|Thursday Apr 17, 2014 - The Fight to Clean Up the Truck Broker Industry
By Karen E. Klein
In 32 years as a truck driver and seven years as a transportation broker, DuWayne Marshall has seen it all: brokers who pay late or not at all; brokers who go bankrupt; brokers who run outright scams.
“You’ve got a pile of somebody else’s money and there’s great temptation to use it for yourself, since you’re always paying backwards,” says Marshall, the owner of Watertown Refrigerated Logistics, based in Watertown, Wis. And the victims are, more often than not, small business owners.
That’s because, despite the large, highly visible trucking fleets that dominate American highways, the vast majority of trucking companies are small businesses. Of the estimated 500,000 trucking companies nationwide, the average fleet size is five to six trucks, says Kenny Lund, a board member of the Transportation Intermediaries Association (TIA). He’s also vice president of Allen Lund transportation brokers, founded by his father nearly 40 years ago in La Cañada Flintridge, Calif.
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In the complex industry known as third-party logistics, or 3PL, brokers are middlemen between the companies that need stuff moved and the people who have trucks to move it. “In just about every industry there’s a bad element, but in transport there was a higher percentage,” Lund says. “My father, when he was selling, wouldn’t even tell people he was a truck broker. He used phrasing like ‘freight forwarder’ to get away from that notorious image.”
Unscrupulous brokers will take payment from the shippers but withhold payment from their drivers for months, leaving them scrambling to cover fuel and maintenance costs with high-interest merchant cash advances. Others offer quick payment terms, but only if the trucker will agree to take 3 percent to 4 percent less than what he’s owed.
“A normal business would turn around and pay the guy, but instead they float the money,” says Joe Rajkovacz, director of governmental affairs for the California Construction Trucking Association, a trade group. That means brokers use money collected from one shipment to pay truckers who delivered goods in earlier months—or for their own personal use. In that respect, he says, “brokering is not much different from what took down [Bernie] Madoff.”
STORY: Are Truckers About to Get Rich?
Those suffering the most are the smallest operators—the 97.2 percent of trucking companies with 20 or fewer vehicles, according to the TIA—many of them owned by immigrants and first-generation Americans. They depend on brokers for business, Rajkovacz says, because “they’re just too small to contract directly. They get squeezed from every angle.”
Jim Kienbaum, whose Stepping West trucking company takes produce from the agricultural fields in California to the Midwest, has horror stories about brokers. One owed him $1,500 but filed for bankruptcy before he could collect. Another broker’s checks bounced when he owed Kienbaum $40,000. “I got really nervous because I have a truck and a family. I had hauled for him forever but he got a divorce and started drinking and gambling, and things just went downhill,” he says. After weeks of hounding, Kienbaum finally got paid, but many other truckers did not. “One guy got burned for $18,000,” he recalls.
Since 1980, when the transportation industry was deregulated, small truckers have had little recourse in such situations. The law made it easy to become a broker and required only a $10,000 bond—insurance to make sure a broker could pay. In the event a broker didn’t pay, the truckers owed small amounts could file claims and expect to get paid, but those stiffed for more than a few hundred dollars would often have to eat their losses if the bond was exhausted, Rajkovacz says. “Truckers don’t even think of turning something over to collections,” he says. “Most of them are like Timex—they take their licks and keep on ticking.”
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The situation may be getting better for truckers. A new provision of federal transportation law that went into effect in December tightens restrictions for brokers and their bonding companies, and increases the bond requirement to $75,000 annually. That means that someone owed $20,000 at least has a chance of collecting it from the bonding company.
The legislation was contentious, although the TIA and other industry groups wound up supporting it. When brokers had to re-register and post the higher bond, Lund says about 7,000 of the 24,000 licensed brokers disappeared overnight, though many may have been inactive companies. Critics blamed the regulation for killing businesses, but Marshall says he’s not sorry to see some brokers go. “There was an uproar from small brokers about it. But honestly, if you can’t get a bank or bonding company to trust you for $75,000, why should anyone else trust you?” Marshall says.
Kienbaum hopes the new law will help. And he lives by lessons he’s learned from getting burned, like always checking brokers’ online ratings, and calling recent references even for highly rated brokers. “Things change fast,” he notes. He avoids brokers vague on details and those who sound desperate. “Someone who’s putting a lot of pressure on you is having trouble getting trucks,” he says. “That tells you something right there.”
Lund and other industry insiders want to hold land shipping to the same high standards that apply to other areas of transportation. He recalls his father, Allen, chastising foul-mouthed truckers on his CB radio in the 1970s. “He’d get on the radio and say, ‘Can you imagine airline pilots talking that way?’ He expected more and would push them all to be professional.”
