|Saturday May 18, 2013 - Flat volumes and ample capacity collide with higher spot rates; is HOS to blame?
Spot rates brace for a July 1 government enforcement deadline.
By Mark B. Solomon DC Velocity
Trucking volumes are flat and capacity is relatively ample, yet spot market truckload rates are rising.
This seeming paradox could be explained by the calendar. Barring a stay by a federal appeals court in Washington, D.C., the federal government will start enforcing new standards July 1 governing a driver's hours of service (HOS). As the date nears without any court action, more observers are forecasting that the enforcement will begin as scheduled. As a result, rates are rising as the marketplace anticipates fewer truck miles driven and reductions in driver productivity.
Bradley S. Jacobs, chairman and CEO of XPO Logistics Inc., a Greenwich, Conn.-based truck broker, expedited transporter, and freight forwarder, said truck volumes are neither rapidly accelerating nor precipitously declining, a trend that mirrors the lackluster performance of the overall economy. Truck capacity remains abundant, as it has for months, he added.
Yet the rise in spot market rates reflects the belief of most carriers that they will need to boost prices to offset the negative impact of the rules on driver productivity and the costs of replacing that lost productivity, he said. Jacobs expects productivity levels to be affected from day one, rather than it having a phased-in effect. That's because he expects everyone to obey the law from the start, with predictable consequences on truck miles driven.
The rules, implemented by the Federal Motor Carrier Safety Administration (FMCSA), a sub-agency of the Department of Transportation, will reduce a driver's maximum weekly work hours from 82 to 70. For the first time ever, drivers will have limits placed on their traditional 34-hour minimum restart period, requiring it to occur once every seven days and to include two rest periods between 1 am and 5 am over two consecutive days. FMCSA left unchanged a key provision allowing 11 hours of continuous drive time after a driver has spent 10 consecutive hours off duty.
Most shippers and carriers oppose the new rules as a safety hazard and an unnecessary disruption to their supply chains. While estimates vary, the consensus is that the rules will result in a 3- to 5-percent decline in truck productivity.
Oral arguments on the matter were held March 15 in Washington. The FMCSA has already denied an industry request for a three-month delay of the enforcement deadline.
VOLUMES FALL, BUT RATES STILL RISE
DAT, a Portland, Ore-based information consultancy, said spot market rates in April rose over March levels for all three equipment types: dry van, flatbed, and refrigerated, or "reefers." Yet spot volumes fell 5.8 percent over March levels, according to the firm's freight index. The decline—which was surprising given that better weather in April usually drives strong sequential traffic gains—was due in part to unusually inclement weather, such as floods in the upper Midwest, DAT said.
Year-over-year volumes in April fell 16 percent from record levels in April 2012, DAT said. Van and flatbed rates dropped, while reefer rates rose, it said.
About 20 percent of all truckload volumes move under spot rates, based on DAT's estimates. The balance moves under contract.
A monthly index of shippers' conditions published by Bloomington, Ind.-based consultancy FTR Associates came in with a March reading of -7.3, an improvement over the February read of -9.5. However, the March reading gives only marginal relief to shippers as any level below zero indicates a sellers' market for truck services.
Lawrence Gross, a senior consultant for FTR, said that although FTR's estimate of the hit that HOS will have on productivity is less than the consensus, "even a 3-percent decline will be sufficient to tip the balance of supply and demand significantly away from shippers, assuming the economy continues to maintain at least the anemic growth levels seen recently."
Gross said HOS enforcement will "usher in an extended period of difficulty for shippers, as there is an array of new regulations lined up behind the HOS change that will further impact trucking in the months and even years to come."
HOS is the latest, but not the only, trigger driving up freight rates. Carriers and their customers must also cope with the impact of CSA 2010, a government safety initiative designed to winnow out unsafe drivers; the cost of recruiting and retaining drivers; compliance with new federal engine emission standards; and escalating expenses for all types of equipment ranging from trailers to tires.
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|Saturday May 18, 2013 - Late planting means long hours for farmers
By Tim Landis ([email protected])
The State Journal-Register
Central Illinois farmers added a night shift this week.
“I started about 5:30 in the morning and went to 11 last (Wednesday) night,” Rochester farmer Larry Beaty said Thursday, adding that he was back planting corn at 5:30 a.m. Thursday and planned to go well into the evening — weather allowing.
“It just depends on how long the rains hold off,” Beaty said. There is rain in the forecast into the weekend.
