Mortimer Downey, former deputy transportation secretary; Kenneth Mead, former DOT inspector general; and James Kolbe, former U.S. congressman from Arizona. FMCSA also has asked the Research and Innovative Technology Administration’s Transportation Safety Institute (TSI) to manage the evaluation, which will determine whether Mexican carriers differ from U.S. carriers in areas such as crashes, unsafe driving, use of controlled substances and out-of-service rates.

Later in June, DOT’s Office of Inspector General announced its plan to conduct a safety audit required by Congress. In a June 19 letter to FMCSA, the DOT IG’s office said that in response to recently enacted legislation it will examine whether DOT has established sufficient mechanisms to apply federal motor carrier safety laws and regulations to motor carriers domiciled in Mexico that are granted authority to operate beyond the border commercial zones and to ensure compliance with such laws and regulations.

In theory, the DOT IG’s audit could be the final step required to implement the pilot program. But regardless of the audit’s outcome, critics clearly aren’t giving up. The leading opponents of the Mexican carrier program – a coalition that includes Public Citizen, the Teamsters, the Owner-Operator Independent Drivers Association and Advocates for Highway and Auto Safety – said June 20 that the Bush administration is ignoring the will of Congress and the U.S. public by rushing to implement the pilot program.

The critics released an analysis prepared by the Advocates for Highway and Auto Safety concluding that FMCSA has failed in numerous ways to comply with the terms of the law enacted by Congress in May. The analysis of DOT’s compliance with the federal law could be the basis of a lawsuit to block the program. In addition, the groups released a poll they commissioned concluding that a majority of Americans believe the Bush administration’s plan to allow Mexican commercial trucks to travel outside the commercial zone and throughout the United States is dangerous.
– Avery Vise

GAO favors statistical approach to safety oversight
Although the Federal Motor Carrier Safety Administration’s data-driven analysis model – called SafeStat – is much better than random selection at identifying high-risk carriers for additional oversight, a statistical approach would be even better, the General Accounting Office said. In a new report, GAO noted that SafeStat is built on a number of expert judgments rather than using statistical approaches, such as a regression model. For example, SafeStat designers weighted more recent motor carrier crashes twice as much as less recent ones – concluding that more recent crashes were stronger indicators of future crashes.

GAO estimates that if FMCSA used a negative binomial regression model, it could increase its ability to identify high-risk carriers by about 9 percent over today’s SafeStat. But whether FMCSA uses its current methodology or a regression model, the completeness of crash data is crucial, GAO said.

Leaders of the House Transportation & Infrastructure Committee requested the study following a bus tragedy that killed 23. Although the bus operator had logged a number of violations, it had a low priority within SafeStat for a compliance review. GAO’s report addressed two issues: (1) the extent to which changes to the SafeStat model could improve its ability to identify high-risk carriers and (2) how the quality of the data used affects SafeStat’s performance.

According to GAO, Department of Transportation officials agree in principle that a statistical approach is preferred, but they are concerned about the greater sensitivity of this approach to problems with reported crash data.

For a copy of the GAO report, go to this site.

Senate passes energy bill
The U.S. Senate last month passed an energy bill (H.R. 6) that includes legislation to require a study and rulemaking on fuel economy improvements in medium- and heavy-duty trucks. The Senate bill includes other measures of interest to the trucking industry, including a loan program to encourage truck stop electrification.

H.R. 6 includes compromise versions of automotive fuel economy provisions that were adopted by the Senate Commerce Committee on May 8. The legislation approved by the Commerce Committee would have mandated fuel economy improvements on medium- and heavy-duty trucks of 4 percent per year between 2020 and 2030. The revised legislation simply requires a Department of Transportation rulemaking in response to a study on how to achieve “the maximum feasible improvement.”

A key provision in the Senate compromise would require that changes to fuel efficiency standards on trucks provide at least four years’ lead time and remain in place for at least three years.

