I am personalizing this column directly to you this month since this will be the last time I will write for Tire Business. The time has come for this old cowgirl to saddle up and ride into the sunset.
Before I do, though, I'd like to look back and see what's happened in both the commercial truck tire and the trucking industries over the past 25 years when I first started to write the commercial tire column for Tire Business in 1996.
You'd be amazed at all the changes and evolutions these industries have gone through. Even if you've worked in the commercial truck tire industry these years, I'll bet you've forgotten many of the milestones and industry-shaping events that have brought us to where we are today.
The economy affects everyone's business, but no industry more so than the trucking industry and its health affects your business. If the economy doesn't grow, neither does freight, and freight revenues decline.
Diesel fuel is a fleet's largest expense, and the price directly impacts its bottom line.
If there's not a lot of freight to haul, and especially if the cost of diesel is high, fleets don't buy trucks; they park or sell trucks.
If truck sales are down and trucks aren't wearing off tread rubber rolling down the road, original equipment (OE) and replacement tire sales drop, along with truck/trailer maintenance services. And so goes your commercial tire business.
Since the trucking industry is linked to the U.S. gross domestic product (GDP), let's look at its growth rate over the years. As a general rule, when the GDP is greater than 3% annually, the country is generating a lot of freight for trucks to haul.
From 1996 to 2000, the GDP grew on average more than 4% each year. Things were good for trucking and the commercial tire industry, as freight was plentiful and diesel fuel stayed at record low levels. The average price for diesel was $1.23 a gallon.
By 1998 diesel averaged around $1.04 a gallon. As a result, fleets ordered an abundance of trucks and trailers.
The long awaited Transportation Equity Act for the 21st Century (TEA21) was passed in May 1996 and authorized slightly more than $29 million for road and bridge work each year through 2003.
Effective in March 1, 1998, antilock braking systems (ABS) were required on all new trailers, dollies, straight trucks and buses in addition to new tractors that already had ABS required.
In 2001, due to the terrorist attack on 9/11, GDP growth plummeted to 1%. Freight tonnage languished as GDP growth varied quarter by quarter between 1.5% and 4%. Members of the International Longshore and Warehouse Union (ILWU) were locked out of 29 ports in California, Oregon and Washington by the Pacific Maritime Association for 10 days before President Bush invoked the emergency provision of the Taft-Hartley Act as fears grew that the economy could be seriously impacted.
In 2002, the trucking industry, as well as many tire dealers, were shocked when one of the nation's largest trucking companies, Consolidated Freightways (CF), abruptly closed its doors on Labor Day, laying off 15,000 employees. The final blow came when one of the company's surety bondholders canceled coverage related to the company's self-insurance programs for workers' compensation and vehicular casualty.
Since then, insurance remains a problem for trucking companies. The shrinking number of commercial auto insurance providers and the growth in lawsuits and higher awards have resulted in higher insurance costs