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The Roemer Report On-Line, Jan 2001

TRUCKING DEATHS DROP IN 1999: The trucking industry can now point to solid proof that its safety efforts are working. Despite an increase in total miles traveled, 33 fewer deaths were linked to large truck accidents in 1999 than in the previous year, according to the National Highway Traffic Safety Administration (NHTSA). Trucks traveled 199.3 billion miles in 1999, compared with 196.4 billion miles in 1998. These figures show "significant improvements in truck safety," according to the American Trucking Associations. Although the number of injuries related to truck accidents was estimated to increase in 1999, industry officials believe the fatality data is a more reliable indicator of truck safety; the government only estimates the number of injuries, whereas it counts every fatality. Also noteworthy is the intoxication rate for drivers involved in fatal accidents in 1999. Truck drivers involved in fatal crashes had a 1 percent rate of intoxication; car drivers, a 17 percent rate, and light truck operators, a 20 percent rate, according to the NHTSA.

LTL DELIVERS UPSCALE GOODS: LTL carriers are finding a new niche with wealthy consumers. When these shoppers buy big-screen TVs or new furniture, the U.S. Postal Service and parcel couriers can't handle such large items. But LTL carriers can. And that's exactly where these well-heeled consumers are turning when they need large products delivered to their homes. "If you buy a baseball card off of eBay, you know how to ship it. But what if you buy a motorcycle?" asks Bob Davidson of ABF Freight System in Arkansas. His company not only delivers goods to consumers' homes, but it places the item in the right room, sets it up, and takes away the packing materials. Services like these are helping many LTL carriers reap extra profits. In fact, publicly traded LTL companies had better averages last year than truckload carriers. So instead of going to the truckload sector when looking for new markets, LTL companies are looking to shippers with upscale customers. "There are very good margins in this business," says the director of residential delivery for Yellow Freight System. But opportunities exist for regional as well as national LTL carriers. One LTL carrier in New Jersey, for example, added a home delivery service to drum up business between Thanksgiving and Christmas, but it didn't take long for that service to become "a full-blown business," according to a vice president. The company makes about 1,000 deliveries per week to homes, which adds an additional $10 million to $15 million to yearly revenue.

NEW CLEAN AIR RULES UNVEILED: The Clinton administration recently approved new regulations intended to sharply reduce air pollution emitted from trucks and buses. The standards, expected to be the equivalent of removing 13 million trucks from the road, will require new heavy-duty trucks and buses to meet strict emission limits and refiners to produce diesel fuel that contains virtually no sulfur. The rules will affect new trucks and replacement engines sold in 2006. For the first time, heavy-duty trucks will be equipped with devices similar to catalytic converters, which capture exhaust chemicals. In its final days, the Clinton administration is working hard to churn out a bevy of regulations, including the new clean air rules, which were crafted to head off challenges by the incoming Bush administration. Though President-elect Bush has remained silent about his views on the new ruling, an Oklahoma senator has promised to do what he can to overturn the regulations. Environmentalists, however, believe the rules will remain intact, given their public support. The new requirements will create major "headaches" for private and government fleets, disrupting operations of diesel fuel fleets, according to the National Association of Fleet Administrators (NAFA). In comments submitted earlier to the Environmental Protection Agency, NAFA said it would be difficult for fleets to provide the additional storage tanks and equipment needed to maintain two types of diesel fuel on site. Further problems could occur, given the potential for misfueling and the resulting damage to engines.

