Today is the day, she thought as she finished wiping the counters at the small town diner.  She was just finishing her shift and just had enough time to pick up the kids from school.  She felt pretty good as she drove through the blowing leaves on that beautiful fall day.  It was amazing how much she had accomplished in the past three weeks.  She had canned all the vegetables from the garden, cleaned the house, and taught Jimmy how to mow the yard.  He was a hard worker.  Last night, she went to a parent/teacher conference and the news was mostly good.  I still have to work with Jimmy on his math she thought as she pulled up the drive to the school.  That’ll be a challenge, because on a day like this he’ll want to be outside after being cooped up in school all day.  Well, it’s the weekend and there’ll be time for that later.

The kids were literally “wired for sound” so she decided to let them enjoy the beautiful afternoon outside while she got some things done.  She stopped at the mailbox on the dusty gravel road and thumbed through the mail.  She saw the envelopes with his settlements, the car bill, the electric bill and the gas bill.  Upon parking the car outside their mobile home, the kids darted out for the woods, while she took their lunch pails into the kitchen and cleaned them out.  She sat down at the kitchen table and opened the mail.  Only 2000 miles on the week, she noticed as she opened the settlement.  Nothing was going to take away the good feelings she had welling up inside.  That’ll make for a tough budget, but she’d already planned for that.  The kids Christmas presents were already on layaway and she smiled as she thought that she only had three more payments left.  She looked outside and smiled again as she saw Jimmy raking the leaves while Sarah and their dog, Jeff were jumping in the pile.

Later in the evening, while she was cleaning the dishes from the dining room table, Sarah asked, “When is Daddy coming home?”  She smiled as said, “He called this morning and thought he would be home right after dinner if he was loaded on time.  But you know Sarah that he always tries to get home as soon as he can.”  The little angelic face pouted and whined, “But Daddy said that he would be home a week ago!  He’s normally gone for two weeks and this time he’s been gone for three.”  “I know, Honey, but you know how trucking can be,” she said, “One of the other truckers had to get home right away to take care of his ailing mother, so Daddy took his load for him so it would be delivered on time.”  “But, why couldn’t someone else take the load,” Jimmy said.  “Well, honey,” she said, “if Daddy didn’t deliver the loads that needed to be delivered, people wouldn’t have things at the store and Santa couldn’t find any toys to bring for Christmas!” she said with a smile.  “Wow, I’m going to tell my friends,” said Sarah, “they think that truckers are these mean people who scare people with their driving on the road.”  “Well, don’t you ever think that, Sarah.  Daddy is one of the best drivers there is and he makes sure that stores always have the things people need to buy,” she said as she looked out the window for a cloud of gravel dust down the road, which wasn’t there.

After the kids were in bed, she went out of the porch and looked into the night.  It was perfectly quiet and the stars were out.  She went back in and laid down on the couch.  The clock showed 10 o’clock.

He pulled his rig off exit 42 and pointed it towards home.  Only two more hours to go he thought.  What a day!  I can’t believe they had me wait six hours for my load on a Friday.  He thought about complaining to the dispatcher, but he knew it wouldn’t do any good anyway.  Normally, he takes waiting at the dock in stride, but tonight he would be home for the first time in three weeks.  He had been listening to the bad news about the economy all week and decided to run another week to get some more money for Christmas and to help another driver out.  It was hard to listen to all the complaining at the truck stops from the other truckers.  Things sure are slow!  But in this business, you have to do what you have to do.  No point in getting all worked up about it.   I bet it’s going to be a busy weekend, he thought as he thought about the work that needed to be done around the house, finishing up the garden, raking leaves and mowing the yard.  I hope the kids are doing ok he said to himself barely out loud.  They really get in a funk when I’m gone this long.  “I don’t know where I’m going to get the money to get Christmas for the kids,” he worried.

At one in the morning, he made his final turn.  As he pulled his rig up in the drive, the lights in the house came on and the door flew open as she ran to the truck.  He smiled through his red eyes as she threw her arms around him and they walked, holding hands into the house.  They talked until three in the morning before falling asleep.

