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The Roemer Report On-Line, April 2003

HIGH DIESEL PRICES SHATTER RECORDS: When it comes to diesel prices, “things are bad and getting worse,” says Robert Molinaro of the Truckload Carriers Association. “We can absorb rising fuel costs over a short period, but they are continuing to go higher.” As of early March, the average U.S. price of diesel fuel hit an all-time high of $1.753 a gallon. That’s up 58 cents from a year ago. The spike in prices is especially hurtful to small carriers. Some large carriers can cope better due to surcharge programs that let them pass on increased costs to shippers. “We are hoping for the best,” said one industry analyst, “but most of the forces affecting the situation are from the outside and out of our control.” Should the United States attack Iraq, the Bush administration could release crude oil from the Strategic Petroleum Reserve to curb prices and ease supply concerns, at least for the short term. Trucking insiders say a mandatory fuel surcharge is the only way to recover fuel costs, but Congress previously failed to act on such legislation. One owner-operator says the current situation is the “most severe fuel crisis” he has seen in his 35 years in the industry. Ron Causey said that in less than two months his fuel expense rose to more than $1,000 a week, compared to his previous expense of $450 per week. “If prices were $1.20, we would be able to pay our bills and put a little bit of money into maintenance of our trucks,” said Causey. “It costs $150 for oil changes alone. When fuel is this high, we can’t even put any money into an emergency maintenance fund.”

UNDERINFLATED TIRES PROVE COSTLY: An as-of-yet-unreleased study, performed by the ATA’s Technology and Maintenance Council, found that truck fleet managers who invest in tire pressure monitors can recoup the cost of the technology in one or two years. According to the study, funded by the Federal Motor Carrier Safety Administration, the average truck fleet loses $750 per tractor-trailer combination each year due to underinflated tires. Tire pressure monitors and automatic inflation devices typically cost between $500 and $2,000 per truck. Demand for these systems has been low since there previously had been no concrete data on the costs of running flat tires. “Carriers rarely know how much they’re losing,” said researcher Robert M. Kreeb. “Who wants to spend $1,000 per unit to save money that’s hard to pinpoint?” The study found that a carrier with a chronic problem of underinflated tires required 12 percent more new tires and 10 percent more retreads, and it suffered a 0.6 percent fuel loss. Keeping tires inflated reduces the risk of roadside blowouts, which costs about $450 when factoring in emergency help, the cost of the tire, and lost productivity. “The conclusion,” said Kreeb, “is that if I were a fleet operator just average in the tire pressure maintenance department, then I’d be looking at these devices and thinking pretty seriously about them.”

TRUCK STOPS READY TO PLUG IN: Momentum is gaining to “electrify” truck stops and reduce idling time. Truck stop “electrification” refers to the technology that allows truck drivers to use electricity to run heaters, air conditioning, and appliances while their vehicles are parked, rather than idling their engines. Idling burns an estimated 0.8 to 2.0 gallons of fuel an hour and produces 190,000 tons of nitrogen oxides and 5,300 tons of particulate matter per year. Electrification has been discussed for years, but now there is renewed interest since the Environmental Protection Agency is funding research to study the technology and trying to convince states to use grant money to electrify certain truck stops. The system costs as much as $3,000 per truck, but manufacturers maintain that fleets can recoup the cost within a year, especially when diesel fuel prices are high. The president of a company that provides electrification says that “plugging in” also reduces maintenance expenses since less wear and tear occurs on trucks, and it also improves driver retention since non-idling trucks are quieter places to sleep. Still, the American Trucking Associations says truckers are intrigued by the technology, but remain concerned about reliability and cost. ATA’s William Gouse believes that electrification is sill 10 years away, but the “seeds are being planted now.”

