|Sunday Mar 09, 2014 - Business owners are abandoning logistics agent programs in 2014
Business owners are abandoning logistics agent programs in 2014, by CarrierDirect
Armstrong & Associates, a third party logistics (3PL) consultancy firm, projected that the US Logistics sector was the fastest growing part of the Transportation industry and was forecasted to total over $150 billion in 2013, accelerating at a rate twice that of the nation’s GDP growth.
The extraordinary size and growth of the industry attracts a wide range of professionals and entrepreneurs, some of whom have become extremely wealthy by carving out their niche in the industry.
As the industry has grown, many companies have begun offering hyped-up promises of ways to get rich through independent Agent programs that resell transportation services of the company. As these programs have grown, it has become apparent that they rarely benefit the individual Agents but instead generally just the company offering the program.
The Agents that sign onto these programs are often stuck with situations where they receive a small portion of the profits but do the majority of the work to bring on and service new customers, all the while receiving a small portion of the profit. In a recent whitepaper written on the subject, CarrierDirect provides an overview of how many of these Agent programs operate and the various scenarios that have left them chasing a dream without the ability to build a business that creates any long-term wealth opportunity.
“It’s an interesting practice that has come up over the past few years,” said Joel Clum, Vice President at CarrierDirect.
“There are hundreds of Agents we hear from that explain how they got to where they are today and how they’re not really capable of growing their Agent program past a certain level, usually $1 million in revenue.
“The companies offering the programs may do very well, but their individual Agents are left struggling to build businesses that ultimately end up being just another job that they have to push through.”
As they elaborate the situation in their whitepaper, CarrierDirect provides additional options to consider for these Agents or professionals interested in the Logistics industry, one of which comes from going out and getting their own brokerage authority. Another option – without the raised bond requirement in 2013 – for entrepreneurs and professionals to consider comes in the form of Franchising, which has exploded in the Logistics industry over the past decade.
Clum said that as Logistics has grown “a number of the most exciting brands have used the Franchising model as the backbone of their growth such as Worldwide Express, Unishippers and BlueGrace Logistics.”
Clum Added: “The programs are structured in a cleaner format, with more of the profits being channeled to the Franchisee who has more control over their business. The businesses they build have a greater income potential for the Franchisee than an Agent would, with the ability to sell their business if they chose to after the business has grown.”
CarrierDirect is an elite consultancy in the transportation and logistics industry that provides advisory services to top third-party logistics companies and carriers, supporting their growth to become market-leading enterprises and outpace their competition. Follow them on Twitter at https://twitter.com/carrierdirect.
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|Sunday Mar 09, 2014 - Trucking costs derail shale recycling
The Columbus Dispatch
A South Side company has backed off plans to process fracking waste.
Ohio Soil Recycling had planned by last November to begin recycling crushed rock and shale (called cuttings) brought to its Integrity Drive facility by fracking companies operating in eastern Ohio.
But the drilling companies are unwilling to pay trucking and processing costs, according to Ohio Soil officials.
The Ohio Environmental Protection Agency approved Ohio Soil Recycling’s plan in August after tests found no elevated radiation in the fracking waste.
The fracking process injects millions of gallons of water, sand and chemicals underground to shatter the shale and free trapped oil and gas. Much of the fracking water comes back up tainted with saltwater that contains toxic metals and radium.
Chris Elliott, president of Ohio Soil Recycling, had said there are companies in Texas and Colorado that recycle shale cuttings from fracking. The state said Elliott’s company is the only business in Ohio that has been approved to do it.
Carolyn Harding, a Bexley resident and co-founder of Radioactive Waste Alert, raised concerns about potential radiation runoff from the recycling treatment.
Elliott had said that drilling lubricants would be removed and that the cleaned rock and shale would be used to help build a cap over an old Franklin County landfill along Alum Creek.
Harding had opposed the plan. She said shale can contain radium 226, which is water soluble and could infiltrate Alum Creek and eventually the water supply.
“I see it as a temporary small win for Columbus but not for Ohio,” Harding said. “We are in danger of having all these Ohio superfund sites that will have to be cleaned up.”
Elliott said drilling companies told him that landfill costs had dropped while trucking and fuel costs had risen, preventing them from hauling tons of material to Columbus.
Radioactivity, he said, never was an issue. Samples taken from sites tested below state limits.
Elliott said he would still consider processing the waste if the drilling companies return with an offer.
