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Roemer Report – February 2008

TRADE IS UP BETWEEN BORDERS: Surface trade between the United States and its NAFTA partners reached record levels last year, according to the U.S. Bureau of Transportation Statistics. In October 2007, trade between the United States and its border countries, Canada and Mexico, was 11.1 percent higher than it was the previous October. U.S.-Mexico surface trade amounted to $26.6 billion in October, up 6 percent from October 2006, and U.S.-Canada surface trade totaled $47.7 billion for the month, up 14.1 percent from the previous October. In terms of economic trade, the U.S.-Canada border is the busiest in the world, according to Traffic World. Trucking companies alone haul more than $20 billion in goods across the border each month. But some Canadian businesses and government officials say the increased congestion is wreaking economic havoc. They claim that higher fees, tougher inspection procedures and a lack of adequate infrastructure and processing facilities contribute to congestion, which in turn raises costs for carriers and shippers. U.S. lawmakers, however, are more focused on border security. The Government Accountability Office recently found major holes in security, including U.S. roads near the border that weren’t monitored and several ports of entry that were unmanned at night. “Some people believe we can have either economic security or physical security, but I think they are two sides to the same coin,” said Perrin Beatty, head of the Canadian Chamber of Commerce. “Our goal should be to enhance both our economic and physical security. And we need to address this with urgency.”

TRAINING RULES EXPECTED TO TIGHTEN: Student drivers working toward a CDL will have to spend time behind the wheel and in a classroom at an accredited educational program if a new proposal by the Federal Motor Carrier Safety Administration (FMCSA) becomes law. The proposal requires that all applicants for a CDL or upgraded CDL provide a valid certificate from an accredited truck driving program or institution (this also applies to schools operated by trucking companies). Applicants for a Class A CDL (tractor-trailers) would require at least 76 hours of classroom instruction and 44 hours of driving training. Class B (heavy straight vehicles weighing more than 26,000 pounds) and Class C (hazardous materials) applicants would undergo 58 hours of classroom instruction and 32 hours of behind-the-wheel training. The curriculum would include CDL safety regulations, vehicles operation, and safe operating practices. The driving portion of the training would include shifting, backing, speed management, space management, night operations, and driving in extreme conditions. Current CDL holders would be exempt from the new requirements.

SHIPPERS’ GREAT EXPECTATIONS: Big retailers, manufacturers, and other companies with requirements regarding when freight must reach facilities are becoming increasingly demanding, according to DC Velocity. And the burden to meet rigid delivery times is falling to carriers. In response, carriers have developed a variety of time-based services. Roadway Express, for example, offers a guaranteed time-critical service but also a nonguaranteed, next-day service. USF Holland recently began offering a next-day service for shipments within 750 miles that guarantees delivery either before 9 a.m., noon, or 3:30 p.m. But for some shippers, it’s more important that a shipment arrive at a specific time rather than quickly. Roadway, for example, now offers a “time-critical multiday window” service that allows customers to designate the delivery time frame that is required by the consignee. By delivering within a certain window, shippers can avoid chargebacks for deliveries that don’t comply with delivery requirements. Offering time-definite services requires new ways of thinking and a willingness to change. But many carriers view these services as necessities. “When people used to ask how fast we could move from point A to B, there was one answer,” said an executive at USF Holland. “Now we have up to six. We have heard from a lot of customers that it gives them flexibility and control.”

