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Transportation News Bulletins - LTL and TL

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Trucking’s Driver Dilemma
Monday, 01 March 2010 00:00
Recovery, regulations could tighten driver supply quickly, pushing up driver pay and freight rates

After last year’s massive layoffs, tens of thousands of truck drivers are unemployed, and more trucking bankruptcies are expected as the nascent recovery takes root.

Some trucking executives, however, say a driver shortage may be on the horizon.

Tougher federal safety regulations, they believe, may tighten the supply of drivers as early as this year, just as growing freight demand puts their business back on its wheels. That could constrict capacity more quickly than shippers anticipate, leading to rapid rate inflation.

Motor carriers struggling to increase their profit margins might welcome that, but much of the revenue from the rate hikes would have to go to drivers in the form of higher pay and greater benefits or through money spent by carriers to recruit, train and keep them.

“The driver shortage is probably going to come roaring back at us in a way we haven’t seen,” said Patrick E. Quinn, cochairman of U.S. Xpress Enterprises in Chattanooga, Tenn. Quinn was one of several carrier executives and consultants who expressed concern about the future supply of drivers in interviews with The Journal of Commerce.

A driver shortage would affect freight arriving at West Coast ports as much as shipments sitting on a factory dock in Tennessee, or at an intermodal railyard in Chicago. Truck drivers are a common denominator in transportation—at some point, they touch every piece of freight moving through North American distribution networks.

It’s not time to panic, but it is time to prepare, trucking officials say. There is nothing close to a driver shortage today. “We’ve not had any problems seating trucks,” said Herb Schmidt, president of Con-way Truckload in Joplin, Mo. “The supply of drivers is adequate.”

That could change quickly if the economy heats up in the second half of the year. “As the economy picks up, all carriers are going to be faced with a challenge recruiting high-caliber drivers,” said Brad Brown, a spokesman for Cookeville, Tenn.-based Averitt Express. “We’re already feeling a shortage in some markets.”

Demand for drivers, especially regional drivers, is picking up. Schneider National raised eyebrows last month when it said it would hire 2,100 drivers this year for its fast-growing regional service. Smaller carriers are hiring as well.

“We have about 220 drivers, and I have about 20 applications on my desk,” said Ed Ferguson, field operations manager at Watsontown Trucking, a truckload carrier in Milton, Pa. “We just had an ad in the paper, and we have a lot of people calling.”

Trucking companies will recover faster than the general economy, said Duff Swain, president of Trincon Group, a Columbus, Ohio-based consulting firm. “We’ve already seen a 15 percent reduction in capacity,” he said. “It’s not going to take that much business” for demand to match and overshoot supply, he said.

Many carriers are taking steps now to ensure they have the drivers needed to provide capacity to their customers in the second half of 2010 and beyond—reviewing driver management programs, pay and benefits and evaluating the potential impact of changing federal safety rules, particularly the Federal Motor Carrier Safety Administration’s Comprehensive Safety Analysis 2010 and other rules focused on driver standards.

They’re rethinking freight networks, finding ways to fit drivers into lanes where they can get more miles and money and get home more often. And they’re being aided by a shift toward regional distribution that’s putting more long-haul freight on rail.

“We’re being very selective hiring drivers,” said Robert E. Synowicki, executive vice president and chief information officer at Omaha-based Werner Enterprises. “We’re hiring drivers who live in areas that more closely match where our freight flows today.”

Carriers also are sending out the message that higher driver costs and other expenses will make rate increases necessary, signaling tougher shipper-carrier talks.

“It’s going to turn into more of a seller’s market for the carrier in 2011,” Swain said. “Carriers that have capacity and drivers and have good relationships with their customers are going to do very well” in the recovery, he said.

Those that don’t, he said, won’t be around that long. “CSA 2010 is going to wipe out another level of carriers that should not be in business because they’re not controlling the quality of their drivers,” Swain said.

A shakeout needn’t be a bad thing, Con-way’s Schmidt said. “I don’t fear it, because I’ve been through that rodeo several times,” he said, pointing to the introduction of the commercial driver’s license, drug and alcohol testing and other safety rules in recent years. Those rules, he said, “leveled the playing field” for drivers and motor carriers. “I do think that professional drivers should be held to a higher standard than the average motorist,” Schmidt said. “That’s why you call them professional drivers.”