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|Friday Mar 07, 2014 - Trucker 'lucky to be alive' after beam stabs cab
by KGW.com Staff
TUALATIN -- Southwest Tualatin-Sherwood Road at Southwest Nyberg Road was closed after steel beams slipped, pierced the back of a semi-truck's cab and went through the front window Wednesday afternoon.
"I was very lucky," said Truck driver Jack Phillips. "If you look into the cab the only thing that's not crumbled is my seat and steering wheel."
Phillips said he was cut off by another driver and instinctively hit the brakes, causing the 30,000 pounds of steel beams in his trailer to shift. Some of the steel beams came barreling through the cab of his truck.
"I didn't know what to do but duck my head and hope for the best," he said.
Afterwards, police joked with Phillips that he should buy a lottery ticket.
The driver of the semi-truck which cut Phillips off was cited.
A huge crane and another semi-truck had to be brought in to clean up the mess.
Southwest Tualatin-Sherwood Road was closed for several hours during the cleanup. Traffic was detoured to Southwest Boones Ferry Road to access Interstate 5.
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|Thursday Mar 06, 2014 - More Wheat, Oats Headed South By Truck
Written by Kelvin Heppner
Farmers close to the US border are trying to truck more grain south as a result of the rail bottleneck in Western Canada.
"There's a lot of grain moving south right now. It's probably more than people realize," says Brian Voth, vice-president of Agri-Trend Marketing. "Anybody that's within 60, even 80 miles of the border, it makes sense to be doing this when you look at basis levels and the fact they can take grain within three to four weeks from contracting, rather than contracting in Canada and not being able to move it for three to four months."
Most of the trucks headed south are carrying wheat, with some oats also being sold directly to US buyers.
While there are some reports of US elevators not accepting any Canadian grain, others elevators have started posting two sets of prices for wheat, depending on the grain's country of origin.
"It seems to be more of an issue the further west you go. I've heard in Montana they won't even take Canadian grain, but you go near the I-29 south of Winnipeg and they gladly take it," says Voth. "Now they have some segregated bids, but generally it's only somewhere between 10 to 25 cents (in eastern North Dakota), but I've heard its been as wide as 50 cents further west."
Farmers who have access to producer car loading sites have also been able to bypass the rail challenges in Canada to access US buyers in some cases.
"That's been a saving grace for a lot of farms, particularly if you can work with US buyers because then you get US pricing and you get the valuation of the Canadian dollar as well," he says.
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|Wednesday Mar 05, 2014 - Three reasons carrier rates will rise in 2014
By Mike Regan, Chief of Relationship Development, TranzAct Technologies
March 05, 2014
At the recent 2014 Stifel Transportation and Logistics Conference, and the Food Shippers Annual Transportation Conference, I had some great discussions with industry experts. They highlighted three reasons carrier rates will rise in 2014:
1. Driver retention issues are causing a capacity crunch:
The Chairman of one large privately-held truckload carrier told me that the driver shortage issue is more serious than what is being reported in the press. He said the real issue is that the trucking industry is simply not attracting new drivers. As a result, carriers have to poach drivers from other carriers to keep their own fleets rolling. Add to that an aging driver population—the average age of truck drivers is 55 years according to the Bureau of Labor Statistics—and you have a better understanding of why it is critically important that the industry attracts new drivers.
According to this executive, the industry needs to increase driver pay. Right now, his experienced drivers make between $45,000 and $55,000 annually. He believes that within the next three years, professional drivers should be earning between $70,000 and $80,000. Obviously, carrier rates would have to be significantly higher to afford this level of increase.
He, along with many other senior trucking executives, recognizes that shippers are not willing to pay theses higher rates right now. But things could change when shippers find it difficult to find carriers to move their freight. If the truckload carriers exercise market discipline and focus on improving their operating ratios, shippers will pay more within the next two or three years or their freight won’t get moved.
2. Carrier fleets are not expanding, adding to the capacity crunch:
At the Stifel Conference, several carriers mentioned that they have no plans to expand their fleets, but J.B. Hunt’s presentation really got my attention. In disclosing their financial results and plans for the future, they projected flat growth for their truckload sector. Asked specifically about the company fleet, he responded, “No. We’re not going to be expanding our fleet.”
If you want real sobering facts that will help you understand what has happened in the trucking industry since 2006, then go to www.tranzact.com and download two slides that Derek Leathers from Werner Enterprises shared with the Food Shippers audience. It highlights the investment in fleets for Publicly Traded Carriers, as well as their investment in asset-light groups. Once again, if the carriers exercise market discipline, they will not significantly expand the size of their fleets until they can get the financial returns that would justify buying equipment. Add it all up and shippers will have to pay more to secure services when there is a shortage of trucks.
