News From The Industry

| December 12, 2008

Charlie Delzer avoids buying fuel in the Northeast, where prices have spiked.

NO RELIEF FOR COSTLY DIESEL

As if the economic pressures – a slow economy, low rates and slow freight – on truckers weren’t bad enough, things are getting worse. Diesel prices have risen as much as 35 cents above last year’s levels, and analysts say the sky is the limit.

From a political strike that has turned off oil pumps in Venezuela to the lingering threat of war with Iraq, there is no shortage of factors pushing diesel prices higher. Average fuel prices rose above $1.50 nationally in January for the first time since the week of the Sept. 11 terrorist attacks. Prices retreated to $1.478 for the week ending Jan. 13, but that’s nearly 20 cents higher than the five-year national average, says T-Chek Systems energy analyst Mark Derks.

“I think owner-operators are going to see today’s price or even higher over the next few months,” he says. “Expect extra volatility. If the Venezuela situation continues, prices could go as much as 15 cents higher at the retail level.”

Owner-operator Charlie Delzer of Cascade, Md., says he’s been paying up to $1.49 for diesel and expects the price to go as high as $2 if the United States goes to war. He’s trying to buy fuel in the South, where it’s cheaper, and to avoid the Northeast, where prices have spiked.

Still, the high price of fuel has prompted the veteran driver to install a $7,700 generator to save on idling costs and to be more choosy on loads. He waited three days at a truck stop in Meridian, Miss., for an oversize flatbed load that would cover his costs and put a little change in his pocket.

Analysts say the biggest driver of price now is Venezuela, where a political standoff between President Hugo Chavez and striking oil workers showed no sign of ending by mid-January. When it’s resolved, it may take months to get production back to normal, Derks says.

Since Venezuela contributes as much as 10 percent to 15 percent of the U.S. oil supply, the loss is significant, especially on the East Coast and in the South, where much of Venezuela’s petroleum goes. Prices there have been climbing several cents a week since the crisis began in November. Prices continue to be highest in California, where Bakersfield, Calif., trucker Robert Deharsh says he pays as much as $1.60.

U.S. Department of Energy analysts, who are also predicting high prices at the pump, say diesel inventories are at seasonal lows, and any increase in demand, such as from a prolonged cold spell, will send the price higher.
– Sean Kelley

STIMULUS PLAN COULD HELP OWNER-OPERATORS

The economic stimulus plan announced last month by President Bush would give favorable tax treatment to owner-operators.

The proposal will accelerate his 10-year tax plan, tripling the amount of equipment purchases small companies can write off as expenses. Bush said that his $674 billion stimulus package would cut taxes, help jobless citizens and boost the economy. The plan must still clear Congress.

It would decrease the amount of income tax and Social Security tax typical owner-operators would pay, says Howard Abrams, president of the California-based PBS Tax and Bookkeeping Service. “It could be more money in their pockets immediately,” he says.

That proposal would also change current tax law for small firms concerning equipment purchase write-offs, the president said.

“I’m asking the Congress to raise that limit to $75,000 and index that number for inflation,” he said. “This change, together with faster rate reductions, will benefit more than 23 million small-business owners.”

The president credited small business for creating the most new jobs and accounting for half of the nation’s economic output: “My view is this economy will thrive only if small businesses thrive.”

The plan also deletes federal taxes on stock dividends to investors and increases the child tax credit by $400 per child. Ninety-two million Americans will retain an average of $1,083 more of their own money because of tax relief, he said.

-Jill Dunn


DOT SUBMITS NEW HOURS-OF-SERVICE PLAN

More than two years after its last attempt to reform hours-of-service rules failed, the Department of Transportation has taken a key step to restart the process.

On Jan. 3 the agency submitted to the White House changes to regulations that govern the hours truckers can work. The White House Office of Management and Budget must clear any rulemaking before it is made public, and review of controversial measures can take months.

The rule has been described unofficially as much clearer, less detail-weighted and more consumer-friendly. The trucking industry is more likely to find this version more workable than the DOT’s proposed rule of two years ago, says one federal source.

The most recent attempt to overhaul hours regulations, which haven’t been changed much since the 1960s, came in May 2000. That version drew 53,000 submitted comments, most of them negative.

The proposal separated regulated drivers into five types of operations: Long-haul, regional, local, local-split shift and those whose primary work is not driving. It also contained a controversial requirement for automatic onboard recorders to replace paper logs.

-Avery Vise and Jill Dunn


The 2003 BFGoodrich Commercial Truck Tires Cool Rigs calendar is available for free through the company’s dealers.

BFG COOL RIGS CALENDAR OUT

The 2003 BFGoodrich Commercial Truck Tires Cool Rigs calendar is available for free through the company’s dealers.

