Posted on Tue, Aug 17, 2010 @ 09:57 AM
The Department of Transportation (DOT) sent its proposed Hours of Service (HOS) changes to the Office of Management and Budget (OMB) Monday (7/26) to settle yet another challenge to the rules drivers and trucking companies must follow.
Meanwhile, Transport Topics reported this week that 20% of truckload fleets increased driver pay in the second quarter of 2010 citing Gordon Klemp, principal of the National Transportation Institute in Kansas City, MO.
Continuing difficulties in attracting new drivers, a situation that will only be exacerbated by expected reductions in work and driving hours contained in the proposed HOS regulations, are contributing to this perfect storm.
Any reduction in driver working and/or driving hours will further reduce already strained capacity and require more drivers and trucks to move the same amount of freight.
Flatbed carriers led trucking with more than 30% of such companies raising driver pay, while 20% of refrigerated carriers and 11% of dry van operators did so in the second quarter according to Klemp. He also predicted significant increases in the third quarter.
With carrier margins already depressed as a result of market pressures during the recession, shippers can expect sizeable rate increases to fund these long overdue pay increases.
In a related story, transportation and logistics professionals predicted major changes and increased costs associated with any reductions in driver HOS. Shippers claim they’ve already adjusted their operations as much as possible and any HOS changes would require them to reevaluate their supply chain.
Reduced HOS = reduced capacity = increased need for drivers = increased pay rates = increased freight rates = increased end user costs.
As the economy rebounds and freight levels increase the pressures on the supply chain will increase as well. Shippers would be well advised to truly partner with shippers to tweak their operations and maximize driver/truck utilization. The alternatives are even more expensive than rate increases.
The perfect storm is churning on the horizon.
Written by Kevin Mullen, Directory: Safety
Posted on Mon, Aug 16, 2010 @ 01:25 PM
The FREIGHT Act is short for the Focusing Resources, Economic Investment and Guidance to Help Transportation Act. It is an act presented by Senator Frank Lautenberg (D-N.J.) that aims to create a voice for freight interests within the U.S. government. As it currently stands there is no real place in the Department of Transportation (DOT) for freight planning. This bill is set to address these problems and give the freight industry some recognition within our nation’s government. Freight advocates said, “The bill as the most far-reaching attempt Congress had made to give freight a place at the infrastructure table.” The FREIGHT Act is within Bill S.3629 (the progress of the Bill can be tracked at this site) and is set to accomplish three main objectives: develop a National Freight Strategic Plan, create a Freight office within the DOT, and initiate the National Freight Infrastructure Grants program.
What the FREIGHT Act Will Accomplish
To put the bill in a broad sense, it will create, “a national freight transportation program for identifying and funding federal, state, and metropolitan efforts to ensure adequate capacity, reduce congestion, and increase throughput.” said Janet L. Kavinoky, head of the transportation infrastructure programs at the U.S. Chamber of Commerce. Ms. Kavinoky believes the bill meets what was asked for by the Chamber of Commerce, the nation’s largest business trade group. She went on to say that, "the key to the grant portion's success is in finding additional dedicated revenues so that other federal transportation priorities aren't diluted." Basically the Bill will seek additional funding so that other DOT programs are not compromised.
The Goals of the FREIGHT Act
There are six main goals highlighted in the bill:
1. Target investment in freight transportation projects
2. Improve energy conservation and the environmental sustainability of freight movements
3. Assist and enhance the health and safety of the public
4. Provide efficient and balanced investment to improve the overall performance of the national transportation system.
5. Promote partnerships between Federal, State, and local governments, the private sector, and other stake holders.
6. Encourage adoption of operational policies
How The FREIGHT Act Will Get Approved
The bill has been referred to the Senate Committee on Commerce, Science, and Transportation. The committee has twenty-five ranking members and is currently considering about one hundred different bills. However, they are usually only one of many committees that are reporting on the same bill. The bill is currently assigned to several committees but so far none have issued a report on it. Once the bill goes through the Senate committees it will go through House committees. If both Houses decide that bill should be voted on then it will go to the Senate first and then to the House. If the bill passes then it will be signed by the President and it will be enacted.