That doesn’t mean there won’t be a driver shortage. “From a short-term perspective, I see a possible hiccup,” Schmidt said. “However, these things over time tend to correct themselves. The market dictates that rates will go up, carriers can afford to pay more, and you can attract people out of other industries, and it rights itself.”

Journal of Commerce, 3/1/2010

New Trailer Orders Up 10%, Led by Spike in Dry Vans
Monday, 01 March 2010 00:00

Orders for new trailers rose 10% in January, compared with 2009, ACT Research Co. LLC reported last week, but the increase may not signal the start of a prolonged recovery, an ACT analyst said.

It was the third year-over-year increase in orders in as many months. Compared with the anemic demand in the 2008 periods, orders jumped 74% in November and surged 140% in December, ACT said.

However, weakness in certain segments of the trailer market suggest that the industry has not yet begun to recover from the disastrous sales tally for 2009, which was the worst in more than three decades, said Kenny Vieth, ACT partner and senior analyst in Columbus, Ind.

“What we would expect would be a lifting of all boats,” Vieth said. “We would be seeing kind of a general improvement across the industry.”

Instead, he said, stronger orders for certain types of trailers made up for weakness in other segments. Tanker trailers and reefers, for example, showed signs of strength.

Conversely, “we had the worst flatbed trailer order month since we started collecting flatbed trailer data back in 1990,” Vieth said. “You see some spots of good news, but you’re not seeing it consistently.

“The trailer market has had a particularly tough go of it, even worse than the Class 8 market,” he said.

Vieth said he expects that the trailer market will begin to firm up in the second half of the year and turn around in earnest sometime next year.

While order data do not yet herald an all-around recovery for the trailer market, the top executive at Wabash National Corp., the only publicly traded trailer manufacturer, said that “the worst is now behind us.”

Richard Giromini, Wabash’s president and chief executive officer, said in the company’s latest earnings report that he was “optimistic about the prospects for our industry.”

The value of unfilled orders at Wabash, Lafayette, Ind., was $137 million at the end of 2009. That total was a modest improvement over $110 million a year ago and up from $96 million at the end of the third quarter of 2009, according to the firm’s latest financial statement.

Meanwhile, trailer registrations last year fell to 67,200, a 52.6% drop from 2008, according to R.L. Polk & Co., Southfield, Mich.

Registrations of dry vans, which represent the largest segment of the U.S. trailer market, fell 54% to 38,650, according to Polk.

Flatbed sales appeared to take the biggest hit, as registrations plunged 69.3% year-over-year to 3,100, Polk data show.

A January report from ACT foreshadowed the precipitous decline in registrations: It showed trailer shipments from factories fell 44% in 2009 to 80,415 units—a 34-year low.

In the van segment, which includes refrigerated trailers and dry vans, Utility Trailer Manufacturing Co., City of Industry, Calif., was the top brand, as measured by registrations, Polk data show.

Utility’s registrations bested larger rivals Great Dane Trailers Inc., Savannah, Ga., and Wabash National Corp., Lafayette, Ind., in both the van and flatbed categories, according to Polk.

“The fact that the refrigerated segment was stronger than the other two segments we’re in helped us,” said Craig Bennett, Utility’s senior vice president of sales and marketing.

Utility builds “over half the reefer trailers in the country,” Bennett said. “We built a little more than that this year.” Overall, the company increased its market share 5% in 2009, Bennett told Transport Topics.

Bennett predicted a modest improvement for trailer sales in 2010—10% to 20% overall—with “a lot of that” occurring in the second half of the year.

“I don’t think there’s going to be any huge rebound this year,” Bennett said.

Transport Topics, 3/1/2010

Analyst says trucking industry firming up, raising prices
Friday, 26 February 2010 00:00

NEW YORK—A KeyBanc analyst said Thursday demand in the trucking industry is improving as downsizing and the failures of smaller companies have paved the way for existing trucks to carry more freight.

KeyBanc Capital Markets Todd C. Fowler said earnings will possibly grow because of the current shift. Fowler added that demand now seems to be improving as well.