The U.S. Department of Agriculture reported earlier this week that farmers across Illinois are playing catch-up after the fourth-wettest April on record brought planting to a halt for much of the month.
At the start of the week, only 17 percent of the crop was in compared with 94 percent at this point in the unusually dry year of 2012 and the five-year average in Illinois of 64 percent of corn planted by mid-May.
But thanks to technology and corn hybrids that are more resilient and grow faster, the USDA this week also predicted a big crop.
‘Head high by July’
“New hybrids in general are better than the older ones, and by ‘better,’ I mean they grow more vigorously,” said University of Illinois crop specialist Emerson Nafziger. “That means they tend to grow larger plants, including larger root systems.”
Faster-growing plants allow farmers to get into fields later and still produce good crops, Nafziger said. But he said faster-growing hybrids also mean faster use of water and nutrients.
Seed companies promote hybrids that reach maturity in as little as 90 days, though Nafziger said central Illinois corn hybrids typically are in the 110- to 113-day range. The ranges are based on reaching maturity before the normal first frost in the fall.
Diana Beaty, who farms with her husband, Larry, said they decided to stick with their traditional 112-114-day corn this year, despite the wet spring and late planting start.
“With the longer-growth corn, you get better yields,” she said. “We have always used the longest.”
The seed industry rule of thumb is the longer corn has to develop, the greater the yields. But shorter growing times are useful when time is running short, as it is this year in Illinois.
Whatever the maturity guidelines, said Diana Beaty, modern corn hybrids grow much faster and are more resilient than the seeds that went into the ground when she started farming in 1977.
“My grandpa used to say, ‘knee-high by July.’ Now, it’s head-high by July,” she said.
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|Friday May 17, 2013 - Former WV transportation firm broker pleads guilty to wire fraud
By Andrea Lannom - email
A former West Virginia transportation management firm broker recently pleaded guilty to wire fraud after federal prosecutors say he created 230 fake cash advances and took more than $100,000 to deposit in his personal bank account.
Richard Maurice Haddix, 33, worked for MegaCorp Logistics LLC, which is a transportation management firm based in North Carolina and which has an office in Elkins.
As a broker, Haddix's job was to match client company shipment orders to available trucking carriers and negotiate terms of the shipment deal, court documents state.
Haddix issued cash advances to truck drivers from the MegaCorp Logistics account by using the software program Via TMS.
Federal prosecutors say between July 23, 2011, and February 19, 2012, Haddix used the software program to create 230 fake cash advances and deposited $102,260 into his personal bank account.
Haddix will make restitution. He is free on bond and faces up to 20 years in prison and a $250,000 fine.
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|Friday May 17, 2013 - 7 Tips for Teaching New Log Rules
May 2013, TruckingInfo.com - WebXclusive
By HDT partner, Today's Trucking
The American Trucking Associations has published an easy-to-use, free tipsheet to help you help your drivers understand the new hours-of-service rules.
Here’s the Reader’s Digest version:
1. Start now: The new rules must be followed July 1 and the ATA warns that if caught unawares, the change “may cause significant disruption to your daily procedures.
If caught off guard, unaware drivers may be confused about the requirements and potentially incur violations that could generate fines and that will affect carrier CSA scores.”
2. Use a personal approach: Most find that drivers retain information better in a one-on-one or face-to-face classroom environment. If drivers can’t attend, make the information available as soon as you can and be ready for follow up questions. Train early and train a lot.
3. Use real-world examples: ATA recommends that you develop log-book examples based on a typical and/or exceptional driving week at your company. If possible, select a small group of drivers to operate under the new restart and rest-break provisions for a week or two.
4. Update route planning protocol: Update your route planning to meet the new HOS criteria. “With truck parking scarce, it may be challenging to find somewhere a driver can rest and it may have to come sooner, or later, than expected.”
5. Discuss efficiency: Drivers who use the current 34-hour restart may experience significant losses in productivity depending on what time of day they begin the new period. “Educating them on the benefits of planning will undoubtedly pay significant dividends.”
6. Educate your entire organization and your customers: “It is important that all parts of your organization are fully aware of the potential changes and their consequences. This is especially the case if your drivers use the current 34-hour restart. Driver managers will need to alter their procedures and the sales staff will need to work hard to adjust shipper and broker expectations. Flexibility will need to be built into business relationships to ensure continued efficiency and productivity.”