Dealer locations are listed on www.bfgoodrich trucktires.com. Also available for free download on the website is a screen-saver version of the 2003 winners. Winning rigs are Class 6 through Class 8 trucks that are in commercial use. Each photo is displayed over two months on the calendar.

The six winning owners whose trucks appear on the calendar are: Guadalupe Valenzuela Aguilar (above) of Culiacan, Sinaloa, Mexico; Dean and Joyce Burington of Arlington, Iowa; Jean Paul Laliberte of Valcourt, Quebec, Canada; Rick and Linda Lindeman of Racine, Wis.; Loren Miller of Omaha, Neb.; and Glen and Janice Rice of Rockford, Ill. They received up to 10 BFGoodrich commercial tires plus mounting. Winners also received 50 calendars and a framed copy of their rig’s picture.


OFF-ROAD ENGINES FACE NEW EMISSIONS HURDLE

The owners of diesel farm tractors, dump trucks, backhoes and other diesel-powered off-road equipment will eventually face the same emissions issues as owners of their on-road cousins.

The federal government is drafting new rules that would drastically reduce diesel emissions from off-road vehicles to approach current emissions standard for trucks and buses. The Environmental Protection Agency is expected to make a formal proposal this spring that would cut off-road diesel emissions by as much as 95 percent, according to published reports. A final rule could be released in 2004.

-Jill Dunn


ALABAMA STOPS TICKETING OKLAHOMA REGISTRATIONS

The Alabama Department of Revenue will no longer ticket certain trucks with Oklahoma IRP registrations and will stop prosecuting existing tickets.

Last year, the Alabama agency began ticketing Alabama-based truckers who registered their trucks in Oklahoma using trucking agents to register, according to the American Trucking Associations. Trucking companies have used Oklahoma to register their trucks for years because state fees are small and businesses did not have to be physically located there to register, which has changed recently.

State revenue departments have targeted carriers with existing registrations, sued to collect back taxes and issued tickets. Alabama law enforcement officials had issued dozens of tickets.

The Alabama Trucking Association and ATA dropped a suit over the tickets after state officials agreed to quit the ticketing campaign. The associations have the right to re-file the case if there are additional issues.

The revenue department has stated that carriers must still follow IRP rules that have been revised to carry a stricter base of business requirement.


INTERNATIONAL OFFERS INCENTIVES

International Truck & Engine Corp. has introduced limited zero-interest financing and an aggressive warranty program to address what it sees as customers’ two biggest concerns: delayed economic recovery and reliability of new engines.

The company has also strengthened its dealer network by building dealerships in two new major markets, Denver and Jacksonville, Fla., says Steve Keate, president of International’s Truck Group. International is also investing $2 million in its Diamond Standards program for dealers, which is intended to improve service and includes dealer incentives.

The “Catch it while you can” financing promotion applies to truck purchases through March, says Wayne Krzysiak, vice president of sales for the Truck Group. The no-interest payments will apply for the first 12 months of a new truck loan through International’s finance arm. Krzysiak says customers could save up to $8,150 per truck.

Krzysiak says the company’s truck sales jumped 30 percent last year when it offered a similar financing program under the same name. The new warranty offer will apply to Class 8 trucks sold between Dec. 16 and March 31, he says.

The company’s Diamond-plus Support service program is also designed to stimulate sales, promising to get a customer’s truck running within 24 hours of a breakdown or to provide a replacement truck for up to three days and 1,500 miles at no charge, Krzysiak says.

The company is predicting flat Class 8 truck sales for 2003, which Keate says is good news because 2002 sales were inflated due to heavy buying prior to the introduction of low-emissions engines in October.

-Max Heine

S.D. COURT UPHOLDS HEFTY TRUCK FINES

South Dakota’s Supreme Court has sent a message to truckers: Better not run overweight.

The court upheld heavy penalties for overweight trucks in similar cases. In the first case, Anthony Krahwinkel was hauling an excavator with his 1994 Mack. He was found to be 50,900 pounds over the legal limit and incurred a fine of $133 and a civil penalty of $19,087. Under state law, the civil penalty for being grossly overweight was doubled to $38,175.

In the second case, three employees of Clausen Construction of Clark were stopped in a convoy. Each trucker was hauling a Caterpillar 627 scraper. The employees, David Geise, David Clausen and Roland Clausen, were fined $133 each for hauling overweight loads. Giese received a $7,913 penalty, Ronald Clausen had to pay $9,844 and David Clausen was given an $11,400 civil penalty.

The three were originally given fines double those amounts. Later, a circuit court judge dismissed double fines as not applicable under state law. Still, double fines were upheld in Krahwinkel’s higher court case.