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|Thursday Apr 17, 2014 - Trucking Rates Expected to Stay Steady in 2014 and Accelerate in 2015
Spend Matters welcomes another guest post from John Bauman, Principal Economist at IHS. IHS anticipates that 2014 will see weak prices for trucking, with the truckload sector experiencing flat prices and the less-than-truckload (LTL) sector experiencing only mild gains. The second half of the year is expected to be stronger than the first, but this improvement may be delayed, resulting in a weaker 2014 than forecasted before. This is particularly true in the truckload sector, where rates have had little growth recently. Trucking rates are diverging between sectors. Truckload rates have been going down since 2012 and are not expected to rise until the second half of 2014. Overall, the producer price index (PPI) for truckloads will decline 0.1 percent in 2014, after a meager 0.4 percent increase in 2013. Next year is expected to see a 2.4 percent rise, however. Meanwhile, the PPI for the LTL sector remains on an upward trend and will rise throughout the year, albeit at a subdued rate. LTL rates will increase 2.4 percent in 2014, after having risen by 3.1 percent last year. IHS expects price growth to reach 3.2 percent in 2015. There is little to propel rates upwards. Carriers have only a bit of pricing power, while fuel prices are drifting downwards. Fuel costs are always a large risk to trucking prices. Diesel prices have peaked and are expected to continue decreasing over the next two years, slipping 5.2 percent on average and removing upward pressure within trucking rates. Any rise in costs would be passed along to customers, and fuel prices can certainly shift rapidly and unexpectedly. Geopolitical issues in the Middle East would seem to represent the largest risk to a price spike. Conversely, if economic struggles erode petroleum demand and fuel prices drop sharply, rate increases would slow or halt. Meanwhile, demand for trucking continues to strengthen. While this has not been happening at a particularly rapid pace, recent history justifies some cautious optimism about the near-term outlook. Traffic has been climbing steadily since 2010, and many industries that ship heavily by truck continue to show improvement. Consumer spending and construction activity will both accelerate in 2014, though the latter sector is hindered by austere government budgets restraining growth in infrastructure spending. Manufacturing expansion remains a bit lackluster, though. There is growing concern about capacity tightness, and shippers are reporting occasional difficulty in finding space on trucks. Carriers took a significant amount of capacity offline during the recession, and plenty of it was scrapped due to aging. New equipment orders are still primarily driven by the replacement cycle rather than expansion plans. But 2014 will be a better year for equipment orders and carriers will start to place more orders. US medium truck sales grew 6.2 percent in 2013. It’s a slowdown from prior years, but still makes for decent growth. Another 6.0 percent gain is on tap for 2014. Meanwhile, heavy-duty truck sales will jump 11 percent in 2014 and 12 percent in 2015. Capacity tightness is not expected to be a serious issue over the next year, but carriers will have more pricing power and rates will rise if the supply situation deteriorates. - See more at: http://spendmatters.com/2014/04/15/trucking-rates-expected-to-stay-steady-in-2014-and-accelerate-in-2015/#sthash.6v1Q0fjN.dpuf
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|Thursday Apr 17, 2014 - Carrier Sues Illinois Over Rolling Stock Tax Exemption
A trucking company has filed a lawsuit against the Illinois Department of Revenue over it disallowing the states rolling stock sales tax exemption on one of its pieces of equipment.
At issue is the department's disallowance of a rolling stock exemption claimed by Illinois-based Seggebruch Trucking on the purchase of a Peterbilt truck, according to the Mid-West Truckers Association. The suit was filed after the company had paid a notice of tax liability issued by the department under protest.
The department's determination followed an audit conducted on the purchase. The company supplied information indicating during the first year of use, the truck made numerous trips from points in Illinois to grain terminals in Indiana. Also, the company made numerous trips from points in Illinois to grain terminals in Illinois, where the terminal operators had provided certification statements, indicating that a substantial portion of the grain delivered to its Illinois terminal was ultimately shipped outside the state on other common carriers.
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The company believed that they had provided sufficient information for the department to allow rolling stock on the truck in accordance with the department's regulations covering this exemption, said MTA. However, the department's audit staff ruled that only those miles where the vehicle actually traveled across state lines could be used in determining if the rolling stock exemption was applicable. It disqualified the intrastate miles the company had sought to include in its calculation.
The MTA is contacting its members about the lawsuit, especially if they are currently the subject of an audit or have been assessed tax based on disqualification of rolling stock. It advises them to contact the Illinois Department of Revenue asking that any further action be held up pending resolution of the Seggebruch Trucking case.