7. Do more research: For your own copy, with the new rules included, click here.
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|Friday May 17, 2013 - New trucking rules have wide-ranging effects
By Vicky Boyd
SAN DIEGO — Two new trucking rules — one from California and the other federal — could have wide-ranging effects on the fresh produce industry from the shipper all the way to the retailer.
A panel of industry experts outlined the two regulations and their implications during the Expert Council Workshop Series, May 15, at United Fresh 2013.
Of the two, the California Air Resources Board’s Transportation Refrigeration Unit, is the more challenging, said Kenny Lund, vice president, support services, for The Allen Lund Co. Inc., La Canada, and chairman of the United Fresh Supply Chain & Logistics Council.
The rule requires all reefer units operating within California or entering the state to have engines manufactured in 2007 or later.
To comply, older units can be retrofitted with an Environmental Protection Agency-approved filter designed to remove 85% of the particular matter produced.
But the filters cost at least $8,500 and have been plagued by performance issues, so few operators have chosen this route, Lund said.
“It’s simple economics,” he said. “Coming out of this recession, they don’t have the financial wherewithal to comply with some of these rules.”
In surveying the hundreds of small owner-operators that Alan Lund contracts with to haul produce, only 25%-30% meet the CARB regulation, Lund said.
“So if you’re 25% compliant, how do you eliminate 75% of the trucks and move half of the U.S.’s produce? And how can the state (of California) regulate interstate commerce?”
Although CARB doesn’t have the authority to stop truckers, it teams with the California Highway Patrol, said Joe Rajkovacz, director of governmental affairs and communications for the Western Trucking Alliance, Upland.
In addition, CARB’s two dozen or so inspectors focus on areas where large numbers of truckers congregate, such as the Flying J Truck Stop near Barstow, to perform spot inspections.
Rajkovacz said he’s already heard anecdotal stories of out-of-state truckers refusing to haul into California because of the regulations.
Not only can CARB ticket drivers of non-compliant reefer units, but it also can fine shippers, truck brokers and even produce receivers for knowingly using non-compliant truckers, he said.
The state already has made headline by fining an Ontario, Calif., egg producer $300,000 for using non-compliant units.
New Jersey and Oregon also are exploring similar rules, Rajkovacz said.
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|Thursday May 16, 2013 - Werner president advises carriers to move less freight, more efficiently
By Aaron Huff http://www.ccjdigital.com/
Motor carriers can no longer be in business just to move freight. Their services must start with freight management, said Derek Leathers, president and chief operating officer of Werner Enterprises, during the keynote address at the ALK Transportation Technology Summit, held in Princeton, N.J., May 15-16.
“This is how we believe and think the industry is headed,” he said. “The world we live in today is much more designed around how do we move less freight and how do we do it more efficiently?”
Rail intermodal provides the biggest opportunity for cost savings. The predominant amount of freight that moves by truck today (77 percent) is freight that cannot be converted to rail intermodal, he said. The amount of freight that is still competitive between truck and rail is about 8 percent.
“Our job as logistics providers is to look every single day for increased opportunities to save our customers money,” he said. “Maximize the amount of conversion opportunities you can find.”
Converting freight from truck to rail is not always an easy transition for a company. Werner Enterprises is the third largest truckload carrier in the United States with 7,600 trucks.
“It was hard for us to wake up one day and say, ‘my number one mission in life is to work with my customers to eliminate the need for trucks,’” he said. “The reason is that if we don’t do it someone else will.”
Intermodal involves more than converting truckloads to rail cars, either trailer on flat car (TOFC) or double-stack containers on flat car (COFC). Today’s logistics providers have to look continuously for the best combination of ocean, rail and truck to lower costs for customers, he said. And large shippers will expect their providers to have global services.
“Customers expect to make one call to make all that happen,” he said.
Another trend, and opportunity for logistics providers, is the increase in cross-border Mexican freight. Manufacturing activity is increasing as companies look for “near shoring” strategies to make their transportation costs more predictable and limit supply disruptions from port activities. Cross-border trade increased 22 percent in first quarter, he said.
Leathers predicted that freight demand (the ratio between freight volumes and truck capacity) will increase sharply in advance of Memorial day and the next six weeks. As an early indication, Werner has seen its “pre-book” percentages, a metric it uses to measure the tightness in its network, increase by 13 percent over the last five days.
Freight volumes typically increase in the Spring, but this year the uptick has been delayed due to an unusually cool April, he said. Compared to last year, temperatures in April were 7 degrees lower, on average.
Among publicly traded carriers, rates were up between 1.3 and 1.9 percent in the first quarter of 2013, but costs have risen by the same or more. Leathers predicts truckload rates will increase by 1.5 to 2 percent range for the rest of the year.