The morning sun beamed through the window.  “Hush,” she said, “Daddy worked hard last week, and needs some sleep.”  The children tried to contain their excitement.  He rolled over and looked at the clock.  “Ten in the morning,” he thought, “I didn’t want to sleep that long.”  He rolled out of bed thinking about all the chores he needed to do but as he looked around, he saw the house was in perfect condition.  The smell of coffee was in the air.  He put his feet on the floor and looked out the window to see a perfectly mowed yard on a crisp autumn morn.  He also noticed that the garden was harvested.  As he went into the kitchen, Sarah and Jimmy ran to him and showed them their report cards.  They were the best he’d ever seen.  “I can mow the yard and rake the leaves now,” boasted Jimmy.  “Yes, you are becoming quite a hardworking man,” he said with a twinkle in his eye.  “You were gone too long,” said Sarah, “but I’m going to tell my friends that my Daddy was helping Santa, so they would have toys at Christmas.”  He looked at his wife’s secret smile.  Later, they went on a picnic by the river and just enjoyed the day as a family.   He beamed with pride as he looked at his family and cherished every minute of that Autumn Saturday. 

The next day after Church, his cell phone rang.  His family all looked at him as he answered the phone.  “I have a 600 mile load for you that has to be delivered Monday night.  Can you take it?” the voice on the phone said.  “I finish my 34 restart at 6 tonight and can start with a fresh book of hours,” he said.  “Good,” the voice said, “Don’t forget your checkcall when you pick up the load.”  “Yes, boss,” he replied.  He looked at the kids and smiled even though he felt sadness coming on him.  “Is that a load for Santa?” asked Sarah.  “Yes,” he said, “you wouldn’t want the toys to be late would you?”  “That’s funny, Daddy!” Jimmy said, “You’ve never been late!” 

As she walked him to the truck that evening, he looked at her and couldn’t get over how good his life was and it was all thanks to this woman that he made his life with.  They kissed, he climbed up in his truck and waived as he wheeled out of the drive.  He remembered her smiling face as he drove down the road.  He thought to himself, “People think that trucking is a man’s business, but they would be surprised if only they knew, it’s the women that keep the trucks rolling.”

Copyright-Tom Kretsinger, Jr. 2010

“Ticking away the moments that make up a dull day,
Fritter and waste the hours in an offhand way.”

                                                            “Time”, Pink Floyd, 1973

CSA 2010, together with the increasing use and mandate of Electronic On-board Recorders will create a new focus for the trucking industry and its customers.  That focus will be on time.

“Time is an equal opportunity employer.  Each human being has exactly the same number of hours and minutes every day.  Rich people can't buy more hours.  Scientists can't invent new minutes.  And you can't save time to spend it on another day.  Even so, time is amazingly fair and forgiving. No matter how much time you've wasted in the past, you still have an entire tomorrow.” ~Denis Waitely

We have been tracking utilization of our tractors for some time.  Recently, we started tracking those with paperless logs separately. There are two things which we found surprising. The new paperless logs have what is called an Efficiency Report. This report measures what percentage of the driver’s legal time is used driving. What we found shocking was that the percentage of a driver’s available drive time that they actually drove was surprisingly low. The other surprise was that the drivers with paperless logs have consistently been averaging more miles per week more than the fleet average.  How do you reconcile this data?  I have been talking with drivers who are using paperless logs to try to understand the cause of this.  What I discovered is that the drivers on paperless logs have learned to manage their time better. We now have a waiting list of drivers wanting to start on paperless logs.  Once drivers realized that they must comply with the hours of service regulations, paperless logs were seen as convenient technology.  For the first time, operations can monitor a driver’s time in real time. Programs are available to load information from the driver’s paperless logs directly into optimization software.

Those in the industry have a history, and a habit, of thinking in miles. The reason for this is that we are all paid in miles and as we have become more judicious in controlling our costs, we think of costs in miles. I suggest we also begin to think of costs in minutes.  To give an example, let’s say a driver is offered three loads. What are the factors that will go into his decision? A lot of drivers will weigh factors such as weight, distance (with longer being preferable) and destination. In talking with one driver using paperless logs, he told me that one change is that he now makes the selection based upon what works best with his logs. Maximizing his use of legal time has become a primary factor in his decision making process. It can also determine if the driver and the trucking company will be profitable.

A truck must produce a certain amount of revenue each day to be profitable, regardless of the number of miles run. The same is true for drivers. The driver shortage now hitting the industry will lead to a competition for “driver friendly” freight because drivers hate to sit and love to drive.