“Anyone who has paid tax on vehicles and equipment felt to be rolling stock as a result of an audit, may wish to file a protective claim with the Department of Revenue to recoup the tax paid,” said the association.
It notes taxpayers have two years to file claims on money paid to the state and if this case takes a lengthy time to eventually be resolved, the ability to recoup the tax paid could be lost by waiting for a final answer.
MTA has also been working with several members who are involved in challenges to their rolling stock sales tax exemption, including those currently the subject of a Department of Revenue audit or have been assessed tax based on disqualification as a result of an audit.
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|Wednesday Apr 16, 2014 - North Dakota could fine truck company more than $1M
By Josh Wood
The Associated Press
WILLISTON, N.D. — North Dakota officials say a Wyoming-based trucking company working in the state could face fines of more than $1 million for operating without a license and illegally dumping saltwater, a byproduct of oil production.
The state's health and mineral resources departments announced the possible fines Tuesday.
A Health Department official says Black Hills Trucking Inc. could be fined up to $1,000 for every day it operated without a license. He says it hasn't had a license since 2008.
The Department of Mineral Resources says it is seeking maximum penalties of more than $950,000 from the company for illegally dumping saltwater on a Williams County road.
The company didn't immediately return a call seeking comment.
The Attorney General's office has filed criminal charges against one of the company's drivers for illegal dumping.
The Trucker staff can be reached to comment on this article at firstname.lastname@example.org.
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|Wednesday Apr 16, 2014 - Elevator will greatly increase grain storage for area
On Monday, Mid Kansas Cooperative (MKC) offered a tour of the slip construction of the Canton Rail Terminal, a grain shuttle loader facility with the potential to load 110-car unit trains in less than 12 hours.
Once loaded, grain will be exported to facilities in the Pacific Northwest, Gulf Coast and Mexico. The Canton Rail Terminal is on Avenue 25, just north of U.S Highway 56 between Galva and Canton.
The necessity for a new elevator developed through two paths: current and potential grain crop yield increases and the aging of available elevators, whose facilities are or soon will be requiring infrastructure improvements. The new operation will both increase storage (with a capability of 1.1 million bushels of cement storage and more than two million bushels of ground storage) and quickly move it where needed (with the capacity to load rail cars up to 80,000 bushels per hour).
After multiple market studies by different companies, it became apparent the U.S. 56 corridor east of McPherson was not only short on storage space but had the potential for a facility that could access a broader market. This project is directly in line with MKC’s vision of providing market relevance, current assets and good service to its customers.
The new facility will provide two scales; state-of-the-art automation; easy access and an easily maneuverable traffic pattern for all truck sizes; three truck pits, two of which will accommodate semis; one rail pit; and the ability to receive up to 60,000 bushels per hour, eliminating waiting time to dump. It also offers ample room for multiple forms of future storage.
Any customer can deliver grain.
All major market grains will be accepted. With the increase in soybean and corn production, the new facility will be able to handle the slower drying time that corn especially needs over wheat. Older elevators, built when wheat was practically the solo crop, weren’t designed for the slower drying times.
The facility is owned 50/50 by MKC and CHS, though MKC will operate the facility like a local MKC elevator and will pay patronage at MKC rates.
CHS was chosen as a partner after an extensive pool of possibilities because both are cooperatives and thus share a similar business model, both have a parallel vision, and CHS had prior railway experience, which MKC sought.
While the elevator will not be fully completed until early fall, ground storage should be available this summer.
To learn more about MKC, visit www.mkcoop.com.
Read more: http://www.mcphersonsentinel.com/article/20140415/News/140419517#ixzz2z4Gmfgpq
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|Wednesday Apr 16, 2014 - Update Next Month on Federal Truck Size and Weight Limits Study
The U.S. Transportation Department’s Federal Highway Administration is holding a webinar next month to provide an update on the progress of its Comprehensive Truck Size and Weight Limits Study.
What’s described by the department as this third public outreach session will take place on May 6 from 1 p.m. to 3 p.m., Eastern time.
The current federal highway funding authorization, known as MAP-21, requires the DOT to conduct a study addressing differences in safety risks, infrastructure impacts, and the effect on levels of enforcement between trucks operating within federal truck size and weight limits and trucks legally operating in excess of them. The study is also supposed to compare and contrast the potential safety and infrastructure impacts of alternative configurations to the current federal size and weight rules along with estimating the effects of freight diversion due to these alternative configurations.
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Webinar details and registration information will be sent to individuals who have registered on the Comprehensive Truck Size and Weight Limits Study email list and will also be posted on FHWA's Truck Size and Weight website.