One controversial amendment that was narrowly rejected would have disallowed a tax credit for renewable diesel based on adding animal fat to regular diesel. The Energy Policy Act of 2005 provided a $1 per gallon credit for renewable diesel.

The Senate-passed version of H.R. 6 still must be reconciled with the much simpler version of H.R. 6 that was passed by the House in January as part of the new Democratic leadership’s “first 100 hours” legislative frenzy.

ATA’s Costello: Freight and productivity low, but demand to pick up
There are up to 120,000 too many Class 8 trucks on the road today, says Bob Costello, chief economist and vice president for the American Trucking Associations. “In less than a year, we went from tight capacity to overcapacity,” Costello told attendees at the CCJ Spring Symposium in Tuscaloosa, Ala.

As most people realize, the situation resulted primarily from fleets pre-buying trucks last year to avoid the lower-emissions 2007 engines. When it comes to negotiating rates, “many of you have seen what that means with shippers.”

But the overcapacity is not all on the supply side. Truck tonnage is contracting. Tonnage fell 1.7 percent last year compared to 2005, driven by a slow housing market, which meant fewer of the heavier, flatbed loads that raise the overall truck tonnage number. This year also started off poorly, but the good news is “if we haven’t hit the bottom of that trend, we’re darned close.” While there’s still plenty of volatility in the market, the general direction is upward, Costello said. After unprecedented growth in 2005, revenue also has slowed, although Costello predicts a modest rise later this year and much stronger long-term growth.

On the cost side, don’t look for fuel prices to stabilize any time soon, Costello said. As countries such as India and China – which make up 37 percent of the world’s population – put more demand on energy, prices will become more volatile. Currently, those two countries consume 11 percent of the world’s oil, but that will increase as their gross domestic product per capita climbs. While politicians talk about reduced dependency on foreign oil, in reality we will become more dependent on OPEC, which controls 61 percent of oil reserves, he said.

“We have seen too little investment in both upstream and downstream capacity – refining and getting new oil,” Costello said. The trucking industry will spend a record $106 billion on diesel this year, he said.

Looking at the overall economy, Costello called this year’s predicted 2.1 percent increase in gross domestic product “a below-trend growth year” because it’s less than the index’s long-term growth rate of 3 percent. Nevertheless, “I don’t think we’re going to go into a recession,” he said. “A lot would have to fall in place for that to happen.”

However, if there is another downturn in the housing market, or if the Federal Reserve raises interest rates in the near term, “those two items could get us to rethink where the economy goes,” Costello said. Another red flag would be if the inventory-to-sales ratio – the measure of what retailers have in stock relative to sales – continues to rise; a high ratio mean less freight to haul.

Moving freight productively is an ongoing challenge, Costello said, made worse by reduced average lengths of haul, driver home time, hours-of-service regulations and congestion. “Taken together, we’ve seen falling productivity over the last four years,” he said. Congestion, in particular, is a growing problem, even in second-tier cities such as Louisville, Ky., Des Moines, Iowa, and Kansas City, Mo. The top 200 bottlenecks alone cost trucking $7.8 billion annually, Costello said.

The country has two choices in dealing with overburdened roadways, Costello said: Either move toward taking the federal government out of the funding process, which means more privatization and more tolls; or pay higher taxes. One of the biggest challenges is to get state and federal governments to spend fuel tax money on highway capacity instead of other things, he said.

A possible way to fight congestion would be to haul more freight on fewer trucks. Language in a recent energy bill would allow an increase in truck weight to 97,000 pounds with an additional axle. While ATA supports the proposal, it’s “a huge uphill challenge,” Costello said. “What would make those size and weight gains easier for politicians to stomach is if we started to separate traffic,” he said, referring to truck-only lanes.