So, how does one manage time?  What happens at shipper’s and receiver’s facilities is often determinative of how much time is wasted.  Many carriers and drivers view these problems as beyond their control. However, if you review your contracts with your customers, almost all provide that the shipper agrees to pay accessorials for such items as truck detention, trailer detention, TONU (truck ordered, not used) and similar items. But do carrier’s charge accessorials?  Prior to the recession, carriers were becoming good at charging accessorials, and innovations in technology made this much simpler.  However, as many shippers gained the upper hand during the recession, many said they would no longer pay accessorial charges. Carriers caved because insisting on a customer paying for wasting its time would result in loss of the business.

Now the pendulum has swung back to the carriers and most are achieving long overdue rate increases.  If you are a carrier, one of the things you can do to prepare yourself for CSA 2010 and EOBRs is begin to start charging accessorials the customer has already contracted to pay. As compliance tightens, you’ll be in trouble from a profitability standpoint as well as a driver recruitment and retention standpoint if you do nothing to make customers accountable for waste. If you are a shipper or receiver, you can prepare yourself by making dock personnel accountable for wasting a carrier’s time. You will not only avoid accessorial charges, but you will lean the supply chain and position yourself as a customer of choice among carriers and drivers.

ALL I DO IS DRIVE

"Well I asked an old truck driver about life out on the road
If he does a lotta singing when he's bringing in his load
If there's a pretty waitress crying for him every hundred miles
If he gets a lotta loving if he has a lot of smiles
And I asked him if those trucking songs tell about a life like his
He said if you want to know the truth about it here's the way it is

All I do is drive, drive, drive try to stay alive
And keep my mind on my load keep my eye upon the road..."

                                          Johnny Cash - Ragged Old Flag, 1974

There are a lot of old songs and stories about the life of a truck driver.  These stories all vividly describe the freedom, loneliness, hard work and outsmarting the law, all while just getting by.  There is a certain allure to a job that let's you see the country while not having a boss breathing down your neck.  However, most of these stories describe a life that has undergone rapid change. 

Trucking today is about as similar to those legends as an old rotary dial payphone is to an iPhone.  Technology has brought satellite tracking, cameras in the cab, and methods of communication that allow a company to more closely monitor and manage that life on the road.  Government regulations, including CSA 2010, EOBRs, Hours of Service, no-idle regulations and host of others ensure that both the FMCSA an their trucking company will be riding team with the driver. 

CSA 2010 is a significant change in safety regulation which will affect everyone in the trucking industry... and it will have real impact on compliance.  To truly understand CSA 2010, one needs to think in terms of ISO (International Standards of Organization). Statistical data (crashes and roadside inspections) is collected and maintained in the FMCSA computer.  Exceptions to mistakes in the data are encouraged through the website.  It is available for auditors and carriers to see. The FMCSA uses the data to determine where additional training is needed for law enforcement personnel and to track carriers' performance.  Carriers are rated according to their peer group under a point system.  Root cause analysis determines where a particular company's compliance problems lay. Audits are then targeted to the deficiencies in seven areas and "red flagged drivers."

At first a carrier is notified by letter of the problem.  They are required to file a corrective action report with the FMCSA addressing their plan to fix the problem. The FMCSA then determines if the plan is adequate, approves the plan and then continues to collect data.  Data is reviewed to determine if the problem has been fixed.  If the problem is resolved, scores are monitored for future deficiencies.  If the problem is not resolved, an on-site visit occurs where the problem is reviewed more extensively.  When the auditor arrives, they are armed with data on the carrier's problem drivers and well as their own history.  If the carrier has taken appropriate actions with its drivers and documented those efforts, the next review looks to see why the drivers have not complied, which can result in fines being assessed against drivers. If they change jobs to try to stay under the radar, their history follows them and prospective employers can see their data before making a hiring decision.  Drivers now have a real incentive to comply with the law.  Smart carriers will follow their own data monthly and look for emerging problem areas and fix them before intervention from the FMCSA is necessary. 