Some groups are pushing for increasing truck size and weight limits, saying it will lead to efficiency gains in trucking while opponents claim any hikes will result in a greater number and more severe truck involved accidents. Those wanting changes are hoping to get them included in the next highway funding authorization, with the current one expiring at the end of September.
A recent review by the Transportation Research Board has revealed possible weaknesses in the truck size and weight study. Groups opposing the changes have seized upon this new report saying it shows the process if flawed when it comes to possibly allowing bigger or heavier trucks.
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|Tuesday Apr 15, 2014 - Oil Patch truck driver charged with illegal dumping
By Amy Dalrymple
WILLISTON, N.D. – Criminal charges have been filed against a truck driver accused of illegally dumping oilfield waste in western North Dakota, and the trucking company he worked for could face more than $950,000 in civil penalties for repeat offenses, officials said Tuesday.
Leo Slemin, a driver with Black Hills Trucking of Wyoming, has been charged with a Class C felony for allegedly illegally dumping saltwater, a byproduct of oil production and an environmental hazard.
A Department of Mineral Resources inspector witnessed Slemin on Feb. 14 driving a truck along a stretch of road in southwest Williams County with valves on the underside of the truck open, allowing saltwater to flow directly onto the ground, court records say.
The criminal charge, which is a violation of the North Dakota Industrial Commission rules, is being handled by the Attorney General’s Office.
“The state will not hesitate to bring criminal and civil actions when we learn of instances of illegal dumping,” Attorney General Wayne Stenehjem said in a statement. “Those who blatantly disregard rules designed to protect the environment and keep our citizens safe will be held accountable for their actions.”
Slemin is scheduled to appear in Williams County District Court on Monday. Court information does not list an attorney for Slemin.
The Feb. 14 incident the inspector witnessed occurred in an area where numerous reports of illegal dumping have been received.
The North Dakota Industrial Commission also has issued a civil complaint against Black Hills Trucking seeking more than $950,000 in penalties for repeat dumping of waste on gravel roads alleged during February and March.
A representative from the Williston office of Black Hills Trucking said the company has no comment.
Stenehjem urged citizens and other waste haulers to report any suspected illegal dumping to authorities.
“The majority of waste haulers should not have to compete with those few who illegally cut corners,” Stenehjem said.
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|Tuesday Apr 15, 2014 - Trinity Logistics Acquires Legacy Transportation
Seaford, DE (PRWEB) April 15, 2014
Trinity Logistics has recently acquired Legacy Transportation, Inc. of Gladstone, Missouri. The Legacy staff, led by former President Harold Elliot, has joined the Trinity team in their location on Ambassador Drive in Kansas City, Missouri.
Since 1991, Legacy Transportation served their customer base with full truckload shipping services. In order to meet the growing needs of their shippers, Legacy identified the opportunities of aligning themselves with Trinity Logistics, ranked consecutively in the top 25 providers of their kind by Transport Topics magazine since 2003. Since the acquisition, Legacy's former customers have taken advantage of additional services such as less-than-truckload, door-to-door intermodal, international, warehousing, transportation management software (TMS), logistics consulting, and freight management.
"I was impressed with the enthusiasm, the conviction, and the professionalism at Trinity Logistics. It made me want to be a part of the team," shared Harold Elliot. "I could see that our customers would benefit greatly by having a larger carrier network for truckload shipments and a multitude of other services that many of my customers had inquired about over the years."
Jeff Banning, President and Chief Executive Officer at Trinity Logistics, had this to say about the acquisition. "In our industry, a critical piece that drives success is technology. We're pleased to be able to offer Legacy an operationally strong robust system that was built for speed. Seconds make the difference in securing the capacity and that is part of what makes Trinity cutting-edge thanks to the investments we've made in creating our own custom platform. We continue to enhance our technology and efficiencies for our customers, carriers, and team members."
"The acquisition of Legacy Transportation is perfectly in line with our growth strategy at Trinity Logistics," said Chief Financial Officer, Doug Potvin. "First, we find great opportunities with small-to-midsize transportation companies that are unable to provide a full suite of logistics services to their customers. Second, but just as important, we honestly assess whether it's a good culture fit blending the two teams. The servant leadership mindset within a framework of empowerment and dedication to integrity is critical to the success of the acquisition. We are excited to welcome the Legacy team into the Trinity family."
For more information on becoming part of the Trinity family of companies, connect directly with our talent acquisition team.
Read the full story at http://www.prweb.com/releases/2014/04/prweb11758220.htm
Read more: http://www.digitaljournal.com/pr/1850364#ixzz2z0qMWFVL
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|Tuesday Apr 15, 2014 - Rail Car Shortage Leading To Pileup At Grain Elevator
KIMBALL, SD - The railcar shortage is hitting hard across KELOLAND. As a result, a grain elevator near Kimball isn't able to ship out its corn and grain.