In both cases the truckers argued that state law does not offer equal protection because it allows different weight restrictions for certain industries or occupations. But the court disagreed, upholding the penalties.

– Jill Dunn


RULING BLUNTS MOVE TO OPEN BORDER

Mexican trucking companies may have to wait a little longer to drive on U.S. roads. A federal appeals court has ordered the Department of Transportation to study what impact Mexican trucks will have on the environment. In a ruling handed down Jan. 16, the 9th U.S. Circuit Court of Appeals ordered the agency to do further studies after safety, labor and environmental groups sued.

The Bush administration has vowed to open U.S. highways to Mexican trucking companies as part of the North America Free Trade Agreement. More than 90 Mexican carriers were poised to begin operations here once the DOT approved their safety programs.

The court concluded the DOT “acted without regard to well-established United States environmental laws.” The DOT can appeal the decision.

It was unclear at press time if DOT’s The Federal Motor Carrier Safety Administration would go forward with safety inspections. Those audits are intended to verify if the carriers have an established method to comply with U.S. safety regulations before granting them authority to haul loads in the United States.

The lawsuit that reached the Court of Appeals was filed by the Teamsters, California Trucking Association, Public Citizen and other organizations.

Under the North American Free Trade Agreement, the United States was supposed to open its border more than six years ago. But that plan has been stalled over several safety issues.

- Sean Kelley


DOT LOWERS HAZMAT FEES

Federal officials decreased hazardous materials registration fees for trucking companies following a lawsuit filed by industry groups.

The American Trucking Associations and 15 other trade groups filed suit July 1 against the Department of Transportation. Now, the DOT’s Research and Special Programs Administration has published a final rule lowering the annual hazardous materials registration fees from $2,000 to $300 for large truck companies and $250 to $150 for small truck companies, according to an ATA statement. The rule is effective March 3.

Any company that prepaid fees for the next two years will be eligible for a refund.
The organizations filed the lawsuit because these fees are deposited in the Hazardous Materials Emergency Preparedness Training Grant program. DOT limits the amount that can be spent from this fund annually and is required to adjust the fees if there is a surplus. As of last July, the surplus was $20 million, according to an ATA official.

These new fees will be effective for three years, which is the time needed to reduce the accumulated surplus. Since a surplus first emerged in 2000, the DOT has proposed lower fees to eliminate the unexpended balance. Both times it suspended the rulemaking because of presidential budget proposals, which called for expenditures from the fund for unauthorized purposes. The budget requests were later rejected.

-Jill Dunn


SHORT HAULS

TWO FORMER MISSOURI weigh stations became trucker rest areas after help from the Missouri-based Owner-Operator Independent Drivers Association. The state transportation department had planned on closing the stations after it completed two new stations on I-70 east of Odessa last year, but OOIDA suggested the conversion to rest areas. State officials agreed, and the two new rest areas now offer 14 spots on the eastbound lane and 14 spaces westbound.

THE 2003 KENWORTH CALENDAR is available from participating Kenworth dealers. The six-page calendar shows Kenworth trucks in various applications.

SIRIUS SATELLITE RADIO will change its lineup this month, adding eight new music streams, three new news streams, and three new entertainment streams. Channel changes include: Jam Central (17), featuring bands such as Phish and The Grateful Dead; Planet Rhyme (41), featuring Latin, Caribbean and European hip-hop; Folk Town (94); and three regional weather channels. Talk channels featuring hosts from the political left and right will be added. Sirius will discontinue eight streams.

TRUCKERS IN KENTUCKY can now dial 511 for traffic, travel and road information. Data will be updated every five minutes.

NEVADA NEW emissions standards now regulate trucks on a tiered system that’s tougher on newer trucks. A violator who does not repair a truck within 45 days of being cited can be fined $800 or more. Trucks and buses with a gross weight of 8,500 pounds or greater are not required to have annual emissions inspections, but visible exhaust must not block more than the stated percentage of light passing through it, according to the Nevada Department of Motor Vehicles. Engines exempt by the California Air Resources Board are also exempt in Nevada.

NOTHING SPARKLES like a show truck – from the lush, buffed paint to the many chrome accessories. Visit eTrucker.com’s MONTHLY FOCUS in February to see photos of Pride & Polish winners and behind-the-scenes stories about how the owners prepare for the tough competition.

THE FINAL CHAPTER of the West Coast dock shutdown was expected to play out late last month when dockworkers were to vote on a new contract, which has the approval of the union’s leaders and shippers. The six-year contract with the Pacific Maritime Association gives International Longshore and Warehouse Union members solid pension and employment benefits, union leaders say. Members are expected to approve the contract.

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