Well, it's that time of year when everyone reflects upon the last 12 months and fervently hopes the coming year will be much better. So it is in the trucking industry, too. After all, despite what you've seen and heard, truckers are only human. Many, however, may not divulge or explain to you their resolutions and wishes. Yet understanding the wants and needs of the trucking industry may help you to at least appreciate the difficult job of anyone working in the trucking industry and get an idea of how you will be affected by the factors impacting the industry.
Wish No. 1: May freight grow and trucking overcapacity cease—but please don't let the overcapacity be my company! Industry consolidation continued at break-neck speed this past year. The list of mergers and acquisitions that occurred during 1996 is twice as long as 1995's list.
More than 100 acquisitions, 21 mergers, and eight closures occurred. Two unionized trucking operations, Roadway Express and Consolidated Freightways, were spun off from their parent companies, and a multitude of trucking firms overhauled their operational networks, which resulted in the elimination of thousands of jobs.
It is expected that this industry consolidation will continue with little abatement in 1997. Tire dealers will lose many of their longtime customers or find purchasing now is done in a corporate headquarters hundreds of miles away.
Wish No. 2: May diesel fuel prices drop—SOON!! It's probably an understatement to say 1996 was a pip of a year for diesel prices. Since last year, diesel prices have increased 18 percent. While gasoline prices have only seen modest increases, diesel prices have skyrocketed this year due to tight supplies of diesel and heating oil.
If we have a cold, long winter like last year, prices could go even higher. Although most trucking companies have implemented fuel surcharges, they may be too little, too late, since most became effective long after the prices went up.
For the average trucking company, fuel costs normally account for about 45 percent of a fleet's operating costs. Tire dealers may find a resurgence of interest in fuel-efficient tires as a result of this situation.
Wish No. 3: May the teamsters join a monastery! Ron Carey was re-elected president of the Teamsters union. This means the Teamsters will continue to aggressively organize non-union carriers like Overnite Transportation and RPS. It also means contract negotiations—which come up in July 1997 for 200,000 United Parcel Service employees, and in March 1998 for 135,000 employees of the less-than-truckload (LTL) general freight companies—could be contentious.
Previously, Mr. Carey ordered strikes against UPS in 1993 and against the LTL carriers in 1994—doing serious damage to both the carriers and the union.
It is expected that intermodal operations will be the next big target for organizing efforts. And you can bet if strikes result against unionized carriers, commercial tire dealers' businesses will be disrupted, and some of their customers may disappear.
Wish No. 4: May the folks at the EPA get a life!! In November, the Environmental Protection Agency announced it will seek to dramatically lower limits for particulate matter and ozone. If enacted, these new standards would mean hundreds of industries would have to upgrade their emissions control technologies or change operations.
It also would increase the number of localities out of compliance with federal air quality standards. This would mean these areas would lose federal funds and have to implement expensive pollution control measures.
The trucking industry would have to make major changes in operations and engine technologies, such as going to alternative fuels like natural gas, which for example, in the Chicago area alone would cost $1.2 billion annually. And this is despite the fact that particulate matter emissions for truck engines have been reduced about 90 percent since 1987. Ozone levels also are down significantly and are scheduled to fall even more as new regulations supported by the trucking industry take effect in 1998 and 2004.
(All small businesses, including retreaders and tire dealers with trucks and retread shop venting systems would be affected by these standards, too.)
Wish No. 5: May passenger car drivers learn to share the highway with trucks! Everyone knows truck accidents are spectacular, tragic and grisly. They tie up traffic and fray nerves. However, most people don't know that 71 percent of the fatal accidents involving two or more vehicles in which one is a truck are caused by the other vehicle, usually a car.
The problem is: Most auto-mobile drivers are not aware of the limitations and handicaps inherent in heavy-duty trucks. These include the fact that a truck will take more than 25 percent longer to stop than a car. In really bad conditions, trucks can take more than twice as long to stop.
Some people know trucks have rear blind spots. But most are unaware that they also have blind spots on the side as well as directly in front of them. If states and schools would do a better job of educating drivers, a large percentage of truck accidents could be prevented and thousands of lives could be saved. Some of these may be in your family.
Wish No. 6: May the driver retention problem be solved and we get back on the road again!! For the past several years there has been a dire shortage of truck drivers. This is due in part to the fact that being a cowboy of the road is not the glamorous profession it was once perceived to be, and more pressure is now placed on fathers to participate in raising families, which is tough to do when you're rarely home. So the demand for trained truck drivers greatly exceeds the supply.
In response, the industry has worked to design cabs that accom-modate smaller people, such as women. Many companies have changed their operations to ensure drivers get home more frequently.
J.B. Hunt, which suffers from an annual driver turnover rate of 80 percent overall and 100 percent in the case of its over-the-road drivers, just recently increased driver pay 33 percent on average.
Time will tell whether the rest of the industry will raise wages. But it is safe to say that as long as the demand for drivers exceeds the supply, driver turnover will continue to be a problem.
Wish No. 7: May CRASH go down in flames! Citizens for Reliable and Safe Highways (CRASH) was established in 1990 as a campaign funded by the railroads to restrict truck sizes and weights. But it since has expanded into a generalized attack on trucking's public image and commitment to safety.
Even though, over the last decade, the number of miles driven by the industry has gone up 37 percent while fatal accidents have dropped 34 percent, CRASH has distorted this record and asserted that trucking sacrifices safety for profit. This is nonsense.
Any intelligent person knows that what the trucking industry really wants is safety and productivity; and if your truck's in a ditch, it's not being productive.
As a result, trucking has been very proactive on truck safety issues including anti-lock brakes, the commercial driver's license and random drug and alcohol testing, and has conducted critical research into driver fatigue, which benefits both truckers and the motoring public.
Last month, in an effort to work with the trucking industry and expand intermodal transportation, the railroads pulled out of backing this runaway disaster group. Now if the rest of CRASH's supporters would only see it for what it really is, it could crash and burn.
Wish No. 8: May rate increases stick. (Please, God!!) Just like the tire industry, the trucking industry has a heck of a time increasing prices and actually realizing those price increases.
Most trucking companies have started 1997 off with rate increases in the 5.2- to 5.9-percent range. Obviously they are desperately needed in an industry faced with paper-thin profit margins and increasing costs due to stricter safety standards, driver shortages, implementation of drug and alcohol testing programs, tighter security due to a higher incidence of crime, operational changes to alleviate driver fatigue and upgrading computer systems to satisfy demands for shipment tracking and electronic data interchange.
Unfortunately, the overabundance of capacity, the appearance to shippers that the increases are high compared with the inflation rate of about 3 percent, and fuel surcharges that are still in effect could result in the industry taking less for its services as it has done in the past.
What does this mean for tire dealers? Pressure will be on you to keep prices low and provide services that reduce fleet costs.
What affects the trucking industry clearly affects the commercial tire dealer. So if some of the trucking industry's wishes come true, you can expect to benefit from them as well.
Best wishes for a healthy and prosperous 1997!