Many carriers I have talked with talk about CSA 2010 express fear.  This is a natural reaction to change.  They nitpick about the scoring system, the unfairness of having crash data collected on non-preventable accidents and their peer groups.  These complaints miss the point.  For statistical analysis to work, it is not necessary that each particular item be 100% accurate.  What they're looking for are trends and exception reports.  Looking at each individual score is missing the forest for the trees.  The information and process taken as a whole is not perfect, but it is a far cry better than anything the industry has had before.  The program will change and improve as the FMCSA gets more experience with it.  This is a welcome change from the dreaded audit under Safestat every ten years where the FMCSA looks at everything, regardless of whether there is a problem.  That was a roll of the dice.  Under CSA 2010 you should never be surprised by an audit.  We were recently audited under CSA 2010 and I found it to be a short, helpful experience.  CSA 2010 will force compliance and change the manner in which the industry operates.  For those of us who try to do things "by the book," the change is welcome and the government is actually helping us by leveling the playing field. When was the last time the government actually did something helpful for business?   

"I'll give you all I got to give if you say you love me too
I may not have a lot to give but what I got I'll give to you
I don't care too much for money, money can't buy me love

Can't buy me love, everybody tells me so
Can't buy me love, no no no, no."

The Beatles, Can't Buy Me Love

Those in the trucking business tell me that this recession is the worst the industry has ever experienced.  The normal freight recession lasts about 18 months.  This recession started in July of 2006 and started to lift in the 4^th quarter of 2009.  In addition to a national recession that was the most severe since 1980, this one was accentuated by a record pre-buy of trucks in late 2006 and unprecedented bidding which drove rates below costs.

The excess capacity has now left the market at a time of record low inventories and pick up in demand as truckers experience an unusually strong first quarter. Many of the survivors are "walking wounded" with decimated balance sheets.  Last week I heard an analyst state that there is a strong possibility of an "instantaneous capacity shortage" as carrier failures accelerate during the recovery.  Why?

Driver Shortage

There now exists a driver shortage.  Driver recruiting magazines, which became thin as carriers cut costs, are now getting thicker again. As CSA 2010 approaches implementation, carriers have become more selective in the quality of new hires. Decimated recruiting departments are not ready to deal with the new challenges on the driver front. Many truck driving schools were shuttered during the downturn.  To the extent that carriers have excess capacity in the form of parked equipment, they will not be able to find the drivers needed to fill those trucks without substantial increases in driver pay.

Equipment

Carriers stopped purchasing tractors and trailers during the recession and as a result the age of equipment is approaching obsolescence.  Maintenance costs are rising rapidly.  The boom sale year of 2006 was followed by record lows in equipment builds.  2010 tractors are subject to increased EPA requirements adding as much as $10,000 additional to the cost.  A tractor which costs $81,000 five years ago now cost $118,000.  This comes at a time when used equipment values are extremely low. 60% of the carriers survived the recession by deferring payments on equipment.  This produces a dramatic spread between new truck prices and used trade-in prices.  Carriers with credit are largely unwilling to invest additional capital in equipment when there is no return on investment, their current equipment is underutilized and rates are below costs.  As carriers attempt to operate 4 and 5 year old tractors, maintenance will eat them alive.

Government Regulations

The industry is experiencing an onslaught of government regulations, increasing costs and significantly reducing capacity. FMCSA is forging ahead with CSA 2010, Electronic On Board Recorders (EOBR's), rules that raise barriers to entry into the business and tougher medical requirements on drivers.  CARB is creating immediate problems for those who work in California.  Other states will likely follow.  Additionally, the FMCSA, at the prodding of trial lawyers and public safety groups, are formulating yet another rule on hours of service.

Brokers

Many procurement people at shippers became heroes and got fat bonuses during the recession by bidding asset-based carriers against non asset-based brokers. Trucking rates dropped an average of 10% while payment terms were extended. Very few trucking companies have a 10% margin even in good times.  Typically a broker bids less because they have no investment in equipment. Currently, brokers are finding it extremely difficult to find capacity because they don't pay enough. As a result, their margins are squeezed, they can't cover customer commitments and they're returning to customers for rate increases.

Fuel

Historically, increases in fuel costs correspond to failures in the trucking industry.  As the economy recovers, fuel will continue marching higher. Many fuel surcharges are inadequate to cover a carrier's true fuel costs. 

Cash

As the economy picks up and fuel rises, carriers must have working capital to carry the float between the time they pay costs and the time their customers pay their receivables.  The walking wounded lack cash and when they run out, abrupt business closures will result.

