As you know, CSA 2010 entails the Safety Measurement System (SMS) which will replace SafeStat; CSA 2010 is slated to roll out nationally 12/12/2010. However, on Tuesday, the National Association of Small Trucking Companies, The Expedite Alliance of North America and the Air & Expedited Motor Carriers Association, asked a federal appeals court to block the implementation of CSA 2010 or, at the very least, to stay the publication of its safety ratings (see full story) until the FMCSA completes a rulemaking process that complies with the Administrative Procedure Act (APA). Unlike the current SafeStat program, the SMS impacts a carrier’s safety rating and assigns safety scores to carriers and drivers. Moreover, SMS data would become available to the public.

It is difficult to dispute the FMCSA’s bolstered efforts – who doesn’t want safer roadways? We need to ensure carriers and drivers are capable of safely traversing our highways, suburban streets and side roads. But the accuracy of the data itself is in dispute. And some believe that publishing this data will wreck havoc on a struggling industry.

CSA 2010 features a BASIC scoring system (Behavior Analysis Safety Improvement Categories) and uses the following seven categories to calculate safety scores:

- Unsafe Driving (i.e. speeding, improper lane change)
- Fatigued Driving (i.e. Hours-Of-Service violations, crash reports)
- Driver Fitness (i.e. lack of training, medical issues)
- Controlled Substances, Alcohol (i.e. misuse of medication)
- Vehicle Maintenance (i.e. mechanical defects)
- Cargo-Related (i.e. spilled cargo, unsecured loads)
- Crash Indicator (i.e. patterns of crash involvement)

But what are the formulas used to develop these scores? Perhaps more importantly, is the playing field level? For example, some states just need “probable cause” to charge a moving violation and carriers that are required to maintain driving logs will be compared with those that are not required to do so. Most logging violations involve recordkeeping errors, not excess driving time. Will data be deceiving? And if data needs to be corrected, can carriers and drivers rely on a fair and satisfactory process?

The filing associations contend that the public release of data will have an anticompetitive effect on the industry. Additionally, shippers and brokers may be liable for “negligent selection” of a motor freight provider as public data easily becomes evidence in a trial. CSA 2010 may also result in a driver exodus. Some predict a 10 percent decrease in truck drivers as CSA 2010 data renders some operators unemployable. And as we know, less drivers means tighter capacity.

The filed motion states, “While the public undoubtedly has an interest in safe highways, it also has an interest in a competitive motor carrier industry, especially in these economic times. A program that decreases competition, reduces jobs, and increases transportation costs, is not in the public interest. Implementation of CSA 2010 in its current form threatens the survival of thousands of carries, many of which are small companies in rural America.”

The associations say they want the FMSCA to comply with the APA which entails notice-and-comment provisions that would allow interested parties to comment on the proposal before final rule. The FMSCA did invite comments on its proposal, and made modifications accordingly (see <a href="story“>full story), but it did not provide full disclosure regarding all aspects of the proposed rule, namely, aspects surrounding the data.

This is a difficult issue to navigate. As transportation industry professionals, and drivers and passengers, we need to do all we can to ensure safe roads. But how will CSA 2010 affect our industry and our economy? What are your thoughts?

This new acronym stands for driving while distracted (DWD) and it refers to behaviors that can be just as deadly as driving under the influence of alcohol or drugs. For more background, check out my previous blog Driving While Distracted. The reason I am returning to this topic is because this week Ray LaHood, U.S. Transportation Secretary, said that the federal government is looking to ban text messaging and limit the use of mobile devices by drivers hauling hazardous materials. See the full story.

As non-asset-based 3PL, LMS caters to companies that ship hazardous materials; more than half of our business comes from chemical companies. As such, our transportation planners are required to be hazmat trained and certified. We are also a partner of the American Chemistry Council’s Responsible Care program, which entails a comprehensive system for safety and security management. We understand the impact chemicals can have on people and the environment and although we do not haul the materials ourselves, we have a responsibility to help ensure the safe transport of these fragile shipments.

Numerous accidents can be linked to drivers who were distracted by cell phone use. According to the DOT’s distracted driving Web site, using a cell phone while driving, regardless of whether it’s hand-held or hands-free, delays a driver’s reaction as much as having a blood alcohol concentration of .08 percent – the legal limit. Any respectable truck driver would never haul freight while under the influence of drugs or alcohol, yet countless drivers are engaging in equally harmful activities. Imagine a driver hauling chemical shipments while drunk; the potential consequences are unimaginable.