That's good news for the trucking industry and the overall economy, because when the trucking industry shows improving demand, it means more manufacturers are making goods and more retailers are ordering them. Trucks haul everything from small consumer goods like toys and handbags to the biggest industrial products like construction equipment.

Fowler said industry volumes are improving this quarter beyond his initial expectations, as more retailers stock store shelves on encouragement from a better-than-expected holiday season.

Aside from retail restocking, Fowler said truckers are seeing strength in shipments of basic materials like paper, chemicals and plastic as well as industrial goods. Housing and automotive segments still remain generally weak, he said.

Adding to the spur in demand are reports of fleet downsizing, which is good news for remaining truckers because it reduces competition for freight.

Fowler said some of his contacts are reporting that truck supply could come into balance with demand as early as next quarter. Trucking demand hasn't outpaced supply in over three years, when the first signs of a recession surfaced., 2/26/2010

FMCSA responds to safety panel criticism of CSA 2010 delays
Friday, 26 February 2010 00:00

WASHINGTON—Even as truckers express more than a little anxiety about this summer’s rollout of CSA 2010, that sweeping reform of the federal truck safety program can’t come soon enough for the panel charged with setting transportation safety priorities.

The National Transportation Safety Board, in its annual “Most Wanted List” meeting last week, downgraded “Improve the Safety of Motor Carrier Operations” to “unacceptable” status, faulting the Federal Motor Carrier Safety Administration for taking too long to fully implement its Comprehensive Safety Analysis 2010 initiative. The new program is designed to more thoroughly evaluate carriers—both drivers and vehicles—in order to detect and correct safety issues before they lead to prevent accidents.

Even though FMCSA has made “potentially viable plans,” the NTSB has run out of patience.

“When I came to the board in 2004, CSA 2010 was going to be the solution to everything,” said NTSB Chairman Deborah Hersman. “I really didn’t think I was going to be here in 2010, but I’m here and CSA 2010 is not.”

And while the new program is scheduled to go into effect later this year, rulemaking hurdles remain before the CSA 2010 regime can be used to formally take an unfit carrier off the road—a priority for the safety board.

“It’s a chicken-and-egg thing,” Hersman said. “They’ve been telling us everything’s going to be fixed, but we’re still waiting. We’re finding accident after accident, and things haven’t changed. I don’t want to be here in a year, and we’re saying ‘now it’s going to be 2015.’”

In response, FMCSA says the agency “is committed to moving as quickly as possible to roll out a robust and effective CSA 2010 safety measurement system later this year,” according to an e-mail reply to questions from The Trucker. “Our goal is to implement a new and improved safety enforcement program that ensures only the safest carriers and drivers can share our roadways.”

“Require Electronic Onboard Data Recorders” also remains on the Most Wanted List, and had previously been elevated to red, for “unacceptable response” from FMCSA.

The EOBR requirement stems from 2007 tractor-trailer rear end collision. NTSB views the recorders as an Hours of Service enforcement tool, as well as an aid in accident reconstruction.

And while the FMCSA has developed a proposed EOBR rule, only carriers with a high accident rate or a history of non-compliance would be required to install them, and only for a two-year period. The result, NTSB contends, is that the rule as proposed would effect only 930 of the 700,000 registered carriers.

The safety board wants the rule to apply to all carriers. And even though the FMCSA has said it is considering extending the requirement, intentions clearly are not good enough for NTSB.

Hersman also noted that the proposed EOBR rule doesn’t take into consideration the way carriers will be evaluated under CSA 2010.

“I think the whole thing is a mess. It doesn’t seem like it’s worth the trouble, it’s going to reach so few operators,” Hersman said. “It needs to be across the board. This is not punitive. It should level the playing field. If you have carriers who are complying with HOS, they’ll be rewarded. If you have carriers who are violating, they’re going to be brought into compliance. That's the purpose of EOBRs.”

On the other hand, Hersman added, if FMCSA can incorporate the universal requirement and get through the rulemaking process, the board would welcome the opportunity to remove EOBRs from their list next year.

Indeed, an FMCSA plan to broaden the EOBR requirement is already under way. The agency noted it has posted a schedule for the development of a new proposed rulemaking, calling for a March 17 release from the Office of Management and Budget, and for publication for comment on March 29.