This bill has a long way to go before it makes it to the President’s desk; however it seems to already have major support behind it. An article by Mark B. Solomon on DC Velocity.com concludes, “Advocates of the Lautenberg Bill said today the senator's staff has been in contact with key lawmakers in both chambers to discuss the legislation. The bill was co-sponsored by Sens. Maria Cantwell and Patty Murray, both Democrats from the state of Washington.”
Posted on Thu, Jul 22, 2010 @ 09:37 AM
In what can only be heralded as a historic address, FMCSA Administrator Anne S. Ferro spoke to the National Industrial Transportation League at their Washington Freight Transportation Policy Forum in Arlington VA June 10th.
In her remarks, Administrator Ferro told attendees that wasted “down time” at loading docks was a constant complaint that drivers said negatively impacted safety at numerous public listening sessions this past winter and spring.
Ferro went on to say, “I ask you to increase your stake in motor carrier safety. Practices that leave truckers waiting at the port or terminal for hours at a time do not take account of how long drivers may drive. I ask each of you today to take responsibility in your businesses to increase your stake in motor carrier safety. Between now and the end of the year, take the time to re-examine practices that short change the driver's ability to drive safely.” (The full text of her remarks can be found here.)
Clearly, time spent waiting at shippers and consignees to get loaded or unloaded is putting severe pressure on carriers' and drivers' ability to meet customer expectations while complying with federal hours of service regulations.
Shippers who do not respect drivers' regulated hours will likely find it more difficult to attract carriers to haul their product. (Drivers are limited to 14 hours of on-duty time once they start their day. Hours spent waiting to get loaded or unloaded reduce drivers' remaining work and driving time.)
Shippers and consignees must examine their operations and procedures and work with their trucking partners to find ways to expedite loading and unloading. Failure to do so may very well result in carriers diverting their trucks to more carrier-friendly customers leaving less carrier-friendly shippers with product on their dock or in their warehouse and no trucks to haul it.
Carriers must be able to get their trucks loaded and underway in reasonable time if they are to get maximum use of the equipment and driver. This is just good business practice and necessary for any kind of reasonable return on investment (ROI) on the $100,000+ they have tied up in a tractor and trailer.
Article posted by Kevin Mullen: Director, Safety- ADS Logistics
Posted on Mon, May 10, 2010 @ 10:47 AM
There may have been no more challenging a period in trucking than what we face in 2010 and beyond. As previously discussed, a great deal of capacity has been eliminated over the past 18 months. Much of it is not coming back. The regulatory pressures of CSA 2010 promise to further exacerbate this problem by contributing to an already burgeoning driver shortage.
Rates (and along with them driver wages) have been driven down by seemingly savvy shippers during the economic downturn which will only serve to stoke the perfect storm forming on the horizon.
Self-serving carriers have undercut their competition in the misguided assumption that any rate is better than no freight at all. Carriers need to get a moderate return on their investment. Those who under-priced their services are not long for this world.
Shippers now face the reality of steep rate increases in order to ensure sufficient capacity to move their product. The second-tier carriers who were willing to cut their rates in order to obtain their freight will be unable to supply trucks. Worse still, the trucks and drivers they do supply will be substandard. Carriers who accept less-than-market rates have to cut somewhere… maintenance and safety are usually the first casualties.
Regulations restrict the hours a truck can operate. Shippers will need to stop “talking” about being carrier-friendly and become carrier-friendly. No more can trucks afford to sit for hours at the shippers’ dock or their vendors’ dock. Trucks will be diverted to shippers who can get them loaded in a timely manner and ensure the carrier (and driver) can maximize their available hours thus providing a return on investment.