Demand

Demand is rising as evidenced by the monthly Purchasing Manager's Index.  Many will counter that sales are far from prerecession levels.  Albeit true, this disregards the fact that the increases in demand are occurring at 30 to 40% rates.  The industry is so leaned out, that it is unable to respond to this rate of increase.  This comes at a time when customers' inventories are at record lows, painting a picture of empty store shelves.

What is Your Strategy?

If you are a carrier or a broker, you should get your rates up as quickly as possible.  Current rates are not sustainable.  Running more miles below costs, or sport trucking as I like to call it, will only increase your losses.  If you are a shipper, you would be wise to review your budget, increase rates and educate upper management at your company.  If you were fair to carriers, didn't bid during the recession and gave increases during the recession, you're probably in a good position.  If you commoditized carriers during the recession, remember what happens to commodities when they're scarce.

David Bowie

The trucking industry and its customers are on the precipice of change, the likes of which have not been seen since deregulation in 1980. Upcoming regulations are about to change common industry practices on many fronts. Like deregulation, these changes will challenge the business models of many companies. Those nimble enough to adapt and have the sense of timing, which is so necessary to success, should work through these changes and come out a better and more disciplined company. Those who don't may find themselves as obsolete as the Polaroid camera.

Audits

2010 promises to be the year of regulatory onslaught. Some of these changes have already been implemented. Last year, the FMCSA changed their audit standards. They now audit logs to satellite positioning reports and require satellite positioning reports to be retained for six months. The FMCSA also markedly increased fines for non-compliance. Currently, standard practice is that when the FMCSA conducts an audit of a motor carrier, they go straight for these records. A typical audit results in a carrier failing, leading to onerous fines and being placed in a deep hole in regards to their safety rating. To get themselves out from under, the carrier then agrees to install and implement paperless logs throughout their fleet.

Drivers

As we emerge from an unprecedented 42 month recession in trucking, the problem has been that shippers are dominant, leaving carriers to compete for freight at below-cost rates and problems being pushed down to the driver. In July of 2010, the FMCSA plans to implement CSA 2010 to replace the current Safestat system. The direct result will have drivers being held accountable for roadside violations (whether placed out of service or issued citations) and more carriers being audited. The standards for a carrier's fitness ratings will change as well, with ratings adjusted monthly instead of after each audit. Since drivers will be held accountable, they will have increased incentive to push back when a carrier or shipper tries to make them do something that will result in a violation of safety regulations.

In tandem with CSA 2010, the FMCSA is currently working on a new Hours of Service and EOBR regulation. FMCSA has been under pressure from Congress to shorten the on-duty hours for drivers and mandate the use of EOBR's. It's been estimated that between 175,000 and 200,000 drivers will lose their CDL's due to CSA 2010, with many more being fined. Many will retire rather than make the move to paperless logs. The owner operator has been decimated by the recession. In spite of this, FMCSA is in the process of looking at ways to tighten driver medical standards. I expect the prolonged driver shortage temporarily alleviated by the recession will return with a vengeance later this year, resulting in a rapid increase in driver pay as carriers compete for a limited resource.

More Questions Than Answers

With many trucking companies pre-occupied with day-to-day survival, it would be prudent for you to do some strategic planning and ask your team the following questions:

1. Considering a driver's day ends 14 hours after his wheel turns in the morning, how many miles (actual, not computer based) can a driver legally drive each day? Drivers are human, not machine; remember to take into account the many factors eat into their time: dock time, time driving to pick-up, loading and unloading, stops, pre-trip inspections, post-trip inspections, overweight issues, time spent at the scales, speed limits, congestion, fueling, food, breaks, etc.
2. Does the shipper allow drop and hook, or must the driver spend time live loading and unloading? Do you have enough trailers for drop and hook? Can the driver spend the night at the pick-up or drop facilities, or are they starting their day 30 miles away at a nearby truck stop.
3. How much revenue does your company need per day to cover costs to be left with a reasonable profit? How much revenue does your driver need per day to do the same?
4. How many of their legal hours are your drivers utilizing each day? Each week? Efficiency reports from paperless logs are showing me a frightening low percentage.

If you start with a clean chalkboard and put aside your pre-conceived notions, you might be surprised to find that your business model, length of haul, customer base, driver pay and rates are all about to undergo a dramatic change. Many of you will ignore this...but before you do, ask yourself this - "When was the last time you took a Polaroid picture?"