HIGH FUEL COSTS HIT INDEPENDENT OPERATORS HARDEST: The high cost of diesel fuel is affecting everyone in the trucking industry, but owner-operators are perhaps the hardest hit. In New England, for example, diesel prices are among the highest in the nation, diesel has been about $1.76 per gallon lately, compared to about $1.05 just 19 months ago. Owner-operators receive no increased payments to cover the extra costs. And due to federal hours-of-service rules, they cannot work extra hours to make up the loss. Most carriers, however, have been charging for their additional fuel costs. Federal Express, for example, added three rate hikes totaling 5.25 percent, while United Parcel Service added a 1.25 percent rate increase in August. The U.S. Postal Service says high fuel costs accounted for an additional $240 million in expenses in the first six months of last year, but it can't raise rates without a complex financial review. While some major truck companies have raised rates as much as 6 percent since the spike in fuel prices began, many say their third-quarter earnings were still down. And owner-operators say they are not benefiting from any of the increases imposed by big companies. "Shippers are paying a fuel surcharge but somehow it gets lost with the middleman," says Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association. "Our folks simply don't have the leverage of the larger companies." As a result, many small companies and independent operators have had to call it quits. Spencer estimates that "probably tens of thousands of individuals" have had to park their trucks, while 1,350 trucking companies closed down in just three months.

UNPAID FINES CARRY ULTIMATE PENALTY: A recent ruling now gives the U.S. Department of Transportation authority to shut down interstate commercial motor vehicle (CMV) owners, operators, brokers, and freight forwarders who neglect to pay their fines. Effective April 16, the rule also prohibits CMV owners and operators from operating in interstate commerce if they fail to honor payment agreements with the Federal Motor Carrier Safety Administration. The ruling, hardly a surprise to anyone, will not apply to motor carriers and others who are currently delinquent in paying their penalties. "We cannot and will not tolerate those who repeatedly violate highway safety regulations, consistently put the public at risk, and refuse to be held accountable," said Transportation Secretary Rodney Slater. The final ruling can be viewed at www.access.gpo.gov/su_docs/aces/aces140.html.

WHO WILL PAY FOR PARKING? Safe parking spaces are in high demand at night, as any trucker can attest. In fact, an American Trucking Associations study found a shortage of more than 28,000 spaces each night, with the problem expected only to worsen. The shortage is becoming so severe that some states are limiting the number of hours a truck can be parked in a rest area. Other states make it illegal for trucks to park overnight on interstate ramps or exits. Since the federal government will not pay for private rest stops along U.S. highways, taxpayers would have to foot the bill for additional parking. The trucking industry, however, argues that the government should pay for the parking since federal hours-of-service regulations force truckers to layover in rest areas for six- to eight-hour stretches. Meanwhile, the national truck stop trade association has suggested closing underused rest areas and funneling the money toward locations that need more parking. Should that plan prove inadequate, says the trade group, companies could pay as much as $300 per truck into a federal trust fund that would finance more spaces. Critics say that all drivers stand to benefit from additional trucking spaces for tractor-trailers, and that pushing the burden of cost onto the trucking industry is unfair.

THE RULES HAVE CHANGED: The direction and needs of America's workforce is shifting, but few organizations have made the necessary adjustments in their strategic thinking. Companies hoping to leave a mark and make a profit in the new millennium may need to step back and consider changing their strategic focus. Here's why: (1) Nothing is predictable. New technology, new information, and new leaders burst upon today's organizations on an almost daily basis. If strategic plans do not allow for this unpredictability, they become empty assumptions. Managers must become comfortable with ambiguity. Similarly, they must learn to distribute knowledge and leadership so that teams are organized and ready when changes and new ideas emerge. (2) A need for new tactics. Business priorities have shifted from products to customers and from assets to employees. However, few companies have created systems and tactics to manage both talent and customers. (3) Grab a partner. No single company can meet every one of its customer's needs. That's why more businesses are forming partnerships-even with competitors-to keep customers happy. Once customers know you'll go the extra mile, they're bound to stay on board. (4) Get social. Okay, a business has created an effective cash management program, improved quality, and enhanced service. But does that company have a social agenda? Smart companies are making sure they're known as a friend to the community, whether it's helping train tomorrow's workforce or making sure kids don't drop out of school.

Sometimes those who rock the boat save the passengers.