3. Brokerage firms’ rate increases will mean higher spot market rates as well:
Shippers who rely on brokers to manage the gaps in their capacity also got a wakeup call at the Stifel Conference. Several individuals addressed the industry wide implications of C.H. Robinson’s earnings call in late January, their statement that they will be focusing on long term financial targets, and their intent to deliver 7% to 12% EPS growth over the long term by increasing margins and reducing costs.
Let’s translate this: C.H. Robinson will be looking for margins instead of using pricing to capture market share. So, as the 800 pound gorilla, if C.H. Robinson follows through and actually increases their rates, you can expect other major brokerage firms to follow suit—which means higher rates in the spot market.
Guess what? That is exactly what has been occurring in 2014. Jeff Silver from Coyote Logistics was a member of the panel that I moderated at the Food Shippers Conference. Jeff highlighted that he had never seen a January and February like 2014. Jeff’s comments were echoed by several other members of the attendees I talked to at the conference. When you hear these types of comments from individuals with twenty to thirty years of industry experience, it gets your attention. It was particularly interesting when one sage industry veteran talked about the impact of carriers “auctioning” their equipment to move freight for shippers. An auction environment means rates will go up if we continue to have a sellers’ market.
What will you do with this information?
Finally, Peter Burke, another member of our panel at Food Shippers, offered some great advice. Shippers need to be sharing these types of articles with their Senior Executives, so they have a better understanding of the transportation marketplace and how it could impact the bottom line for their companies. So why not copy this post and pass it along? Perhaps it will come in handy when those executives review your budget.
For a downloadable copy of this blog, with the slides about carrier fleets, click here.
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|Wednesday Mar 05, 2014 - Grain freight scheme to be reviewed
IT prompted community meetings and constant council discussion in the north, and now the Grain Harvest Management Scheme (GHMS) will be the subject of a NSW Government review.
Roads Minister Duncan Gay announced the review on March 4, saying it would build on feedback from farmers and transport operators during harvest.
The GHMS allowed a five per cent flexibility on general mass limits during the 2013-14 grain harvest, giving farmers more leniency for variations in crop weight and grain distribution in a crop.
The review will examine the scheme's conditions and management processes and include consultation with local councils and stakeholders including NSW Farmers' Association, GrainCorp and NSW Livestock and Bulk Carriers Association.
It will also look at the flow-on effects of changes in delivery volumes at receival sites and make recommendations for improvements to the scheme for the 2014-15 season.
Mr Gay said early data collected by Transport for NSW Freight and Regional Development showed strong participation rates in the trials by farmer and transport operators, despite some councils putting the scheme on hold due to concerns about the condition of shire roads.
Narrabri Shire Council jumped at the chance to sign up for the scheme when it was introduced in September, but the scheme was put on hold less than a month into harvest.
Narrabri mayor Conrad Bolton said at the time that road conditions were to be assessed before the scheme's introduction, but harvest had already started before the process was underway.
Identifying the state of the road before the trucking started would have allowed the council to apply for funding to pay for damage done to roads during the harvest.
At Moree, community and farmer backlash resulting in an extraordinary meeting of Moree Plains Shire Council to overturn the initial decision to not take part in the scheme.
Both councils said their continuation of the scheme in 2014-15 would depend on the impacts on the road network and whether state funding would be provided to alleviate the costs of repairing roads.
The review is due to be completed by April 30 and the findings will be incorporated into any future scheme.
"This review will help us ensure the scheme is delivering real benefits to farmers and others in the supply chain by looking at how it could be further developed for future harvest seasons," Mr Gay said.
Councils, farmers, transport operators and receivers are encouraged to make submissions to the review.
For more information visit Roads and Maritime Service
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|Wednesday Mar 05, 2014 - Congress Hears Size Testimony
Trucking industry interests brought testimony before the U.S. House of Representatives’ Committee on Transportation & Infrastructure Feb. 27, 2014, to encourage legislation that would increase maximum size and weight limits. Representatives from fleets, manufactures and transportation planning groups argued that increased limits would reduce traffic, improve road conditions and help the industry accommodate the growth expected in years to come.
By 2035, trucks in the United States will haul twice the tonnage of freight being moved today, according to Henry Maier, FedEx Ground President and CEO.
“If we think traffic congestion is bad today, imagine twice as many trucks on our highways, not to mention more passenger vehicles,” said Maier in his testimony.