"It's an issue I never thought we'd see, but here it is," farmer Brad Veurink said.
The corn and milo piling up outside the Gavilon Liberty Grain near Kimball is creating a mountain that could soon rival the elevator itself. Manager Todd Yeaton says he's dealt with railcar shortages before, but never like this.
"This widespread in multiple rail systems, I don't think it's been seen, not in the years that I've been in the industry and that's been since the late 80's," Yeaton said.
Weather issues and crew changes are being blamed for putting the delivery of railcars behind schedule. Gavilon even leased out private cars to try to keep up with the demand, but that hasn't stopped the mountain from building outside the door.
"If we get a two or three inch warm rain, any place that has grain uncovered on the ground, you stand the potential for a lot of spoilage," Yeaton said.
There's also an issue of things coming into the Ag business as well. There's a shortage of fertilizer coming in by rail, and that might lead to some producers changing up their plans before planting season.
"Switching over to soybeans might be the deal, because the last thing you're going to do is go out and put a $350 bag of corn out in the field without any fertilizer to supply it," Veurink said.
If more railcars don't soon come to elevators across the state, Yeaton says it won't just be farmers who are hurting.
"It's costing the producers money. It's costing elevators money. It's costing the end users money. Everyone, it's a trickle-down effect in the economy, and there's really nobody gaining by it at all," Yeaton said.
With no answers on the horizon, concerns here, like the grain, will only continue to pile up.
U.S. Senator John Thune recently called on railroad companies to get more freight cars into South Dakota, saying the issue needs to be fixed before spring planting.
© 2014 KELOLAND TV. All Rights Reserved.
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|Monday Apr 14, 2014 - What do shippers want? Custom IT solutions
Study finds shippers are no longer satisfied with standard-issue IT offerings from their logistics service providers.
By James A. Cooke
In the face of ever-increasing shipper demands, carriers and third-party logistics service providers (3PLs) find themselves jumping through hoops to devise special information technology (IT) solutions. For that reason, the results of a recent survey of chief information officers (CIOs) for logistics and transportation service companies are pretty much what you'd expect. That is, the top challenge facing CIOs is providing custom IT solutions for their clients.
That was one of the most interesting findings of a CIO survey conducted by the information technology giant HP and the British conference organizer eyefortransport (eft). One hundred eighty-seven respondents took part in the survey. Fifty-three percent of respondents came from the United States, 24 percent from Europe, and the remainder from other parts of the globe.
Given the push for individualized solutions, it also comes as no surprise that 67 percent of respondents plan to increase their IT spending this year. As for specific areas for investment, warehouse management systems topped the list, with 46 percent of respondents planning to purchase that type of application. Modifications to business applications came in second, followed by electronic data interchange and transportation management systems.
Although in most cases, the respondents looked to software vendors to supply their applications, the survey found several instances where the CIOs said they would rather build their own solution than buy or rent one. This was particularly true when it came to applications for route planning and business intelligence as well as for modifications to existing programs.
Big data continues to have appeal. Forty-two percent of respondents reported that they are using big data technologies, and another 19 percent plan to make investments in that area in the next 12 months. When it comes to setting up their big data programs, most CIOs plan to seek outside help. Fifty-seven percent of survey participants said they would use an outside firm to develop their big data strategy.
As for which big data technologies respondents plan to invest in, analytics topped the list, cited by 46 percent of CIOs in the survey. Most respondents said they would use analytics as a way to gain insights into capacity management and for product and market segmentation. Incidentally, when survey-takers were asked how they are currently using big data, the least popular response was analyzing data from social media to spot trends—which is, of course, the hottest area for big data analysis in corporations these days (think marketing for consumer products).
Despite the interest in big data, few provider CIOs are planning to spend big bucks on it in 2014. Seventy-three percent of respondents said they plan to spend less than a million dollars. Sixteen percent said they would spend between $1 million and $1.5 million, and 11 percent between $1.5 million and $2 million.
The study also found that companies using cloud-based solutions are more apt than their noncloud-using peers to have deployed sensor technology. Thirty-nine percent of cloud users were using some type of sensor compared with 25 percent of noncloud users. Companies using (or considering using) sensors— whether they used cloud-based solutions or not—were most likely to deploy sensor technology in the following areas: global positioning systems (GPS), radio-frequency identification (RFID), temperature monitoring, and humidity monitoring.
For their part, CIOs view technology as essential to the business. In fact, a third of respondents—33 percent—said that from their point of view, technology innovation held a higher priority than core business activities.
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