“The rate issue is going to be an ongoing struggle. I think the winners in the rate game are the ones that can offset costs with enough innovation,” he said. “The secret sauce in all of that is that you simply have to find a way to move less loads.”
Leathers also commented on the increasing costs of government regulations and flaws with the Compliance, Safety, Accountability program of the Federal Motor Carrier Safety Administration. One of the glaring flaws is a lack of due process for challenging speed warnings, particularly in Indiana, which issues 35 percent of all speed warnings nationwide.
“That’s on my record and because it is a warning I can’t fight it. Think about a world not where we could live, but where we do live, where there is no due process. We are already there,” he says. “That is un-American and unacceptable.”
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|Thursday May 16, 2013 - Manitoba man converts grain bin into livable home
Years-long efforts see grain silo converted into home near Dugald, Man.
CBC News Posted: May 15, 2013 3:59 PM CT Last Updated: May 15, 2013 5:14 PM CT
After four years of planning, building and improvising, one Manitoba man has finally seen his dream of converting a grain silo into a livable home become a reality.
Suruj Persault moved to Manitoba from Guyana more than 20 years ago, and in 2009 was inspired by his friends to build the unique home.
“I thought it would be crazy, but once those guys kind of say it out to me, you know, I kind of said, ‘Yeah.’ It woke me up,” said Persault.
But converting a grain bin into a home was easier said than done. One of the challenges was finding the contractors with the skills to convert the iconic Prairie structure into a livable home.
Dan Landry of Charpenterie Sans Souci signed on to help with the carpentry and said the task pushed his skills to the limit.
“Nothing is your standard square, 90-degree angle,” said Landry.
Complicating matters were the materials Landry and Persault wanted to use.
“Everything in the house, except for maybe 10 to 15 per cent of the material is all recycled,” said Landry.
Old hydro poles were used for support beams, and many of the materials were sourced from Persault's work, Westeel, a company that manufactures grain bins.
Persault purchased discounted salvaged materials to create his home’s roof.
“Suruj is a legend around here,” said Don Ozero, who works with Persault.
“Very happy-go-lucky guy — always a smile on his face and a very hard worker.”
Now, Persault’s unique home sits just outside of Dugald, Man.
“Even though it's a little more expensive than a regular house, the benefit pays off in the end,” Persault said.
Persault explained the structure is so air tight that last winter, he barely had to use his heating system.
It’s also virtually soundproof, which is a good thing, because Persault’s property sits adjacent to a rail line.
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|Wednesday May 15, 2013 - Truck drivers sue over overtime, meal breaks
By Ricardo Lopez, Los Angeles Times
May 15, 2013
Two truck drivers have sued one of Southern California's largest trucking companies, alleging they were denied breaks, lunch hours and overtime because they were treated as independent contractors rather than employees of Harbor Express Inc.
The lawsuit filed this week is one of several complaints lodged against trucking companies in recent years and is seeking class-action status.
Lawyers for the plaintiffs said it could affect as many as 400 truck drivers who worked for the Wilmington-based company since May 2009.
The complaint alleges that Harbor Express, which serves the ports of Los Angeles and Long Beach, misclassified hundreds of truck drivers as independent contractors so the firm wouldn't have to provide worker benefits such as rest breaks and overtime pay.
The civil suit, filed Monday by brothers Jose I. Estrada, 58, and Jose A. Estrada, 48, in Los Angeles County Superior Court, alleges truck drivers act as direct employees, driving company-owned trucks exclusively for Harbor Express.
"It looks like a traditional employment, but they slap the title of independent contractors on them," said Brian Kabateck, one of the lawyers who filed the case.
"If they were truly independent contractors, they would own the truck or lease it," Kabateck said. They would also "have freedom to come and go and can take on other jobs and assignments. This is just a clever way to do a runaround of labor law."
Messages left for Andy Kim, president of Harbor Express, weren't returned Tuesday.
Harbor Express was founded in 1984 and lists 40 employees, according to public records. The firm reported annual sales of $3.6 million, according to business data provider Dun & Bradstreet Inc.
Trucking companies that serve the ports of Los Angeles and Long Beach have long relied on independent contractors to move goods. The twin seaport has about 10,000 registered trucks that move goods in and out of the ports, officials said. Industry experts estimate only about 10% of truck drivers are direct employees.