Others testified that increasing the weight and size limits will not have a negative impact on safety. The technology to haul longer, heavier loads without compromising safety is already being used successfully in other parts of the world, according to Susan Alt, senior vice president for the Volvo Group.
Size and weight studies in Wisconsin and Maine also support the benefits of the improved efficiency of larger trucks.
“What we’ve seen so far [are] lower shipping costs and improved safety without damaging our road system,” testified Maine Rep. Mike Michaud, speaking of his state’s pilot program.
The Moving Ahead for Progress in the 21st Century highway funding act commissioned Congress to complete a two-year study on truck size and weight limits, but that study is not yet complete.
Despite the consensus at last week’s House hearing, some trucking industry groups have historically opposed increasing truck size and weight limits. Among those groups are the Teamsters and the Owner-Operator Independent Drivers Association.
- See more at: http://gobytrucknews.com/congress-hears-size-testimony/123#sthash.SOqsd7PW.dpuf
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|Tuesday Mar 04, 2014 - Let’s make an effort to move more freight by rail and less by road. Trains are more efficient.
By Brian Palmer, Published: March 3
Last month, President Obama announced an initiative to improve the fuel efficiency of trucks. That’s a lofty goal, but here’s an even better idea: Let’s make an effort to move more freight by rail and less by road. Trains are far more energy-efficient than trucks — and they always will be.
Trains have a significant friction advantage over trucks. The degree of “stickiness” between two surfaces is expressed mathematically as the coefficient of friction. For a steel wheel rolling over a steel rail, its value is approximately 0.001. For a rubber tire rolling over pavement, the coefficient is between 0.006 and 0.010, or roughly an order of magnitude greater. Some friction is good — it stops the vehicle when a person runs out in front of it. But too much friction means less energy driving the vehicle forward.
The strength of steel gives trains another efficiency advantage. Rubber tires sag under 80,000 pounds of freight, the amount carried by many trailers. The weight of the truck deforms the pavement, and the road cradles the flattened wheel. This increased surface-area contact means yet more friction. Train wheels and railroad rails deform, too, but the stiffness of steel limits the damage.
As for aerodynamics, trains also trump trucks. Every vehicle has to “punch a hole in the atmosphere,” explains Christopher Barkan, executive director of the rail transportation and engineering center at the University of Illinois at Urbana-Champaign. Once a tractor-trailer has punched its way through, that hole closes. The next truck must punch a new hole. Trains can carry more than 100 trailer-size containers. When the locomotive punches its hole in the atmosphere, each car that follows can sneak into that same hole, saving a tremendous amount of energy. The faster a vehicle travels, the more significant these aerodynamic effects become.
The train engine itself is a more efficient device than the engine of a truck. “A highway semi-tractor has a roughly 500-horsepower diesel engine, while a freight locomotive has a 4,400-horsepower diesel prime mover,” notes Tyler Dick, a research engineer at Urbana-Champaign. Nine truck engines have nine sets of parts rubbing against each other whenever they each attempt to combust a drop of diesel fuel. A single train engine can produce the same output with less rubbing.
Industry consolidation also speeds implementation of new technologies. There are dozens of large trucking companies in the United States, in addition to thousands of independent truckers, which makes it difficult to broadly implement good ideas quickly. (That’s one reason President Obama is getting involved.) By contrast, a small number of companies dominate American rail freight, giving them the power and motivation to improve efficiency.
In all of the areas mentioned above — friction, aerodynamics and engine efficiency — railways have made improvements over the past two decades.
For example, to minimize the energy that is lost when a train comes around a curve — the squealing of the wheels is “the sound of energy being wasted,” says Dick — modern freight trains release a small amount of lubricant as they round a curve. It’s enough to cut down on the friction, but not so much that it inhibits braking.
Changes in how trains are loaded can improve aerodynamics. You may have seen a freight train pass by with empty beds, or spaces between the freight cars. That’s bad. Open slots create turbulence, forcing the next car in the train to fight air currents and waste energy. Railroads in recent years have worked to eliminate open slots, either through improving management of the freight they have or by placing empty trailers on beds if they’re out of loaded cars.
The efficiency improvements in trains is notable over the past few decades. “Between 1980 and 2013, the number of ton-miles moved by railroads has doubled,” Dick says, referring to the unit that train operators use to measure the weight of their freight and how far it has moved. “But the amount of fuel they are using has remained relatively constant.”
