Few Changes Ahead

ATA economist Bob Costello said large truckload carrier turnover averaged 121 percent during 2004 and 136 percent in the fourth quarter, both record levels.

Expect plenty of freight in the coming years but no relief from costly fuel or the driver shortage, according to a top trucking economist.

Freight has slacked a little, “but when we get back to the fall freight season, it’s going to be very tight again,” said Bob Costello, chief economist for the American Trucking Associations. He addressed about 400 industry executives in May at the Randall Trucking Spring Symposium in Tuscaloosa, Ala. The symposium is sponsored by Randall Publishing, parent company of eTrucker.com, Overdrive, CCJ and Truckers News magazines.

Reports that U.S. manufacturing is dying because production is moving out of the country are misleading because they look only at jobs, Costello said. Technology gains allowed U.S. manufacturers to increase production by 60 percent during the 1990s, yet the manufacturing work force dropped 1 percent.

“U.S. manufacturers are going to continue to produce more – more to be hauled in trucks,” he said. “What they’re not going to do is create jobs.”

The Gross Domestic Product should continue growing at about 3.3 percent each year, Costello said – a steady rate that should deter the Federal Reserve from frequent interest rate changes. Combine those trends with expectations of low inflation and reduced federal spending, and GDP growth should be good for the next five years, he said.

For-hire truck tonnage grew 5.7 percent in 2004, the biggest increase since 1998, and for-hire fleets are proving to be more efficient than private fleets, Costello said. “They haul 52 percent of the tonnage with 40 percent of the trucks,” Costello said. “There’s a lot of opportunity there.”

Less-than-truckload has seen the strongest increase in freight volumes, 16.4 percent, based on year-to-date figures through March versus a year ago. Reefer is next highest, followed by flatbed.

During the same period there have been “unprecedented increases in average revenue per mile,” Costello said. Truckload revenue per mile is up 13.3 percent. LTL revenue per ton is up 7.7 percent.

“Not only is the volume doing well, but the revenue’s there, too,” he said.

The industry appears to be adding enough trucks to keep up with demand, though other factors weigh against capacity, Costello said.

After the dramatic drop in Class 8 sales during the recession, followed by the minor pre-buy surge in advance of 2002 engines, sales have risen steadily, Costello said. However, “So much of what’s going on is replacement,” Costello said. Some carriers need to replace old pre-2002 trucks, or they want to have a young fleet “to hold off as long as possible in 2007” when the next emissions mandate takes effect.

Also working against capacity are the inability of startup carriers to quickly assume the roles played by larger carriers that failed during the recession, loss of productivity from hours-of-service changes, a tight lending market and the lack of drivers.

Large truckload carrier turnover averaged 121 percent during 2004 and 136 percent in the fourth quarter, both record levels. Even though much of the turnover is churn within the industry, the long-term prospect for the driver pool is not good, Costello said.

Fuel costs, too, will be a long-term problem. Increasing price volatility makes predictions difficult, but Costello said forecasts of lower prices from 2007 to 2010 are probably too optimistic.

Newt backs equipment incentives
Also speaking at the symposium was Newt Gingrich, former speaker of the U.S. House.

Gingrich told attendees, primarily fleet executives, that he thinks the IRS should allow all equipment purchases to be written off on taxes the first year, as an incentive to companies to keep buying. “Anything that discourages investment in new equipment and new technology is antithetical,” he said.

Gingrich strongly advocates new engine technology. “A hydrogen engine changes the whole economy. It wipes out all the problems of the Kyoto accords, because its only byproduct is water. It eliminates our dependence on the Middle East. And when it happens, it’ll happen in trucks first.”

To ensure a consistent energy supply, “the United States must invest in more alternate fuels,” rather than being economically dependent on “medieval kingdoms,” Gingrich said. “Venezuela, Saudi Arabia, Uzbekistan – these are not stable places.”

Gingrich added that while the long-term price of gasoline and diesel fuel will go up a bit, he doesn’t expect it to go “through the roof” unless a major oil producer such as Saudi Arabia or Venezuela collapses politically. Predictions of an imminent global oil shortage don’t worry him much, he said, as he heard similar predictions in the 1970s.
Max Heine and Andy Duncan

Study: Rush Hour Delays Tripled in Past Two Decades
A study of U.S. urban areas indicates the annual delay from rush hour traffic has nearly tripled since 1982.

The cost of delays is valued at $72.65 per truck hour, $13.75 per person hour.

The Texas Transportation Institute’s 2005 Urban Mobility Report measures traffic congestion trends from 1982 to 2003. The annual delay per rush hour traveler increased from 16 hours to 47 hours from 1982 to 2003.

The annual price tag of congestion in the United States is $1.7 billion, the institute said.

Congestion must be addressed systematically by building more roads and public transportation systems and operating them efficiently, said Tim Lomax, TTI research engineer. Variable pricing at existing toll facilities and additional truck-only lanes are necessary, too, Lomax said.

