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Roemer Report – March 2009

SPEED LIMITS DEBATED: Ohio is one of only four states that limits tractor-trailer speeds to 55 mph on interstate highways, while cars are permitted to travel faster. In recent years, Ohio lawmakers have tried to raise speed limits for trucks so they can travel at the same speed as cars—65 mph—but they have met resistance from the State Highway Patrol, which contends that faster-moving trucks can’t stop as quickly and tend to cause more accidents. Nevertheless, truck drivers are again urging lawmakers to adapt uniform highway speeds, arguing that highways are safer for everyone. While the Ohio Trucking Association has been neutral on the issue in the past, it is now pushing for a uniform speed limit of 65 mph, citing safety as the main reason. “We had felt there were savings in fuel in going slower,” said Larry Davis, president of the Ohio Trucking Association. “But when you weigh that against the crashes, we think it is safer to go all one speed.” Likewise, the American Trucking Associations recently asked Congress to create a nationwide speed limit of 65 mph for all vehicles. Eleven states have different speed limits for cars and trucks, while some states, including Colorado and Arizona, allow all vehicles to travel as fast as 75 mph. The ATA says that a nationwide uniform speed limit of 65 mph would reduce fuel consumption and curb truck-related fatalities.

LTL CARRIERS MAKE SLIGHT GAINS: Forecasts for less-than-truckload carriers (LTL) are gloomy for the next six months or so, but LTL carriers are managing a slight upswing by snagging a bit of market share away from truckload carriers, according to a new survey by Longbow Research analyst Lee Klaskow. The survey found an emerging trend of smaller shipments as retailers continue to be wary of inventory and shipping larger quantities of freight. “We do not believe this is a secular long-term shift,” said Klaskow. “However, it is new business. Any new freight is considered good freight for LTL carriers.” Despite the slight gains in LTL, carriers were not optimistic for the outlook of the LTL industry over the next three to six months. More than half of LTL carriers surveyed (56 percent) said they have a negative outlook for LTL demand over the next several months. That’s an improvement on the 59 percent who had a negative outlook in December, but it’s more pessimistic than the 50 percent of LTL carriers whose outlook was negative in October. “Shippers give carriers little insight into their future freight requirements given high levels of economic uncertainty and lack of visibility into their upcoming quarters,” Klaskow said.

KEYSTONE STATE LIMITS IDLING: Pennsylvania joins more than a dozen other states in an effort to reduce idling time of heavy-duty diesel vehicles. Last fall, the governor signed the Diesel-Powered Motor Vehicle Idling Act, which restricts heavy-duty diesel vehicles from idling more than five minutes per hour. Acting secretary of the state’s Department of Environmental Protection said the new restrictions will save vehicle owners billions of dollars a year while reducing air pollutants, which are especially harmful to children, the elderly, and those with respiratory problems. “This new law will protect the health of our citizens, reduce our reliance on imported oil, and drive the adoption of new technologies to meet our nation’s transportation needs,” John Hanger said. Other states with anti-idling laws include California, Connecticut, Delaware, Florida, Georgia, Illinois, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New York, Rhode Island, South Carolina, Texas, Utah, and Virginia. Laws vary from state to state, and some counties and cities have their own laws, making it confusing for truckers trying to comply. Some drivers say the new Pennsylvania law, which is similar to New York’s law, is too restrictive and creates a health risk for the drivers themselves. “If it’s nice weather, then it’s cool, shut if off and sleep,” said one driver. “But when it’s too cold or too hot, then we have to turn it on.” At least some drivers will get a temporary reprieve: those with sleeper berths will be exempt during low and high temperatures until May 2010. Afterwards, they’ll have to find an alternative or risk a fine.

