Bob Costello predicts slow economic growth throughout 2006.
PLENTY OF FREIGHT ON WAY, TRUCKING ECONOMIST SAYS
Despite higher interest rates and a slowing business climate, the economy is still strong, and there’s going to be plenty of freight for trucking companies, economist Bob Costello told attendees of the Commercial Carrier Journal Spring Symposium, sponsored by Overdrive publisher Randall-Reilly Publishing.
“We are going to see a deceleration of the U.S. economy through the year,” said Costello, chief economist for the American Trucking Associations. “By end of the year, we’ll have an under 3 percent growth rate. But that’s not such a bad thing. As long as we’re growing, that’s not bad. It’s sustainable.”
The last three quarters should be better for trucking companies than the first quarter of 2006, when truck tonnage fell, Costello said. That slowdown was related to a $6 billion inventory correction by a major retailer and the weight of goods being transported in the economy, Costello said. Carrier revenues and freight volume were not affected as much.
While long-haul trucking fell 9 percent in the first quarter, flatbed and refrigerated applications actually grew, Costello said.
Industry challenges include driver availability, capacity and fuel prices, said Costello, who is also concerned that the Federal Reserve is interested in further raising interest rates to slow inflation. Those increases could cool the economy.
There are good signs in the economy, as well. Business investment and manufacturing are performing robustly, and that should help trucking, Costello said.
MINETA PROPOSES VARIABLE TOLLING
U.S. Transportation Secretary Norman Mineta said his new national plan to alleviate congestion would include implementing broad “congestion pricing” and encouraging more private transportation investments.
Congestion pricing, or variable tolling, is the first strategy Mineta listed in his blueprint to tackle highway, freight and aviation clogs. This plan charges higher tolls during peak times of the day and lower tolls during off-peak times.
He presented his National Strategy to Reduce Congestion on America’s Transportation Network at the National Retail Federation conference in Washington, D.C., May 16.
“Some of what we are about to do will be labeled controversial by those who are wedded to the status quo,” Mineta said. “But we must embrace new solutions if we are going to make any meaningful progress in reducing congestion.”
Department officials will seek Urban Partnership Agreements from large metropolitan areas that will require variable pricing programs to spread traffic throughout the day. Congestion pricing has been successful in mitigating congestion in major international cities, he said.
At the state level, the private sector has shown growing interest in transportation through such projects as the lease of the Chicago Skyway and the pending lease of the Indiana Toll Road. Mineta said states would be encouraged to open their transportation infrastructure funding to private investment.
The plan also calls for:
- Creating or expanding express bus services.
- Securing agreements from major area employers to establish or expand telecommuting and flex scheduling.
- Expediting completion of the most significant highway capacity projects currently underway that will reduce bottlenecks the most.
- Widespread deployment of new technologies and practices that end traffic jams and targets port and border congestion.
America loses $200 billion to freight bottlenecks and delayed deliveries annually, while consumers lose 3.7 billion hours and 2.3 billion gallons of fuel sitting in traffic jams, Mineta said.
FREIGHTLINER, DAIMLERCHRYSLER MARK 25 YEARS
Twenty-five years after Daimler-Benz AG acquired Freightliner Corp., executives of both companies joined more than 2,500 Freightliner employees for an anniversary celebration at Freightliner’s headquarters in Portland, Ore.
“In 1981, Freightliner became the first foothold in the U.S. for Daimler-Benz AG,” Dieter Zetsche, chairman of the DaimlerChrysler board of management, said during the celebration. “Thanks to its dedicated employees and strong brands, the company has now become an indispensable part of DaimlerChrysler.”
When Daimler-Benz purchased Freightliner, it had 9 percent market share in Class 8 trucks. By 1992, Freightliner had reached No. 1 in North America in Class 8 trucks. Today it leads the market in all vehicles from Class 5 on up, with a 30 percent market share.
In a media roundtable after the celebration, company executives discussed the potential impact on Class 8 truck sales of new, low-emissions engines, set for introduction in January 2007.
“Sooner or later, everyone’s going to have to buy these engines,” Chris Patterson, Freightliner president and CEO, told media attendees. “Overall, volumes are dependent on the economy. If the economy slows, whether there’s an emissions event or not, that slows buying down. We’re positioning ourselves conservatively.” Patterson added that Freightliner already has some production slots filled for 2007.
Looking ahead to the 2010 emissions regulations, Andreas Renschler, head of DaimlerChrysler’s truck group and buses, said the best solution is to combine selective catalytic reduction technology with BlueTec, a European technology for exhaust purification.
Despite diesel fuel prices hovering in the $3 range, Patterson said Freightliner has not seen “a significant shift” toward spec’ing trucks with lower horsepower engines or more aerodynamic features. “We have seen a high degree of interest in APUs,” Patterson said.
Carriers are reluctant to drastically change truck specs because of the driver shortage, which has led carriers to pay more than just “lip service” to treating drivers and owner-operators well, Patterson said. “They know they can go to work for someone else the next day,” he said. “Treat them poorly, and it doesn’t matter if you put them in a new Western Star Stratosphere or a used Volvo.”
