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The Roemer Report On-Line, March 2001

THE INTERNET IMPACT: How will e-commerce affect the freight transportation industry? That was the question posed in a survey by Morgan Stanley Dean Witter. The New York research firm found that freight transportation customers plan to make far more transactions electronically, suggesting that carriers with the best electronic interfaces will be better positioned to attract more customers. Here are the top findings of the survey: (1) Automation is imperative. Transactions via the telephone, fax machine, mail, and in person are expected to decline from their existing 67 percent to 31 percent within two years. (2) Speed it up. While the present state of e-commerce is not affecting freight transportation patterns, the future is expected to bring faster, more frequent, smaller, and lighter shipments. (3) A shift in mode. About 70 percent of survey respondents said e-commerce will cause their freight transportation needs to change. Of those, 65 percent said they plan to use more parcel/express envelope; 57 percent plan to use more regional or national less-than-truckload carriers; and 53 percent plan to use more local trucking or courier services. (4) Customers call the shots. Some 44 percent of those surveyed said that in order to bid for their business, a freight transportation provider must have e-commerce connectivity. (5) Helpful web features are important. The most important feature for a freight transportation company's web site is real-time tracking and tracing, according to the customers surveyed. Other top features include online service performance reports, real-time transit time calculator, electronic bill presentation and payment, and electronic retrieval of historical shipping documents.

TRUCKING AND THE ECONOMY: When the economy slows, the trucking industry is one of the first to notice. "We knew the economy was in trouble six months ago," said a transportation analyst with A.G. Edwards & Sons. "Eighty percent of all goods in this country move by truck. If you're looking for an indication of where the economy is going, take a look at what's going on on the highway." On the highway, truckers are dealing with rising diesel costs, increasing insurance rates, wage pressures, and a decline in goods being shipped. Shipments in tonnage were down 7 percent from July through September, compared to the previous third quarter. If you ask the drivers themselves, many will say it hasn't been this bad in years. "You got so many guys sitting longer between loads," says one trucker. "And out there on the highway I'm noticing less car carriers, less rolled steel, less lumber, and less insulation. It (doesn't) look good." Still, economists are using words like "slowdown" and "weakness" instead of "recession." The Federal Reserve predicts the economy will grow by 2 to 2.75 percent this year, well below July's forecast of 3.25 to 3.75 percent. Federal Reserve Chairman Alan Greenspan recently noted that he believes the economy will recover quickly from its present slump. Even as the economy slowed, said Greenspan, the growth in productivity remained strong. Many truckers feel differently, however. "Times are real tough," said one. "I'm waiting for times to get better."

MEXICAN TRUCKS TO GET GREEN LIGHT: A five-member trade arbitration panel ruled unanimously that the United States will be in violation of the North American Free Trade Agreement (NAFTA) if it does not begin considering applications from Mexican companies. The panel-made up of two Americans, two Mexicans, and a British chairman-said that decisions regarding which Mexican carriers are allowed or denied access to U.S. highways must be made case by case. On the same day as the ruling, the Bush administration announced it would reverse the Clinton administration's policy and allow Mexican trucks to enter the United States. NAFTA states that Mexican trucks should have full access to the United States by 2000. Currently, Mexican trucks are limited to a 20-mile area near the border. The Clinton Administration and the International Brotherhood of Teamsters opposed allowing Mexican trucks into the country due to safety concerns. The American Trucking Associations (ATA), on the other hand, supports the panel's ruling, noting that an open border would reduce congestion and delays at ports of entry along the border. ATA president Walter B. McCormick Jr. added that "ATA strongly believes that motor carriers operating in the United States, no matter what their nationality, must abide by U.S. safety standards."