FRUSTRATION OVER IDLING LAWS: Truckers say a variety of state and local idling laws makes compliance difficult. Ten states and dozens of local communities have anti-idling laws, with a permitted range of idling time anywhere from zero (in some residential areas of Minneapolis) to 15 minutes (in Nevada and Atlanta). Fines for a first violation vary from $25 to $1,000, but some jurisdictions allow exceptions in severe cold or heat, according to USA Today. The trucking industry spends more than $2.5 billion each year in fuel and engine repair due to idling. The practice emits 11 million tons of carbon dioxide into the air, and exhaust particles from diesel can penetrate the lungs, aggravating asthma and other illnesses. One solution is to electrify truck stops so drivers can plug in auxiliary generators; another is to retrofit older trucks. The Environmental Protection Agency (EPA) and the Small Business Administration offer loans to small trucking companies to retrofit older trucks with other power sources. Meanwhile, the EPA has implemented stricter emissions rules for heavy-duty trucks, starting with the model year 2007, in an effort to curb greenhouse gases by 90 percent. Still, many truckers are frustrated with the inconsistent laws on idling, and some say they would welcome a national standard to avoid confusion.

CALIFORNIA SEEKS TOUGHER STANDARDS: After two years of considering the case, the federal government recently shot down California’s attempt at setting its own tougher emissions standards for cars, light trucks, and SUVs. California had wanted to set mileage standards of almost 37 mpg by 2016, while the federal government has stated it will require 35 mpg by 2020. (By 2020, California had planned to achieve a 44 mpg standard.) The ruling is a victory for automakers, which had lobbied against the proposal. The Bush administration argues there should be a single national standard rather than a “patchwork quilt of state regulations.” But the Golden State and other states hoping to follow California’s lead see the decision as a blow to protecting the environment. Scientists say that rising seas could erode California’s coastline and top its levees, and warming temperatures could lead to a statewide water shortage. Last month, California announced its decision to sue the federal government, asking the EPA to review its decision that would allow it and other states to set their own emissions standards. To date, 15 states say they are prepared to intervene and support California with its lawsuit. Whether the EPA’s ruling is legal will be up to the courts.

FREIGHT THEFT UP: Cargo theft has never been so prevalent. Law enforcement and insurance companies estimate that $15 billion worth of freight is stolen each year in the United States and another $35 billion is stolen in the rest of the world. But those are only estimates, because until 2006 there was no law that required cargo theft to be reported. A Homeland Security agent says many companies did not report cargo theft because they didn’t want their competitors to know they had a loss; nor did they notify insurance companies because they were concerned about premiums going up. With global trade soaring, law enforcement agencies are understaffed, while gangs that target trucking and warehouse operators are becoming increasingly organized. Some shippers are working together to address the problem. Competing pharmaceutical companies, for example, meet several times a year to discuss the problem, which recently cost one company $54 million in one stolen shipment, according to Traffic World. Pharmaceuticals and other high-value portable items, such as food, apparel, and electronics, are the most commonly stolen merchandise. A Homeland Security agent says thieves tend to strike during holiday weekends after days or even weeks of surveillance. Trucks are most often stolen from truck rest areas (38 percent), unsecured locations such as open yards (26 percent), and secure yards (23 percent). Only 10 percent of stolen trucks are taken from warehouses and 3 percent are hijacked.

WHAT MAKES YOU HAPPY? Quick: what would make you happier? More money, a bigger house, more down time? Happiness can be elusive—circumstances that we control (jobs, education, money) account for only about 10 to 15 percent of our “subjective well-being,” or how good we judge life to be, according to Psychology Today. Happiness is primarily due to personality, not situation or circumstance. If you want to make the most of your 10 to 15 percent quotient, consider these facts: (1) Money. For the truly poor, money does improve the level of happiness. However, for those making about $40,000 or more per year, extra money won’t make you happier. (2) Youth. Young people are more prone to negative emotions than the older set. Old age seems to bring a more positive outlook, despite fragile health and finances. (3) Education. Back in the 1950s, education did improve happiness levels. Today, however, education may help get a better job, but it also leads to higher expectations that may not be met. (4) Humor. A sense of humor can bring hope and happiness. (5) Leisure time. Activities that combine socializing and physical activity (like bowling, dancing, golf) improves happiness by leaps and bounds. Solitary, inactive activities, however, like television watching have little effect.

If you’re never scared or embarrassed or hurt, it means you never take any chances.—Julia Sorel