SAFETY IN A PACKAGE: Each year about 3.6 million rear-end, road departure, and lane-change crashes occur on U.S. highways. Of those crashes, about 27,500 result in one or more fatalities, representing about 75 percent of all fatal crashes. But now under study is the Integrated Vehicle Based Safety System (IVBSS), an integrated driver assistance initiative that has the potential to reduce those collisions by 48 percent. Sensors warn drivers about hazards and provide coordinated warnings to reduce driver distractions. The goal of the study is to determine whether the three technologies—forward collision warning systems, lane departure warning technology (LDW), and blind spot detection systems—can be integrated into one package without overwhelming commercial truck drivers with too much information. Con-way Inc. signed up for the long-term government-sponsored study, and so far drivers are responding well. “The test trucks record audio and video of the driver and in one case, a driver began to nod off, with the truck drifting out of his lane,” said Con-way’s vice president of safety. “The LDW system alerted him, he got back in his lane and drove on without further incident.” The 54-month study, sponsored by the Federal Motor Carrier Safety Administration, will combine existing research results, commercial products, and system integration efforts to develop an integrated solution to dangerous highway problems.

RAIL PROVES STIFF COMPETITION: North America’s railroads have laid off thousands of workers, cut hundreds of millions of dollars from capital spending programs, and stored tens of thousands of idle freight cars. Just like motor carriers, they’ve done everything they can to cut costs. However, rail carriers have hiked rates and are enjoying a sizable net income gain. In 2008, the four largest railroads in the United States generated $7.5 billion in net income, a 16 percent increase over the previous year. The rail industry, according to one consultant, learned its lesson from past downturns, when it cut rates to lure shippers but also undermined profitability. But now rail shippers are feeling the squeeze, and many are angered by increasing rail charges. The director of Consumers United for Rail Equity suggests that “the railroads are exploiting their monopoly power,” and some shippers have said that contracted prices have jumped anywhere from 10 percent to double what they were in past years. Railroads insist their pricing structure is fair and suggest that operational improvements, including faster trains and shorter waits at terminals, are key reasons for their success. Although rail has gained market share at the expense of truckers, that may begin to change. There is already evidence that some frustrated shippers are yanking a portion of their business off the railroads in favor of trucks.

UNINSURED DRIVERS INCREASE: With family budgets under strain these days, a growing number of people are cutting costs where they can, including their car insurance. The Insurance Research Council (IRC) estimates that nearly one in six motorists will be driving without insurance by next year. That amounts to 3 million more uninsured drivers than just five years ago. “We can’t explain why people drive uninsured, we just know that a certain percentage of people do, and it does change with economic conditions like unemployment,” said David Corum of the IRC. Drivers mistakenly believe they will save money by foregoing insurance, but not having auto insurance could mean financial ruin. Penalties for driving without insurance may include fines that are greater than the annual premium for minimum insurance; some states suspend the car registration or license of the uninsured driver, while others impound vehicles or take license plates. More than 6 million crashes were reported to police in 2007, but an estimated 10 million or more crashes go unreported each year. The industry is also monitoring the number of drivers carrying too little liability insurance and is concerned that the number will escalate as people try to cut costs.

FORWARD AND UPWARD: A football travels fast because it spirals—there is less resistance. The same goes for people and organizations. What creates that forward and upward spiral is a relentless pursuit of a clear vision. Pete Carroll, head football coach at the University of Southern California, offers these five tips for a forward and upward spiral: (1) Model positive self-talk. Set the tone you want for your organization. Model the kind of positive thinking, speaking, and acting you want from others. (2) Move forward. Illustrate the big picture, or the vision, in order to set the wheels in motion. A shared vision helps people move forward in the same direction. (3) Reach out. Connect with every player and find a way to make each person feel that his or her contribution is necessary and important. (4) Set some rules. Carroll’s first rule is to always protect the team. This is about looking out for each other, saying and doing the right thing, and taking responsibility for your actions. His second rule? No whining, no complaining, and no excuses. This rule requires team members to speak mindfully and realize “it’s not about me”—it’s about the team. (5) Share the glory. Carroll says he enjoys sharing the credit when his team succeeds, and the team members do the same. “It’s so powerful when an exceptional performer has a chance to get all the gain and glory, but instead acknowledges all those who have helped him get there,” Carroll writes.

You can’t wait for inspiration. You have to go after it with a club.—Jack London