DRIVER PHYSICAL EXAMS FLAWED? In November 2001, the Federal Motor Carrier Safety Administration (FMCSA) issued an updated medical form intended to be easier for drivers to fill out and to give more direction to medical personnel performing the exam. The new form requires the signature of both the driver and medical examiner, stating that “the information provided is complete and true.” The new form also requires the examiner to review all “yes” answers about the driver’s medical history. Despite these changes, some physicians and other critics say the exams too often fail to identify medically unqualified drivers. A New Jersey physician and attorney, who specializes in medical exam oversights, says his company reviews 20,000 driver physicals yearly and finds three-fourths of them to be incomplete. “Twenty percent of the time, the local examiner passes the driver, who we ultimately fail because the local physician didn’t know the DOT (requirements),” said Dr. Jeff Liva. “In 20 to 30 percent of the cases, we find false information or purposeful omission of information.” Liva says he knows of drivers with poor vision who have memorized the vision chart. Other drivers with histories of seizures, alcoholism, or sleep apnea, he says, search for examiners until they find one who will certify them. The FMCSA acknowledges that problems exist with the examination process. One way they hope to improve the situation is to work with health care providers to ensure that they are all familiar with the DOT requirements. Currently, medical examiners require no training, no certification, and no monitoring. Critics say if more guidelines were implemented for the examiners, fewer medically unqualified drivers would be on the road.

A FEW DRIVERS ENDANGER THE REST: A new study by the AAA Foundation cited unlicensed drivers and drunk drivers as the biggest safety threats on the nation’s highways. “A relatively small number of irresponsible and intoxicated individuals are endangering the rest of us on the roads,” said Susan Pikrallidas, AAA vice president of public affairs. “Unfortunately, these high-risk drivers are slipping through the cracks and escaping punishment.” According to the study, nearly two-thirds of drinking drivers in fatal crashes are seriously drunk, with a blood alcohol content higher than 0.15. Another 20 percent of fatal crashes involves at least one driver who did not have a valid license. This means that a relatively small percentage of drivers is causing a large percentage of the problem. The study found that courts often do not identify high-risk drunk drivers. “Unfortunately, the usual screening tests for alcoholism don’t seem to do a good job of identifying people who will drink and drive repeatedly,” said Peter Kissinger, President of the AAA Foundation for Traffic Safety. The study also found that (1) two-thirds of drivers with suspended licenses continue to drive, (2) more than half of all drivers arrested for drunk driving are repeat offenders, and (3) there’s less than a one-in-50 chance that an intoxicated driver will be arrested while driving drunk.

CURTAILING HARASSMENT: Too often, sexual harassment problems in the workplace come to light only after legal processes begin. The authors of The Manager’s Guide to Preventing a Hostile Work Environment say that harassment in the workplace would decrease if managers learned to step in earlier. Why managers? The authors say that managers usually observe employee relationships on a daily basis and, therefore, are best positioned to defuse problems. Managers must learn to look at harassment from an interpersonal perspective, rather than a legal perspective. Doing so allows managers to quickly determine when employee relationships are out of sync and might escalate into incidents of harassment. Because harassment suits are the most time-consuming and expensive litigations businesses face, avoiding these lawsuits is particularly beneficial to the bottom line. The authors say that sexual harassment is a sign of much deeper problems within an organization, specifically, unhealthy interpersonal relationships among workers. The authors give two primary examples of how hostile work environments develop and how managers can diffuse them. In one typical scenario, the employee simply doesn’t realize how his behavior, such as telling off-color jokes, offends his co-workers. In another case, the person who is harassing others disagrees with public rules of behavior. In both cases, a manager can step into the situation, correct it, and prevent it from becoming a potential lawsuit.

MAKING IT NEW: Every organization should be asking itself, “what’s new?” If the answer is, “not much,” its future may not hold much promise. Innovation is key to sustaining growth. Many companies rely on past innovations to carry them through, but the truly successful companies have come to view enterprise-wide innovation as part of their culture. Here are four ways to manage innovation: (1) Make it comprehensive. Avoid a haphazard approach to practicing innovation. While innovation usually takes place in areas such as marketing or research and development, organizations should broaden their approach. Innovation must become part of every service, process, strategy, and business model. (2) Continue the search. Businesses should put specific systems and practices in place that help promote a better understanding of social, demographic, and technological changes. Some companies use “think tanks,” which track trends and ask searching questions that can lead to innovation. (3) Unleash creativity. Today’s organizations must teach people to champion their ideas and create solutions. Or, as the founding chairman of Sony explains, “Everybody in the company must contribute more than manual labor. We insist that all of our employees contribute their minds.” (4) Improve your climate for innovation. Is your organization innovation friendly? Ask yourself questions such as, “What happens to the people who think outside the box?” “How often do we tell people it’s okay to take risks?” and “How do we treat someone who takes a risk and fails?”

Forget your opponents. Always play against par.—Sam Snead, professional golfer