“There is no single solution that can reverse the growth in congestion,” Lomax said.
The number of urban areas with more than 20 hours of annual delays per rush hour traveler grew from 5 in 1982 to 51 in 2003.

The Bush administration released a statement from Mary Peters, head of the Federal Highway Administration, which said the report “offers more proof that surface transportation reauthorization is long overdue.” A six-year transportation bill has been pending in Congress for years, necessitating a series of funding extensions.

Bush’s proposed 2006 budget eliminates all funding for the most visible federal public-transit program, Amtrak.

More information on the TTI study is at this site.
Jill Dunn

EPA Pushes Back Low-sulfur Diesel Deadline
Retailers will have six more weeks to start selling ultra-low-sulfur diesel fuel in fall 2006, the U.S. Environmental Protection Agency announced.

The retail compliance date will be pushed back from Sept. 1, 2006, to Oct. 15, 2006, to allow terminals and retail outlets more time to comply, the EPA said.

The mandated fuel contains much less polluting sulfur than normal diesel fuel, 15 parts per million rather than the current standard of 500 ppm.

“Refiners have been gradually lowering the sulfur content,” said EPA spokesman John Millett. “I would anticipate levels well below 100 ppm a year out from the standard.”

The six weeks between Sept. 1 and Oct. 15 also will serve as a transition period, when diesel fuel with a 22-ppm sulfur level can be marketed as ultra low sulfur.

The transition period reflects a concern that the new fuel, when traveling through existing pipelines, might be “contaminated” by old sulfur residues so that it comes out above 15 ppm.

The transition period gives the trucking industry “45 days and 7 ppm of flexibility” to address any problems in adjusting to the change, Millett said.

The EPA also announced it would establish a testing program, in cooperation with the fuel industry, to determine whether its current 2-ppm testing tolerance is sufficient. This will allow the EPA to gauge the accuracy of its monitoring tools, Millett said. “We will be publishing the results in the rule before the end of this year.”

The EPA’s announcements on the sulfur content do not affect the cleaner-burning diesel engines mandated for sale in 2007.

This sulfur content reduction will lower smog-causing nitrogen oxide emissions by 2.6 million tons a year and reduce soot or particulate matter by 110,000 tons a year, the EPA said.

The EPA further calculates that these reductions annually will prevent 8,300 premature deaths, 5,500 cases of chronic bronchitis and 17,600 cases of acute bronchitis in children, as well as 1.4 million lost work days, 7,100 hospital visits and 2,400 emergency room visits for asthma.

For more information on the EPA’s diesel rule, visit this site.
Lance Orr

Truck Repos Increase in First Quarter
Nassau Asset Management reported a 45 percent increase in the volume of truck repossessions when comparing the first quarter of 2005 to the same quarter of 2004, but cautioned against declaring a trend.

This was the first quarter since 2002 that Nassau saw a significant increase in repossessions and liquidations, said Edward Castagna, senior executive vice president of the New York asset management company.

“It’s too early to call this a trend, but Q1 is the first time in a long time that repossession and liquidation activity increased for most sectors,” Castagna said. “We are monitoring the situation to see if our statistics reflect deeper economic issues.”

Other types of equipment saw a much steeper increase in repossessions. For example, repossession of medical devices increased 258 percent, personal computers 79 percent.

On the other hand, repossessions of construction equipment increased only 13 percent, while repossessions of machine tools actually decreased 44 percent.

Higher fuel prices, higher insurance premiums and an overall economic slowdown may have contributed to the spike in truck repossessions, Nassau said.

Also, an increase in lending by Nassau’s clients may have resulted, inevitably, in more leases and loans subject to default this year.
Jill Dunn

Trucking Groups Criticize Hazmat Background Checks
The Transportation Security Administration should perform only name-based driver checks until a coordinated nationwide security credential program is in place, The American Trucking Associations told a U.S. House subcommittee.

A unified check system database would save time and money and not force carriers to go through multiple state and local check programs, said Dan England, CEO of C.R. England, based in Salt Lake City, in his testimony May 11 on ATA’s behalf.

Hazmat background checks are required for hauling everything from guns and toxic waste to paint and nail polish, England noted. Truckers are subject to additional federal background checks at airports, seaports and the Canadian and Mexican borders, as well as Pentagon checks if hauling arms or ammunition for the Department of Defense, England said. Now states and local governments are beginning to layer on their own background check requirements, England said.

Since Jan. 31, the trucking industry has borne the costs of fingerprint-based background checks federally mandated for the relatively small number of new hazmat applicants, England said. On May 31, the fingerprint-based checks became mandatory for the estimated 2.7 million drivers seeking hazmat renewals as well.