OPERATION LIFESAVER GETS $1M GRANT
Preventing collisions at grade crossings is a goal of a $1 million grant from the Federal Railroad Administration to Operation Lifesaver, a nonprofit railroad safety education organization.
About 95 percent of all railroad fatalities in the United States each year are caused by collisions at grade crossings and by trespassing on tracks.
Twenty percent of truck-train collisions result in a train derailment, and more than half those collisions take place at public crossings already equipped with flashing lights and bells, according to a 2003 report by Operation Lifesaver of Canada. Property damage from each collision often exceeds millions of dollars.
TV NETWORKS SUE FLYING J OVER PRE-EMPTED ADS
Disney, ABC, CBS, NBC Universal and Fox are among the major TV producers who have filed a federal lawsuit against the truck stop chain Flying J.
The lawsuit, filed in April in U.S. District Court for the Southern District of New York, charges the company with copyright infringement and unfair competition for replacing regularly scheduled TV commercials with its own chosen ads specifically targeting truckers.
Owner of more than 130 truck stops, Flying J provides a truckers’ lounge at each location where drivers can watch television. The lawsuit states that the company has been selling commercial time to its own network of advertisers and substituting those commercials for the ones scheduled to run by the networks.
According to a Flying J media kit, advertisers pay $31,250 per month for a 30-second spot to play each hour in every Flying J location that carries a service called Plaza TV.
The service is made possible by a commercial-substituting device produced by the company SegOne.
Flying J’s marketing director, Virginia Parker, said the company received legal counsel prior to using SegOne that the service would be legal. “SegOne and its legal representatives continue to believe that the plaintiff’s claims are without merit,” she says.
PANEL: WORK-LIFE ISSUES TOP CONCERNS
Fleet executives discussing driver turnover June 7 at the Commercial Carrier Journal Spring Symposium, sponsored by Randall-Reilly Publishing in Tuscaloosa, Ala., say work-life issues are becoming more important to truckers, who prefer shorter, dedicated routes to long-haul deliveries.
Turnover “is the highest it’s been in the nine years I’ve been there,” said Stacia DeWitt, recruiting director for Marten Transport of Mondovi, Wis. Marten is looking to add more regional terminals to keep drivers closer to home, DeWitt said. “The work-life issue has become huge,” she said.
Paul Williams, president of Wooster Motor Ways of Wooster, Ohio, said his company has lost drivers to fleets offering more dedicated routes.
New drivers often are blindsided by the demands of trucking, Williams said. “Their families cannot accept the lifestyle change that just happened with their spouse,” said Williams, whose company now requires candidates to read over a lengthy list of job requirements and sign off on each stipulation.
Jeff Wilmarth, president of Silver Arrow Express of Rockford, Ill., said he has lost a few drivers to local carriers but has seen less turnover than larger companies. “Being a regional hauler, we have a lower turnover ratio, and we try to get them home more often,” Wilmarth said.
Silver Arrow is hiring more second-career drivers and women, but Middle Easterners and Eastern Europeans haven’t been as interested in hauling hazmat for the carrier, Wilmarth said.
LEASING TO CARRIER MORE ATTRACTIVE, KENWORTH CHIEF SAYS
Owner-operators remain a viable part of the market, but economic and operational changes mean some of those who operate independently “may be in the business in a different way,” Bob Christensen, Kenworth general manager, told Overdrive last month at Kenworth’s headquarters in Seattle. “More may lease on to carriers to take advantage of economies of scale,” he said.
Customers’ desires for sophisticated freight tracking systems and carriers’ ability to negotiate fuel surcharges – and pass them on to owner-operators – can make becoming a leased owner-operator attractive, he said. But, he quickly added, “there are still independents out there.”
Noting diesel fuel prices averaging $2.89 per gallon, Christensen said customers are “certainly interested in trying to offset the impact.”
Strong interest in aerodynamics is one reason Kenworth introduced the T660, which replaces the T600, he said. It will offer the Clean Power System, an anti-idling system that supplies cooling, heating and 110-volt electric power.
But the driver shortage means carriers must weigh fuel economy against driver appeal, he said.
IDLING STUDY RAISES CONCERN OVER IN-CAB POLLUTION
An Environmental Protection Agency study of air pollution inside and outside trucks idling at a truck stop indicated particle concentrations “might be a concern.”
The study involved six trucks idling in different areas of a large truck stop in Knoxville, Tenn., during December 2004 and January 2005. The trucks were model years 1996-2003 with engines ranging from 410 to 430 horsepower. The truck brands were not identified.
Researchers concluded that particulate concentrations may be a concern inside and outside the truck.
“It was noted that there might be routes of entry other than just the fresh air intake vents and that it may arise from crankcase emissions or other leaks inside the engine compartment,” said the study’s conclusion. The study’s authors recommend a follow-up study to identify the source of contamination.
An additional test of a truck in an empty parking lot without other idling trucks nearby yielded similar results as trucks parked near one another. That indicated the truck by itself plays a major role in contributing to the concentrations of pollutants outside and inside the cab. This implies that some exhaust emissions come from locations other than the smokestack.