For the Estradas, being an independent contractor means small paychecks for long workdays — as little as $85 per load. Work is particularly grueling before the holiday shopping season when retailers are stocking shelves with new merchandise.
Truck drivers are paid per trip, no matter how long they take. Delays leaving the port aren't accounted for when they are paid, the younger Estrada said.
"They don't pay us a penny for the time we wait at the port," he said in Spanish. "I live paycheck to paycheck. I don't have a savings account."
He said it's hard to provide for his family as a contractor but said finding a company to directly hire him as a truck driver is nearly impossible. "All the trucking companies have the same system," he said.
Because they are classified as contractors, they aren't eligible for workers' compensation when they are injured. The older Estrada brother was left disabled after an accident and he's unsure whether he will ever be able to work again.
Critics say that the truck driver contractor model has given way to various wrongful labor practices.
California in 2008 began cracking down on trucking companies that misclassified employees as independent contractors. As attorney general, Jerry Brown filed at least five lawsuits against Southern California trucking companies that allegedly circumvented state labor laws.
In 2008, the twin seaports sought to reduce air pollution by trucks. They ordered that older trucks be phased out and others be retrofitted. At the Port of Los Angeles, one of the provisions of the clean truck program would have required trucking companies to directly hire drivers.
Trucking companies objected, filing a legal challenge. In 2011, the U.S. 9th Circuit Court of Appeals affirmed some of the program's components but struck down the direct-employee provision of the mandate.
The case is now before the Supreme Court, which is expected to issue a decision this summer.
Times researcher Scott J. Wilson contributed to this report.
Copyright © 2013, Los Angeles Times
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|Wednesday May 15, 2013 - Graves Urges Transport Secretary on Mandatory Hair Testing
Posted: May 14, 2013 04:21 PM | Last Updated: May 14, 2013 04:21 PM
ARLINGTON, VA — The American Trucking Associations (ATA) “praised” new measures proposed by the National Transportation Safety Board (NTSB) to reduce impaired driving. The ATA is also calling for the Department of Transportation (DOT) to allow mandatory hair samples in standard drug tests.
Today the NTSB released new recommendations to improve road safety and reduce impaired driving. These recommendations include reducing the legal limit for drunk driving to a BAC level of 0.05 instead of 0.08, increasing the use of interlock devices, stronger penalties for repeat offenders, and an increase in high-visibility enforcement.
The ATA supports all of the measures put forth by the NTSB.
“All motorists should support reducing the instances of impaired driving” Graves said. “The trucking industry is held, and holds itself, to a higher standard and we are encouraged by NTSB’s recommendations to bolster efforts to reduce drunk and drugged driving for all motorists.”
ATA President and CEO Bill Graves wrote to Transportation Secretary Ray LaHood yesterday urging the DOT to move forward on a process that allows carriers to collect hair samples for the mandatory drug testing, instead of the current urine testing method.
“All we are asking is for DOT to allow this industry to use the best available tools under the DOT-mandated drug and alcohol testing program to make sure our roads are safe for all motorists,” said Graves.
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|Wednesday May 15, 2013 - Trucking capacity and supply demand now in precarious balance
Transportation forecasting firm FTR Associates has announced that its Shippers Conditions Index (SCI) for March eased from February’s level of a -9.5 reading to a current reading of -7.3. That, said FTR, points to a “slightly improved but still negative environment for shippers.
The index is a compilation of factors affecting shippers’ transport environment. Any reading below zero indicates a less-than-ideal environment for shippers. Readings below 10 signal that conditions for shippers are approaching critical levels, based on available capacity and expected rates.
According to FTR, trucking capacity and supply “remain in precarious balance at the moment, with very limited demand growth keeping shipping costs in check.”
What’s more, added FTR, shipping conditions are “projected to deteriorate further” as freight improves seasonally and the Hours of Service rule changes go into effect (July 1st), which are expected to reduce driver productivity.
“Current shipping conditions remain calm but storm clouds are on the horizon,” stated FTR senior consultant Lawrence Gross. “Every indication is that the Hours of Service regulatory changes will occur as scheduled July 1, which FTR projects will reduce trucking productivity by about 3%.
“While our estimate of the productivity hit is less severe than some, even a 3% decline will be sufficient to tip the balance of supply and demand significantly away from shippers, assuming the economy continues to maintain at least the anemic growth levels seen recently,” he continued.
“This will usher in an extended period of difficulty for shippers,” Gross added, “as there is an array of new regulations lined up behind the HOS change that will further impact trucking in the months and even years to come.”
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