The same day as England’s testimony, the House subcommittee on highways, transit and pipelines also heard criticism of the background checks from the Teamsters union. The increased costs are unfair to drivers, and the new qualifications will make it difficult, if not impossible, to qualify enough drivers to haul America’s hazmat loads, said Teamsters official Scott Madar.

U.S. Rep. James Oberstar, D-Wis., seemed to agree with both ATA and the Teamsters when he aired his own complaints. “In all my years working with transportation issues, I have never seen such a lack of communication and coordination between agencies as I have with this program,” Oberstar said.
Lance Orr

Research Suggests Truckers at Risk for Hearing Loss
New research indicates chronic exposure to noise and workplace carbon monoxide induces hearing loss, and truckers are among those most at risk.

A connection between carbon monoxide exposure and hearing loss had been established in animal studies but not in humans.

The conclusions were based on a study of nearly 9,000 workers exposed to both occupational noise and carbon monoxide. Other than truckers, the workers most at risk were welders, firefighters, garage mechanics, forklift operators and miners.

The University of Montreal study, using National Institute of Occupational Safety and Health data, compared the hearing of workers exposed to noise levels lower than 90 decibels for 8 hours to the hearing of workers exposed to noise above 90 decibels. In both groups, a sample of workers was also exposed to carbon monoxide.

The study found employees exposed to carbon monoxide and to noise levels above 90 decibels displayed significantly poorer hearing thresholds at high frequencies. Several hypotheses might explain this effect. One is that reducing blood oxygen levels accelerates the deterioration of inner ear sensory cells.
Jill Dunn

Mobil Delvac to Give Away Oil at GATS
At the 2005 Great American Truck Show, ExxonMobil will celebrate the 80th anniversary of Mobil Delvac and the Mobil Delvac family of heavy-duty engine oils by conducting the Mobil Delvac Engine Oil Giveaway Contest on Friday, Aug. 26. The contest will give away $80 worth of Mobil Delvac every 80 minutes for one day of the show. Entries for the contest will be taken at the ExxonMobil booth.

In addition to the giveaway contest, ExxonMobil is sponsoring a special concert by Grammy-nominated country singer Terri Clark. The concert will be at the Dallas Convention Center on Friday, Aug. 26, 2005 at 6:30 p.m.
Christine Green

Tonnage Drops

Trucking activity dropped in April, its third monthly decline, according to an index tracked by the American Trucking Associations. ATA’s advanced, seasonally adjusted, for-hire Truck Tonnage Index fell 0.9 percent in April. The TTI dropped to 114.3, marking the third consecutive monthly reduction.

Teamsters Monitor UPS-Overnite Deal
The Teamsters union will closely monitor the purchase of Overnite by UPS to ensure no members’ jobs are hurt, union President James Hoffa said. The $1.25 billion deal is expected to close in the third quarter of 2005. UPS is the single largest employer in the Teamsters union, but Overnite is non-union and was the target of an unsuccessful three-year Teamsters strike that ended in October 2002.

Port Permits
Washington’s Port of Tacoma truckers should be relieved of the dilemma of overweight transload cargo with the passage of legislation completing the Heavy Haul Industrial Corridor, which allows the state Transportation Department to issue special permits for what is generally less than a 2-mile trip. The new law adds State Route 509 to the corridor, which connects several segments of City of Tacoma roadways.

Truck Photos
Users of eTrucker.com now can post photographs and information about their trucks on the new Truck Gallery by simply following directions on the Truck Gallery section. Photos posted on Truck Gallery will be considered for inclusion in the Reader Rigs section of Overdrive magazine.

International Promotes Highway Watch
International Truck and Engine will promote the Highway Watch security program throughout its dealer network and is encouraging its dealer and company employees to get the training. Administered by the American Trucking Associations and funded by the U.S. Department of Homeland Security, Highway Watch trains truckers and other transportation workers to watch for suspicious activity and keep large vehicles or hazardous cargoes out of terrorists’ hands.

Cat Shows Bush ACERT
Caterpillar Inc. showed President George W. Bush the clean diesel technology that it will use to meet the stringent 2007 U.S. Environmental Protection Agency emissions standards for on-highway truck and bus engines. Utilizing a Cat C13 engine with ACERT technology, the company displayed a 2007 emissions compliant truck at an event in West Point, Va.

Peterbilt E-mails Maintenance Reminders
Peterbilt Motors Company announced that users of its TruckCare Maintenance Manager can now receive e-mail reminders when their vehicles are due for routine service.The new automated feature sends customers a reminder when a vehicle is within 1,000 miles of its factory-recommended lube, oil and filter service. Customers can then call (800) 4-PETERBILT to schedule the service with a Peterbilt dealership when and where it is most convenient for them.

Showcase your workhorse
Add a photo of your rig to our Reader Rigs collection to share it with your peers and the world. Tell us the story behind the truck and your business to help build its story.
Submit Your Rig
Reader Rig Submission