You may have heard railroad commercials bragging that trains can move a ton of freight more than 450 miles on a gallon of fuel. What they don’t tell you is that, in 1980, that distance was only 235 miles. While freight trains have doubled fuel efficiency over the past few decades, tractor-trailers remain nearly as inefficient as they were in the 1970s. The average semi got 5.6 miles per gallon in 1973, and today that has improved to just 6.5 miles. (The American Trucking Association did not respond to a request for comment.)
Columnist George Will once called the preoccupation with trains a “disorder” that “illuminates the progressive mind.” He’s wrong. Recognizing a 30-year trend, accepting simple physics and caring for the environment isn’t a sickness — it’s a cure.
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|Monday Mar 03, 2014 - Former Trucking Comptroller Admits to Millions in Theft
A former comptroller for a Missouri trucking company pleaded guilty last week to stealing more than $4.9 million from his employer.
David VanWinkle of Frontier Leasing based in Joplin, Mo., waived his right to a grand jury and pleaded guilty in U.S. District Court in Springfield, Mo., to wire fraud, money laundering, and failure to pay taxes between June 2008 and December 2013, which he spent on personal expenses and gambling.
Frontier Leasing operates around 100 trucks in the dry van and flatbed sectors along with brokerate services, according to its website.
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Based on a report from a financial institution, federal agents began investigating unusual deposits VanWinkle made into his business accounts for two businesses, VanWinkle Accounting and VanWinkle Farms, according to the U.S. Attorney’s Office for the Western District of Missouri.
VanWinkle, acting as the comptroller for FLI, received payments from FLI’s customers in the form of checks. VanWinkle deposited some of those checks into FLI’s legitimate business accounts, but deposited other checks into another checking account under the name of FLI that VanWinkle had opened at another bank. VanWinkle was the sole person on this secret account. No one else was aware that FLI had the account and VanWinkle was not authorized to open an account or deposit any of FLI’s customer payment checks into the account.
VanWinkle admitted that he withdrew money from the secret bank account to deposit into his business accounts. The embezzled money was then spent on VanWinkle’s personal and gambling expenses.
According to the indictment, VanWinkle failed to report the embezzled funds from FLI on his personal income tax returns he filed with the IRS for the years 2008 through 2010. VanWinkle did not file income tax returns for the years 2011 and 2012 and did not report the embezzled funds during these years, either.
In addition, VanWinkle was responsible for collecting payroll taxes for FLI and paying those payroll taxes to the IRS. VanWinkle withheld those taxes but failed to turn them over to the IRS. VanWinkle admitted that he collected, but failed to pay over, a total of $435,896 in federal tax, Social Security and income taxes withheld from FLI employees’ paychecks.
Under the terms of the plea agreement, VanWinkle must forfeit to the government more than $4.9 million, a 2013 Holland tractor, a 2007 Hummer H3, a 2012 John Deere no-till seed drill, and $28,086 that was seized from various bank accounts.
Under federal statutes, VanWinkle is subject to a sentence of up to 30 years in federal prison without parole, plus a fine up to $750,000. A sentencing hearing will be scheduled after the completion of a pre-sentence investigation by the United States Probation Office.
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|Monday Mar 03, 2014 - Idaho Court Ruling Favors Truckers
The Idaho Supreme Court has issued a ruling that ends an unusual insurance practice related to independent truckers. Under the ruling, truck drivers whose services are commissioned by a broker will no longer be treated as employees of the brokerage for purposes related to unemployment insurance.
The ruling is a win for both the truck drivers and the brokers.
“The stakeholders are anyone who at any time may want to contract with an independent [trucking] contractor,” says Julie Pipal, executive director of the Idaho Trucking Association.
Trucking broker Western Housing Transportation and its owner Sid Burgess filed the lawsuit after an audit in 2011 revealed that the company hadn’t submitted $12,000 to pay the tax for 13 independent operators that transported houses for Western that year.
The law at the time classified independent truckers as employees of the brokers because the truckers rely on federal permits held by the brokerages for interstate travel. That meant that brokers had to pay unemployment insurance taxes for drivers who were actually self employed.
“The original [rule] caused many trucking companies to either quit using independent contractors altogether or to completely change their model for doing business,” says Pipal.
Most independent drivers are already paying for their own unemployment insurance, according to Western Housing’s lawyer David Leroy, so the ruling should not put a new burden on the truckers. Instead, it opens up the market by making it easier for companies to hire them.
- See more at: http://gobytrucknews.com/idaho-court-ruling-favors-truckers/123#sthash.9GxiFQHl.dpuf
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