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The Roemer Report On-Line, May 2003
HOS RULES COMING SOON: Federal officials say we can expect to see new hours-of-service regulations soon, but that inspectors will not be able to write up violations under the new rules until early 2004. The government says it needs plenty of time to retrain roadside inspectors and retool software programs before the rules can take effect. An estimated 8,000 federal inspectors will need to be trained on the new rules, which will take approximately eight months. Department of Transportation inspectors also will require updated computer programs, says David Longo, Federal Motor Carrier Safety Administration spokesman. “Modifying computer systems is no small task in and of itself,” said Longo, but it must be done. During a roadside stop, officers need to be able to use the computers to access information on the driver, the company, and the vehicle. And each of the six computer systems that contains that data must include the new regulations. Government officials are trying to keep the details of the program under wraps, but some sources did reveal that the new regulations would allow a driver to work 14 hours per day—11 hours of which could be spent behind the wheel, compared to the current 10 hours. Drivers also would be permitted to use written logbooks, rather than be monitored by electronic onboard recorders. “We’re sitting on the edge of our seats and waiting in anticipation for (the regulations) to come out,” said David McCorkle of the American Trucking Associations. “We think it will be fair.”
FARMING IT OUT: A recent survey by Commercial Carrier Journal found that 95.1 percent of respondents say they outsource at least some type of maintenance work. About 65 percent say they outsource 25 percent or less of their maintenance, while almost 20 percent say they outsource 75 percent to 100 percent. In general, the more specialized the task—such as collision repair, paint work, and alignment/suspension—the more likely a fleet is to farm it out. On-road breakdown services and tire work are also more commonly outsourced. While farming work out is no guarantee you’ll save money or improve quality, it should offer these advantages, says one expert: (1) reduce overhead, thereby lowering operating expenses, (2) improve service by improving responsiveness and increasing availability, (3) eliminate waste by removing non-value-added activities, (4) allow the company to spend time on what it does best, and (5) raise the level of specialization expertise. You can only achieve these goals if you choose the right vendor. When shopping around, be sure to consider a vendor’s: capabilities, referrals, cost, data reporting capability, workload, availability, warranty, location, experience, integrity, and financial history. Once you select a vendor, it’s important to maintain ongoing contact and communication.
INDUSTRY IN FOR A BUMPY RIDE? At the annual meeting for the Truckload Carriers Association, executives painted a somewhat gloomy picture for trucking, but offered some ways to help offset high fuel costs and insurance premiums. Here’s a look at some of their suggestions: (1) High fuel prices make it important for carriers to collect a fuel surcharge from shippers. “If you’re not getting it, you’re in trouble,” said the chairman of an Ohio carrier. (2) Donald Schneider, chairman of Schneider National Inc., said, “The single biggest thing we can have an impact on is empty miles. It’s pure waste.” With up to 25 percent of trailers moving empty, the industry should take advantage of technology to improve how existing equipment is utilized. (3) Delivering a load to a customer’s dock on time used to be all you needed to keep customers loyal, said the president of an Iowa carrier. But to gain loyalty in the future, carriers will need to do much more, including greater information sharing and helping design freight services. “We’d better be prepared to spend money to take care of our customers,” he said. (4) Many executives at the meeting voiced concern about the new cleaner-burning diesel engines, with one saying, “We don’t plan to be a guinea pig” for the new technology. Schneider said the industry should get involved earlier in the political and regulatory process “so we can have an impact on the outcome” and not suddenly be faced with new technology.
AMERICANS ANTICIPATE FUEL SHORTAGE: Public opinion on America’s energy situation has varied dramatically over the past few years. Current events, gas prices, and energy shortages all appear to have a strong impact on public opinion, according to Gallup’s annual Environmental Issues survey. Twenty-eight percent of Americans believe the energy situation is “very serious” compared to 22 percent a year ago. Still, that number is low compared to the 58 percent who believed the situation was “very serious” during California’s 2001 energy crisis. The poll found that the majority of Americans (56 percent) believe the country will face a “critical energy shortage” within 5 years. Last year, only 48 percent of Americans felt that way. When asked how the nation should solve the problem—either increase production of oil, gas, and coal or conserve these limited resources—60 percent of Americans said the country should conserve, while 29 percent sided with energy production. The survey also found that: (1) 80 percent of Americans favored setting higher emissions and pollution standards for business and industry, (2) 75 percent favored greater enforcement of federal environmental regulations, (3) 75 percent favored imposing mandatory controls on greenhouse gases, (4) 73 percent favored setting higher vehicle emissions standards, and (5) 55 percent of Americans oppose opening up the Arctic National Wildlife Refuge for oil exploration.