The scope of the EOBR mandate will be made public with release of the NPRM, and the dates are subject to change.

FMCSA did get credit for its efforts to respond to the Most Wanted item, “Prevent Medically Unqualified Drivers from Operating Commercial Vehicles.”

Based on its investigations of accidents involving drivers with serious medical conditions, the NTSB has determined that serious flaws exist in the medical certification process for commercial vehicle drivers. Two of the eight specific recommendations in this area—dealing with FMCSA developing a comprehensive medical oversight program—were closed by the board, and the designation was upgraded from red to yellow, meaning “acceptable response, progressing slowly.”

“I think we should recognize the progress,” Hersman said, noting, however, that a number of other steps remain before the recommendation can be removed from the list.

The board also credited the Department of Transportation for recently initiating a texting ban for commercial vehicle drivers. The FMCSA added that a formal regulation is in the works.

“In January, the FMCSA took a huge step toward addressing the dangers of distracted driving by announcing that existing federal regulations may be enforced against most interstate commercial truck and bus drivers who text while driving,” the FMCSA statement said. “The existing regulatory guidance is not a substitute for a formal notice-and-comment texting ban rulemaking. This spring, the FMCSA will issue an NPRM that addresses a ban on texting while driving by most interstate commercial motor vehicle drivers.”

The proposed regulation would also restrict the use of cell phones while operating a commercial vehicle, according to the rule abstract—which also notes rulemaking would address the NTSB Most Wanted List., 2/26/2010

Budget chairman: Tolling and mileage tax still on table
Thursday, 25 February 2010 00:00

The chairman of the Senate Budget Committee says Congress should not rule out a mileage tax, tolling or public-private partnerships as funding options for transportation no matter how unpopular they may seem.

Chairman Kent Conrad, D-ND, raised the point during a hearing Wednesday, Feb. 24, on the subject of President Obama’s recent budget request for 2010-11. Conrad highlighted some of the options.

“And these include increasing the gas (fuel) tax; charging for each mile traveled; adding more tolls; continuing general fund transfers, which I strongly oppose; and identifying other funding sources,” Conrad said.

“Now let’s be frank, none of these are popular options. But we have to find a way to close this funding gap. We are going to have to start making tough choices.”

Conrad said it is critical that Congress pass a long-term surface transportation authorization bill as soon as possible.

U.S. Transportation Secretary Ray LaHood, who testified at the hearing, said the administration is not keen on raising fuel taxes. But it is keen on establishing a national infrastructure bank and capitalizing on the momentum of the American Recovery and Reinvestment Act.

“The president has said he doesn’t want to raise gas taxes. And in a very bad economy, it’s not the thing that we should be doing to people who are out of work and who can ill afford to buy a gallon of gasoline,” LaHood told the committee.

LaHood highlighted the $4 billion proposal for a national infrastructure bank to fund projects with national significance, and addressed the issue of tolling and public-private partnerships.

“Tolling is a way to pay for additional capacity where states want to do that, and we need to look at that,” he said. “You can raise a lot of money through the use of tolls. And we’ve talked about the idea of publicprivate partnerships, where roads are going to be built. There can be private dollars utilized.”

Mike Joyce, director of legislative affairs for the Owner-Operator Independent Drivers Association, said OOIDA is ready for a good debate on funding.

“They’re saying that everything is on the table right now as far as trying to fund transportation programs,” Joyce told Land Line Now on Sirius XM.

OOIDA leadership says now is the time to narrow down the list and decide what stays on the table and what comes off.

OOIDA is against the tolling of existing capacity, but not necessarily against tolls being used on new highways or lanes. Joyce said OOIDA remains strongly opposed to the sale or long-term lease of infrastructure to the private sector.

“PPPs are still out there, and we’re going to fight those and have active debates on them,” he said.

President Obama’s budget request will continue to be the subject of congressional hearings and debate. It calls for $77.6 billion for the U.S. Department of Transportation, an increase of $1.6 billion over 2010 levels.

It contains $500 million in seed money for a new Office of Livable Communities, which has highway groups, including OOIDA and the American Highway Users Alliance, questioning where the money is going to be spent.

The Association and the Alliance say highway money should stay with highways and not be diverted to non-highway uses.

Land Line Magazine, 2/25/2010

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