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The Roemer Report On-Line, April 2002

BUSH INCREASES BUDGET FOR TRUCK SAFETY: The Bush admin-istration's budget plan for fiscal 2003 proposes to spend $8.8 billion on transportation security-that's about 15 percent of the Department of Transportation's total proposed budget. Of the $8.8 billion, $4.8 billion would go to the newly created Transportation Security Administration in the aviation sector, $2.9 billion would be used for maritime security, and $1.1 billion for other transportation modes, including trucking. Most of the $1.1 billion would be used to prevent terrorists from entering the country at Canadian and Mexican checkpoints. While the Bush administration has not spelled out precisely how the $8.8 billion would be spent, at least part of it is expected to go toward developing a worker identification system and database to identify how people and cargo move across the transportation system and to better identify contents at the points of origin. The budget plan also earmarks $371 million for the Federal Motor Carrier Safety Administration, up from this year's $345 million budget. That money would go toward safety enforcement along the Mexican border and toward building new inspection facilities along the border. Not all areas of transportation can expect increases. President Bush is proposing to cut $9.1 billion from highway spending, a 29 percent drop in fiscal 2002 levels. Officials say the drop in funding is due largely to the slumping economy, but in a joint statement, a group of republicans and democrats say the cut could backfire, resulting in "hundreds of thousands of Americans being thrown out of work."

ECONOMY LOOKING UP: The trucking industry's two-year slump may be ready to reverse, say some economists. Donald Broughton, an analyst with A.G. Edwards & Sons, says fourth quarter economic figures were updated, and showed economic growth, instead of a decline as initially reported. Other signs of a turnaround for trucking and the economy as a whole are low interest rates and diesel prices that are lower this year than they were the same time last year. When the costs drop for making goods and for transporting them (because of lower fuel prices), consumers enjoy lower prices on goods and buy more. The cycle kicks in, creating more demand for goods to be manufactured and shipped. Still, many in the trucking industry have prepared themselves for bumps in the economic road. An increased number of motor carriers say they are cutting driver pay and benefits, thereby reversing a recent trend. Overall, 16 percent of fleets polled by the National Survey of Driver Wages say they made changes to their pay packages, for an average decrease of 0.3 percent. The majority of those changes involved increasing the co-pays drivers must pay for visits to the doctor.

HOW SAFE ARE YOU? Having a culture of safety is a lot easier said than done. Motor carriers need to have solid programs and policies in place that back up their words. Here are some "musts" that one expert believes are crucial for a true culture of safety: (1) Distribute employee handbooks. Effective handbooks must spell out exactly what is expected of employees and what they can and cannot do. Give each new hire a handbook, but also ensure they read it and understand it. (2) Hire safe drivers. It's not easy hiring experienced and safe drivers, but having that as a goal, rather than quickly hiring questionable drivers, will pay off in fewer accidents, fewer violations, and lower turnover. Create and follow a set of hiring guidelines, if you have not already done so. (3) Provide thorough training. Good trucking companies should have thorough training programs for new drivers, but they also should address experienced drivers' training needs. (4) Hire a safety director. Every motor carrier should have a person in charge of the company's safety program. This person studies and reviews federal highway safety regulations and documents safety violations. (5) Discipline drivers. The employee handbook should outline the policy for disciplinary action, and management should follow it. The purpose is not to punish, but to help drivers improve their behavior so problems do not recur. (6) Provide incentives. Employees thrive when they know the company is rooting for them. Companies should offer driver bonuses or other perks based on hours or miles worked without an accident, or on registering no citations or violations on a driver's MVR or hours-of-service record.