FMCSA RAISES SAFETY FINES: CDL holders and motor carriers who don’t follow the federal safety rules can expect their fees to take an even bigger bite out of their wallets. The Federal Motor Carrier Safety Administration raised the fees for noncompliance, so that a CDL holder convicted of violating an out-of-service order may be fined between $2,100 and $3,750 per incident, compared to the previous range of $1,100 to $2,750. If an employer “knows, allows, requires, permits, or authorizes an employee to violate an out-of-service order,” the employer faces a civil penalty of $3,750 to $16,000, compared to the previous penalty of between $2,750 and $11,000. For motor carriers that fail to maintain required insurance, there is a maximum penalty of $16,000 per day. Those violating hazmat regulations face fines of between $275 and $32,500. Record-keeping violations—including incomplete, inaccurate, or false records—will cost between $275 and $32,500 per incident. In addition, the FMCSA noted that any person or entity that knowingly falsifies a report or record is subject to a maximum civil penalty of $5,500 “if such action misrepresents a fact that constitutes a violation other than a reporting or record-keeping violation.” The FMCSA says the rates were adjusted for inflation and have not been raised since 1998.
SEEKING FAIR COMPENSATION: Most hourly employees are willing to work a few hours extra, provided they get paid for it. However, an increasing number of workers throughout the United States are filing lawsuits that claim they have been cheated out of overtime pay. In fact, last year, the number of collective actions brought against the Fair Labor Standards Act exceeded the number of actions alleging job discrimination. Overtime rules, which have existed for 70 years, usually require companies to pay time-and-a-half to employees who work more than 40 hours a week. However, federal laws include dozens of exemptions, ranging from “managerial” to “administrative” to “professional” workers. The increase in lawsuits is due in part to the number of companies that improperly categorize employees to save on labor costs. For example, some restaurants classify many of their workers as “managers” when they really wait on tables. This past year, Pepsi Bottling Group Inc. failed to pay overtime to its delivery-truck drivers and customer representatives in New Jersey. Pepsi classified these workers as “outside” salespeople which made them exempt from overtime pay. A state appeals court, however, said Pepsi had improperly classified the workers. In addition to misclassifying employees, some companies avoid paying overtime by requiring employees to work off the clock. For example, Minolta Business Solutions allegedly did not pay its copier technicians for work performed after 5 p.m. and during lunch hours. Violating overtime rules is a costly problem for employers. In general, companies that violate the federal wage and hour law must pay double the back wages owed, plus attorney fees.
TIME FOR A TRUST OFFENSIVE? Trust is a critical foundation of American business, but that foundation appears to be crumbling, according to a recent Golin/Harris Trust survey. Sixty-nine percent of Americans surveyed said that “recent economic events have created a crisis of confidence and trust in the way we do business in America,” and consequently, they’re “going to hold business to a higher standard in their behavior and communications.” Richard Jernstedt, CEO of Golin/Harris International, said that when that many consumers express such skepticism, “American business has a serious problem that goes beyond the ‘Enron factor.’” The director of marketing at Golin/Harris advises U.S. businesses to mount a trust offensive. “We see some very clear and compelling opportunities and strategies for businesses to build and strengthen trust,” she says. For example, when asked what companies can do to re-earn trust, respondents answered: be open and honest in business practices (94 percent); communicate more clearly and straightforwardly (93 percent); provide the best value for products and services (88 percent); provide outstanding products and services, regardless of price (72 percent); understand and address my needs better (65 percent); demonstrate industry leadership (65 percent); change the way companies communicate financial activities (61 percent); and be involved with the community (50 percent). As for CEOs, respondents said they can earn trust by: assuming personal responsibility and accountability (65 percent); visibly showing concern for customers (60 percent); and sticking to a code of business ethics no matter what (58 percent).
There is no substitute for paying attention.—Diane Sawyer, U.S. journalist