Knoxville’s National Transportation Research Center of Oak Ridge National Laboratories funded the study under subcontract from EPA.
Truck makers follow exhaust system integrity specifications listed in the Federal Motor Carrier Safety Regulations. However, as equipment ages, it can develop leaks. Experts say owners should follow federal guidelines for routine inspections, paying attention to tightness of clamps, joints and mounting brackets, looking for corrosion and wear, and checking manifold gaskets, flex tubing, the engine compartment, filters and the drip tube.
ATA RALLIES OPPOSITION TO I-81 TOLL PLAN
The American Trucking Associations wants truckers to lobby against Virginia’s plan to implement truck-only tolls that would cost truckers $120 to drive 325 miles of I-81.
The state’s adoption of the proposal has garnered opposition from many parties, including local governments and some state legislators. NATSO opposes it, saying the plan would force truckers onto roads inadequate for increased truck traffic and also would feed national interest in privatizing interstate highways.
The Sierra Club’s Virginia chapter opposes it in favor of a rail transportation plan, and the National Trust for Historic Preservation opposes it to protect historic places and rural areas along the interstate.
In 2001, Star Solutions, a consortium of road builders, submitted a proposal to the Virginia Department of Transportation that included widening the whole I-81 corridor to include separate truck and automobile lanes. Star Solutions’ anticipated funding sources included federal and state funds and truck-only tolls. Estimates of the truck-only tolls are 37 cents per mile.
Before the work can begin, federal law requires the state to conduct an environmental impact study, a process that includes public hearings and letters.
FEDEX will buy less-than-truckload fleet Watkins Motor Lines, based in Lakeland, Fla., and certain affiliates for $780 million in cash. The deal is expected to close during the first quarter of fiscal 2007. FedEx said that Watkins will be renamed FedEx National LTL.
SCHNEIDER NATIONAL is selling its specialized division to Maverick USA, a flatbed transportation and logistics provider. The Schneider unit is the largest specialized glass carrier in North America, and also offers other specialized services. The acquisition is expected to close by July 31.
ALL VEHICLES at the Port of Vancouver, Wash., including trucks and heavy equipment, will run on biodiesel. The port will use B20, a blend of 20 percent vegetable oil and 80 percent diesel. Larry Paulson, executive director of the port, said the move is part of a plan to comply with a new state regulation that a minimum of 20 percent biodiesel be used in all state vehicles by 2009.
EDOUARD MICHELIN, one of the two managing partners of the tire company that bears his family name, died May 26 in a boating accident. He was 42 years old.
PAUL STALTER, an owner-operator leased to Schneider National, won $25,000 in the Midnight Trucking Radio Network’s “Guess What’s In It and Win” game, sponsored by Petro Stopping Centers.
CHUCK HARTER, who drives for R. Turner Trucking of Brownsville, Texas, won $10,000 and a trip for two to the Bahamas in Volvo’s “Discover the Treasure” sweepstakes. Nearly 19,000 truckers entered the contest, sponsored by Disney’s summer movie Pirates of the Caribbean: Dead Man’s Chest.
NEW IDLEAIRE locations include the Ontario East TravelCenters of America in Ontario, Calif.; the TA on Lovell Road in Knoxville, Tenn.; the Pilot in Laredo, Texas; and the TA in New Braunfels, Texas. These are the first of 210 locations to be added to the network through March 2007.
THE TRUCK TONNAGE INDEX increased 2 percent in April, the American Trucking Associations reported. This was the first increase since January and the strongest month-to-month gain since January 2005.
THE TRANSPORTATION SERVICES INDEX for freight fell 0.5 percent in April, said the U.S. Department of Transportation. The April 2006 index is 1.3 percent below the April 2005 level, the first April-to-April decline since 2000.
ALABAMA. Effective Oct. 1, trailer owners can buy a $60 permanent tag rather than an annual $20 tag. To compensate for the lost tax revenue, the state also is increasing truck registration fees by $35 for Class 8 and by $45 for Class 9.
COLORADO. Violating any out-of-service order now will cost a driver a mandatory fine of $100 to $1,000 and/or jail time of 10 days to 12 months. CDLs also will be suspended for terms ranging from one year to five years.
ILLINOIS. The Dan Ryan Expressway has been reduced to six lanes for a two-year, $600 million rehabilitation project.
MAINE. A laser detection system being installed this summer on I-395 in Bangor will warn tall trucks before they reach the I-95 overpass, which has a little more than 14 feet of clearance.
NEW YORK. The state sales tax on diesel now is limited to 8 cents whenever the price of diesel is $2 per gallon or more. The state’s Thruway travel plazas also will add pumps for biodiesel, ethanol and compressed natural gas.
OHIO. Only 76 of the state’s 88 counties have the portable scales required by law, according to the Buckeye State Sheriffs Association and the Ohio County Engineers Association.
TEXAS. An 89-mile stretch of I-20 and a 432-mile stretch of I-10 now have 80 mph daytime speed limits, the highest in the nation – but only for four-wheelers and light trucks. The limit for big rigs is still 70 mph by day, 65 mph by night.