The proposed hazmat regulation supplements a rule the Federal Motor Carrier Safety Administration (FMCSA) published on Tuesday that bans texting by interstate commercial drivers; it takes effect on Oct. 21. But the FMCSA does not have jurisdiction over hazmat drivers – these drivers are under the Pipeline and Hazardous Materials Safety Administration. This new proposal will ensure the no-texting rule applies to hazmat drivers as well.

As a 3PL owner, and a non-commercial driver who appreciates safe roadways, I continue to support the government’s efforts to fight distracted driving. I encourage everyone to add DWD to their transportation vernacular and remember: a DWD can be just as hazardous as a DUI or DWI. Drive safely.

Enter the SmartWay Transport Partnership. It is the EPA’s collaboration initiative that enables the freight industry and the government to team up and reduce harmful emissions. The best part of this program is that it embraces the many players of the freight sector – truck and rail carriers, shippers, truck stops and yes, non-asset-based logistics companies.

As I mentioned, we don’t own trucks; we hire them. But we can help reduce greenhouse emissions by making smart hiring choices. Enter SmartWay carriers. Truck and rail providers become SmartWay partners when they commit to increasing fuel efficiency and reducing their impact on the environment. But it’s more than just talk. These carriers must set and strive for fuel efficiency goals within a three-year timeframe. Annually, they must complete a Freight Logistics Environmental and Energy Tracking (FLEET) Performance Model, to quantify the environmental performance of their operations. Based on the results, each carrier is assigned a SmartWay score – .75, 1.0 or 1.25.

There a number of different ways carriers can reduce their fuel usage. Most obviously, they can employ hybrid technology; less obviously, they can invest in wide-base tires, use low-viscosity lubricants and simply reduce their speed. In fact, SmartWay offers a number of carrier strategies for greener operations.

Some carriers may be greener than others, but all SmartWay carriers are working to lessen their impact on the environment. (Check out SmartWay Partners and their scores here. As far as LMS, we are scored based on our use of SmartWay providers and the miles we spend with them. And, the greener the provider, the better our score.

As part of our partnership agreement, LMS must encourage carriers to join the program and increase our use of SmartWay carriers by at least 10 percent a year. Since joining the initiative in 2008, LMS has more than doubled its use of SmartWay carriers.

If you haven’t already, check out SmartWay. Whether you’re a shipper, a carrier or even a non-asset-based 3PL, you can work with us to reduce harmful emissions. Join today (all the smart companies are doing it).

But this week, I’m running into some headlines that no one likes to see, i.e. “US Manufacturing Growth Slows” “DOT Reports Downturn in Freight Index” and “New York Manufacturing Index Slips in July”

These headlines feed the fears of a double-dip recession, which some analysts, like Derek Hoffman, predicted. According to CNNMoney.com, Hoffman, the founder and editor of The Wall Street Cheat Sheet, originally gave the economy a 50-50 chance of double-dip activity.

But I am blogging to put those fears to rest. Try out these headlines: “Pulse of Commerce Index Falls, But Doesn’t Indicate Double-Dip Recession” and “Conference Board Sees US Growth Slowing: No signs of ‘double dip,’ says research group, expecting GDP of 1.5 to 2 percent.”

And as far as Hoffman, he too started to see the light. He now puts the odds of a double-dip recession at 20%.

We’ve enjoyed a fast, uphill climb and we’re slowing down a bit. Economic stimulus programs have run their course and many shippers have right-sized inventory levels, which means an economic slowdown should not be a surprise. I may not be a financial analyst, but I do not believe we are plunging to the depths of recession once again.

What do you think?

Last week I traveled to Atlanta for eyefortransport’s 8th Annual 3PL Summit and learned LMS had been named a “Best 3PL” for the fourth consecutive year. Yes, that’s four in a row, even better than a three-peat.

Our company has been fortunate to receive many awards, but this is one of my personal favorites. That’s because I know the judges; they are important to me and everyone at LMS. The judges are our customers.

Each year eyefortransport conducts an online poll where shippers are asked to vote for their favorite 3PL. Our employees can’t vote, my golf buddies can’t vote – it’s just for customers. And customers can write in any company they wish during an initial round of voting that determines the three providers that will vie for the “Best 3PL” title. A final round of voting determines which one wins. (Check out the official news release.)

Shippers not only voted for us once, but twice and this is true honor. If I had to thank “all those who made this possible,” my acceptance speech would entail a litany of client names. Long before I was finished, they’d have to cut to commercial.

But it’s not possible for me to list all of them here either, so let me say this: Thank you to all of our customers. We are grateful to have earned your business and we are proud to be your 3PL of choice. Our entire staff works tirelessly to ensure your safety, service and savings goals are met. Your trust in us makes our efforts worthwhile and we will continue to work hard to earn your vote next year, too.