Given productivity constraints, “the biggest challenge is not the slowdown we’ve got going on right now,” Costello said. “It’s are you going to be able to haul 31 percent more freight in 2017 than you can now?”
– Linda Longton

CCJ Hot Spots: The South rises again

Georgia (Outbound)
Destination State Avg Rate Min Rate Max Rate Avg Fuel Surcharge Avg Accessorial
Van WV 1.5663 1.2734 1.8593 0.28 174.98
LA 1.4835 1.2085 1.7586 0.23 162.61
AR 1.3017 1.1558 1.4475 0.22 171.11
Reefer WV 2.1793 1.959 2.3996 0.05 264.4
LA 1.9533 1.5819 2.3247 0.06 220.21
AR 1.4737 1.0031 1.9444 0.2 245.59
Flatbed WV 1.6748 1.4156 1.9341 0.17 101.05
LA 1.5341 1.3768 1.6914 0.09 101.58
IN 1.4938 1.348 1.6396 0.13 97.16
Arkansas (Outbound)
Destination State Avg Rate Min Rate Max Rate Avg Fuel Surcharge Avg Accessorial
Van WV 1.8115 1.5532 2.0698 0.22 222.77
GA 1.5607 1.3295 1.7919 0.24 153.96
NC 1.5605 1.3055 1.8155 0.22 204.52
Reefer GA 1.908 1.775 2.0409 0.25 169.63
SC 1.7923 1.6158 1.9689 0.22 278.72
WV 1.6422 1.631 1.6504 0.18 291
Flatbed WV 1.8411 1.7012 1.9811 0.34 225.51
CA 1.8242 1.5914 2.0571 0.2 694.3
GA 1.6859 1.4134 1.9583 0.11 94.4
Alabama (Outbound)
Destination State Avg Rate Min Rate Max Rate Avg Fuel Surcharge Avg Accessorial
Van WV 1.6935 1.427 1.9601 0.27 226.72
IN 1.3931 1.2135 1.5726 0.23 141.91
IL 1.3833 1.2203 1.5463 0.19 143.06
Reefer OH 1.367 1.3066 1.4274 0.19 246.23
IL 1.2849 1.0864 1.4833 0.23 208.12
CA 1.2447 1.1594 1.33 0.2 798.13
Flatbed WV 1.6689 1.4742 1.8636 0.17 138.93
CA 1.6407 1.5127 1.7688 0.1 449.43
IN 1.5552 1.3817 1.7288 0.15 97.91

Georgia, Arkansas and Alabama were the nation’s strongest spot-market states during May, according to the latest CCJ Hot Spots data. In cooperation with freight-matching leader TransCore, we highlight the nation’s three hottest states – those where the outbound load-to-truck imbalance is most in favor of the carrier. We then pair these states with market rate data to identify the three best outbound paying lanes by each of the three most popular equipment types – van, reefer and flatbed. And like the three origin states, all of these destination states have positive load-to-truck ratios. Load-to-truck ratio and market rate data are courtesy of TransCore. The goal is to highlight not only the best states for spot-market freight but also the best outbound opportunities from those states.

CCJ Symposium addresses key challenges
From the state of the economy to trends in crash litigation to rehabilitating poor-performing drivers, the 2007 CCJ Spring Symposium tackled some of the most pressing issues facing fleet owners today. Delivering the keynote address was David Gergen, veteran journalist and key adviser to four U.S. presidents. Gergen explained how presidential and congressional politics have changed now that the World War II generation has passed from the scene. Featured speakers included:

· Bob Costello, chief economist of the American Trucking Associations;

· Clay Porter, partner, Dennis, Corry, Porter & Smith;

· Kevin Burch, president, Jet Express;

· Jeff Davis, vice president-safety, Jet Express;

· David Owen, president, National Association of Small Trucking Companies; and

· Jeff Wilmarth, president, Silver Arrow Express.

The CCJ Spring Symposium, held June 4-6 in Tuscaloosa, Ala., attracted about 300 trucking company and private fleet executives. Symposium sponsors were ACS, Caterpillar, Comdata, Goodyear, International Truck & Engine, PeopLease, PeopleNet, Roadranger, Shell Lubricants, Tidwell DeWitt, TMW Systems, TravelCenters of America and Utility Trailer Manufacturing Co.

Symposium Sessions