DO PROPOSED EMISSION STANDARDS GO TOO FAR? Complying with the Environmental Protection Agency's (EPA's) rule that would greatly reduce diesel fuel sulfur content will not only be difficult, it may be impossible, say some engine manufacturers. The former president of the Engine Manufacturer's Association says that the EPA's stringent standards are "forcing technology." In other words, the EPA is forcing manufacturers to meet requirements that are technologically impossible. The EPA plan calls for a 40 percent reduction in nitrogen oxides and hydrocarbon emissions by 2004 and, by 2007, a 90 percent reduction in particulate matter and a 95 percent reduction in nitrogen oxides. In environmental regulation, however, passing legislation that forces manufacturers to invent new technology is not unusual. In this case, though, some would have liked the EPA to ensure its goals were attainable before finalizing the regulation. Critics of the rule believe the goals cannot be achieved solely by modifying the engine; also required will be filters using catalysts and nitrogen oxides absorbers-achievable only if the fuel is extremely low in sulfur. Today's fuel has about 500 ppm sulfur, compared to California's mandated 120 ppm, and the EPA's requirement of 15 ppm by 2007. Some refiners believe producing ultra-low-sulfur fuel would lead to shortages and increased prices. The American Petroleum Institute (API) warns that "the costs of the EPA proposal would be excessive," estimating that phasing in the use of ultra-low-sulfur diesel could increase costs from 4 cents to 13 cents per gallon. The new standards would cost an additional $2,500 per truck in higher fuel costs and reduced fuel economy, according to the API. Meanwhile, the Bush administration has reopened the EPA ruling, postponing the effective date by 60 days to give the new administration time to review the new standards and possibly make changes.

JUST LIKE THE REAL THING: New technology has made driver training a bit easier at the Carnegie Mellon Driver Training and Safety Institute in Lemont Furnace, Pennsylvania. The institute supplements its on-road driving training with truck driving simulation to better equip future truckers for driving in adverse conditions. The simulator can place students in difficult driving situations without actually risking their safety. The driving experience seems very real to students. They sit in a cab with full instrumentation on the dashboard and a 10-speed gearshift. Students are immersed in the situation, experiencing full motion and sound. Thanks to huge landscape screens, students' entire field of vision is filled with scenery-bridges, mountains, and other vehicles. The instructor can choose from thousands of driving variants-whether the student "drives" on an interstate highway or a narrow, winding mountain road, whether other vehicles weave in and out, or whether weather conditions include fog, rain, or snow. The teacher evaluates how the student performed on each trip, with the driver either advancing to the next exercise or repeating the same one. Presently, simulators are too costly for most companies and schools, ranging from $250,000 to $2 million. But once they are proven to be effective and generate more industrywide interest, the price will come down, predict experts. And that's a good thing, say proponents of simulators, because they not only teach important driving skills in a safe environment, but they also save fuel costs and wear and tear on trucks.

AMERICANS CONCERNED WITH HIGHWAY SAFETY: A new survey by the Insurance Research Council finds that Americans are quite concerned with highway safety and most would be willing to pay more for goods in order to limit truckers' hours behind the wheel. The survey found that 57 percent of Americans surveyed believe that allowing truck drivers to work 12 hours without a break (as allowed in the proposed hours-of-service regulations) is unsafe. More than half of Americans surveyed said they would be happy to pay more for goods and shipping in order to limit truckers' time on the clock to no more than 12 hours per day. Eighteen percent of those surveyed said they would pay 1 percent more for goods and shipping; another 18 percent would pay 3 percent more; 12 percent would pay 5 percent more; and 8 percent, 10 percent more. Meanwhile, 81 percent of those surveyed said they opposed allowing bigger tractor-trailers on the road since they are more difficult to control and may jeopardize highway safety.

KEEPING YOUR BALANCE: If you're ever in Kinko's and happen to hear an employee talk about his "tripod being out of balance," you should know that he's not talking about one of the copy machines. He's talking about his life. Paul Orfalea, founder and chairman of Kinko's-and the originator of the tripod concept-believes people must have three elements in balance to be healthy and happy: play, work, and love. When one element of the tripod becomes more important than the others, problems arise. During their orientation and training, all Kinko's employees learn about the tripod. They are reminded of the company's philosophy: "We trust and care for each other." They also are encouraged to develop and balance all three aspects of their tripod and not to let work overtake the other two. Managers routinely ask employees how their tripod is. And occasionally a worker will tell a manager her tripod is out of balance and she needs some time off for the play and love aspects of the tripod. Work, play, and love. Sounds like the ingredients to a happy, balanced life. So how's your tripod?

It's so hard when contemplated in advance, and so easy when you do it.
-Robert M. Pirsig, Writer