BORDER QUESTIONS PERSIST: Under the terms of NAFTA, the U.S. border is scheduled to open to Mexican trucks in June. But safety questions and other concerns persist. A new report by the General Accounting Office (GAO) warns that federal and state governments are not prepared to handle the impending safety challenges. The GAO concluded that the United States lacks the facilities and personnel to inspect trucks entering the country. The report also notes that while the Mexican government is working to improve its truck safety rules, it's too early to assess their effectiveness. The GAO recommends that DOT implement a coordinated truck safety inspection system at the border; DOT has not commented on the report. Meanwhile, another big concern is the wage issue. Some industry analysts predict the biggest winners of the border opening will be the large, international shippers who will drive down trucking rates because Mexican drivers are willing to work for much less than their U.S. counterparts. According to the Owner Operator Independent Drivers Association, Mexican truckers earn an average of 13 cents a mile. Comparatively, U.S. nonunion truckload drivers make 31 to 40 cents per mile, and union drivers-mostly in the LTL sector-earn about 50 cents per mile. "Truck driving in Mexico is looked upon as a premier job," says Don Jauquet of Schneider National, who predicts that U.S. southern border states eventually will be dominated by Mexican drivers. But to operate in this country, Mexican carriers must pass a safety audit and compliance review performed by Federal Motor Carrier Safety Administration personnel. Mexican carriers also will be monitored closely by U.S. officials for at least 18 months. As of October, however, fewer than 200 registered Mexican motor carriers out of approximately 83,000 had applied to DOT to operate their trucks in the United States.

AERODYNAMIC TRAILERS SAVE FUEL: Thirty years ago, a truck manufacturer unsuccessfully tried to create an aerodynamic trailer that would increase fuel efficiency. The trailer had a "20-foot extension that tapered to a point, much like the tail on a duck," recalls one engineer. The trailer did eliminate much of the drag, but it was not practical for actual operation. Today, Skip Yeakel, an experienced trucking engineer, has come up with another aerodynamic truck trailer that would be operational too. "If this technology works like it has in small-scale wind tunnel testing, it will border on revolutionary change for this industry," he says. The technology uses aerodynamic surfaces and a "blower" that creates positive air pressure, instead of a vacuum, at the back of the trailer. The flat rear of today's trailers creates a natural vacuum when the truck moves; the vacuum causes a drag, thereby increasing fuel consumption. In addition to lowering fuel costs, the new trailers may also boost safety. "By blowing air across the back of the trailer, we may expect to actually improve the handling of these trailers on the road," says Yeakel. This summer, an over-the-road evaluation of the technology will be performed, with special attention paid to fuel efficiency and safety issues.

RISING INSURANCE RATES NEED LONG-TERM SOLUTION: An insurance task force created to determine how motor carriers might deal with rapidly rising insurance rates concluded there is no quick fix and recommended a long-term campaign, which includes reforming state tort laws. The task force, formed by the American Trucking Associations (ATA), reported that trucking "company executives and risk managers need to make top-level commitments to ensuring that they have a sound relationship with their insurers based on trust and more open sharing of comprehensive and accurate data." Members of the task force said the trucking industry should be prepared for a long and costly process that could take years to see results. Much of the problem stems from an increased cost per accident in recent years, despite the substantial decline in fatal crashes involving trucks. The higher cost per accident is mostly due to larger jury awards. ATA therefore plans to target states with laws that make it easier for lawyers to collect large jury awards in cases involving truck accidents. ATA says its legislative goals include eliminating punitive and non-economic damages, capping attorney's fees, and giving federal courts more influence over class-action lawsuits. In addition to tort reform, ATA will undertake a public awareness campaign, which will include promoting safety through programs like Share the Road and America's Road Team. The task force also recommends pushing for a 65 mph speed limit for trucks, since such a policy would send a positive message to the driving public.

ENHANCED LEADERSHIP: Some leaders today focus solely on leading and acting. As a result, they end up spending too much time doing what others in the organization can successfully accomplish. Today's leaders must assume more responsibility for actual leadership and less responsibility for performing others' tasks. Here's a look at how they can successfully accomplish this: (1) Get a bird's-eye view. Leaders should be able to review every element of an organization from afar. While they must be involved in some daily activities, they should be comfortable distancing themselves from everyday tasks. (2) Help employees see the big picture. Leaders should convey, in simple terms, the company's overall objectives to employees. Employees are often adept at singular responsibilities, but if they see how their tasks affect the company's goals, their performance is bound to improve. (3) Examine values. When a major change is about to occur, leaders must help employees understand the reason behind the proposed changes. Because workers often have different value systems, it is the leader's responsibility to help everyone adopt to new ways of thinking and working. (4) Encourage communication. Employees need the freedom to express their points of view, particularly when a leader introduces a new and conflicting position.

Make big decisions in the calm.
Dwight D. Eisenhower, 34th U.S. President