Carriers who cut rates to ensure cash flow (or for whatever reason) will now need to pay the piper. We’ve “trained” West Coast shippers by taking $1.00/mile freight for years. Why would the rates ever go up if we continue to haul their freight for less than it costs to run a truck? Is any rate really better than no freight (deadheading) in the short or long term? We’ve hurt ourselves in the past. It’s time to stop this self-destructive behavior.
The FMCSA is tasked with getting unsafe carriers off the roads. CSA 2010 is their latest and greatest tool to do so. So why are all these fly-by-night and renegade carriers still out there undercutting rates? I suspect the number of carriers who have gone out of business (failed) in the past eighteen months is a hundred times the number the FMCSA has put out of business. Is market economics the real regulator of our industry? If so the market it poised to act.
In order to ensure our industry is running safe, compliant trucks driven by safe, compliant drivers, it must get reasonable rates and be able to maximize the utilization of both. Anything that does not support that premise (second-tier carriers, shippers or enforcement) does the entire supply chain a disservice.
Written by Kevin Mullen: Director- Safety, ADS Logistics
Posted on Thu, Mar 18, 2010 @ 04:58 PM
“Just give me a rail car rate from Seattle to Chicago. I am pricing out some customers in that area,” someone will inquire.
“What railroads are they on, and what is the commodity?” we will ask.
“I don’t know exactly, but they are on the railroad and it is some kind of metal. I just need a basic rate,” comes the reply.
But therein lays the dilemma. In conventional rail car business, depending on which railroads are actually involved, and the specific commodity involved, the price of the move, and the potential to actually get cars for the move, can vary significantly. There are several types of rail carriers that might be participating in a move. There are linehaul carriers and switch carriers and sometimes you can have several of each involved in a rail route. Each has different ways of setting charges and sharing through rates.
Facilities that are on railroads might be on switch carriers who could connect to one or several railroads. This often enables different price options by comparing the pricing over the different railroads. They might be captive on a linehaul carrier, meaning that there won’t be options on getting into the facility. In cities like Chicago, where virtually all of the major railroads (and many small railroads) come together, there can be big difference in rates between facilities that are only a block apart, or if they are on different railroads.
In the example of finding a rail car rate from Seattle to Chicago, there are two main carriers coming out of Seattle, the UP and the BNSF but in Chicago there are those two as well as the CPR, CN, NS, CSXT, EJE, CSS, IHB, BOCT, ICE, and a few others, so the move could be anything from a single line linehaul on the UP or BNSF to a combination of one or more of the others.
The pricing models of different railroads can vary significantly and also vary by commodity and the amount of particular types of equipment they have available. In some cases the pricing differential can be $25 a ton, and sometimes even more. So, “Just give me a rate” won’t necessarily get someone what they need.
It always comes down to the details.
Article submitted by Steve Klok, Director- Distribution & Logistics
Posted on Tue, Mar 16, 2010 @ 03:13 PM
It’s hard to believe that a year ago we were practically begging for shipments and moving freight at a rate that barely covered our costs. We were not alone, as evidenced by the lack of trucks available for freight right now. As rates and freight decreased more and more truck owners found they could not make a decent living so had to give up their life on the road. Now, just one year later (albeit a very long year) we have seen an increase in freight, but not in available trucks to haul the freight. The laws of supply and demand will tell you this type of market will see rising prices.
How does a customer hold down costs? If that customer has ongoing business and volume either inbound or outbound they can contract with a carrier. At Area Transportation, our contract customers can count on our services all the time, regardless of the market and at a set price. When using a carrier that has their own tractor and trailers, a contracted customer can have peace of mind knowing that their loads will be covered regardless of rates or truck shortages. As a carrier, this is the benefit to having company-owned trucks. As a customer, this is the benefit of using a carrier that owns their own equipment!
Pricing for customers that need one truck for one move can be a bit more difficult and the rate will be reflective of the current market conditions. Whenever possible any buyer of a transportation services should look into contract transportation purchasing and select a carrier with company-owned equipment. This will ensure their loads will be covered and their costs will always be the same no matter what the market.
Article submitted by Marie Studniarz.