Just eight months ago, I wrote a blog about shippers being in the driver’s seat (“Rates are Down . . .”). Capacity was loose, carriers were competitive and rates were low. But now, all that has changed.

Shippers: Welcome to the passenger’s seat.

You’ll see I’m sharing some industry stats, but I don’t need numbers to tell the story. Outside my door I can hear the outgoing and incoming phone calls as our staff members work with carriers to secure trucks for shippers. Like any formidable 3PL, we’ve got a substantial database of qualified carrier partners, but market conditions have led us to a time of tightened capacity and not-so-competitive rates.

According TransCore Trendlines, April’s year-over-year spot market loads have increased by 191% – more than quadruple the freight availability in 2009. At the same time, there was a 9.6% increase in year-over-year tonnage (see graph). As TransCore Trendlines observes, this may mean more freight is shifting to the spot market, compared to 2009, or that capacity is becoming constrained. Based on my experiences, I assume the latter. In regards to specific modes, May year-over-year load-to-truck ratios have spiked, especially in dry van (up 248%), reefer (312%) and most significantly, flatbed (657%).

And as capacity decreases, rates increase. I know of a major shipper who is raising their rates and is not looking to negotiate. As it is, they have more business than they can handle. Other carriers are beginning to pick and choose their business by customer, by freight classification and by lane. The improved economy has afforded carriers the opportunity to do business on their terms. But can we blame them? We must remember that carriers are trying to make a recession recovery.

Take some time to check out these graphs and we’ll try to keep you informed of market conditions in the coming weeks and months. Stay tuned . . . in the transportation industry, the only constant is change.

Imagine driving from St. Louis to Kansas City with four westbound lanes the entire way. Two lanes would be for smaller vehicles (cars, motorcycles, etc…) and two lanes would be for tractor-trailers. This would be an immense undertaking for the United States that some say is still very practical and should be done. Here are some reasons why:

Safety – Thousands of deaths occur each year on US highways. Separating heavy truck and smaller vehicle traffic would reduce highway fatalities.

Reduced Congestion – Less traffic, fewer accidents, and better drive times would be achieved. You could make it to Kansas City faster, safer, and with fewer four-letter words being shouted.

Self-Financing – To pay for these additional lanes, tolls would be charged to trucking companies. Depending on the design of the tolling system it is even possible to make these lanes profitable enough to attract private investment.

Lowered Transportation Costs – With tractor-trailer traffic segregated and the safety barriers in place it would be reasonable to allow the use of Longer Combination Vehicles (LCVs). A turnpike double for example, is a tractor hauling two 48’ trailers. This increased payload per driver/tractor would outweigh the tolls charged and increase carrier productivity. Near city limits breakdown yards would be located where these LCVs could be broken down to single trailer rigs so that pickups and deliveries could be made safely on city and county roads.

Lower Fuel Consumption – It is safe to say (without getting into a bunch of math) that hauling two 48’ trailers does increase the fuel consumption of an average tractor, but it does not double it. Overall fuel consumption would go down with fewer tractors hauling more trailers. This would lead to lower fuel costs for carriers and lower emissions for the environment.

Jobs – This huge undertaking, specifically the construction, would take years to complete. If you see that glass as half full, it means a large number of jobs which cannot be outsourced would be needed for a long time.

In the fourth quarter of 2007, the transportation marketplace feared there was a significant truck driver shortage that would grow exponentially as the economy expanded. At the time, there was an estimated 20,000 driver shortage in the long-haul segment of the domestic trucking industry. Due to economic growth, this shortage was expected to grow to a driver deficit of more than 100,000 by 2014 .

Fast forward to today and the capacity situation is once again a growing concern among shippers. Freight rates are returning to 2007 levels as freight tonnage is up 3-4% in the first quarter of 2010.

Truck driving is considered to be one of the most stressful occupations due to the unpredictability of home time and a pay scale that has declined over the past 10 years . Throughout the 1990s, trucking was considered a well-paying career. However, the trucking market decelerated in 2000 – 2001 (similar to 2008 and 2009) and driver pay has been slow to recover. Construction, manufacturing, and trucking draw from the same labor pool. Driver recruitment is challenging because trucking is often regarded as the most stressful of the three industries and yet transportation companies cannot compete in regards to pay.

The decline in the relative pay of the job, coupled with the perceived stress factor, resulted in significant turnover in 2007 and early 2008 and increased freight rates. However, when the credit market froze up in the latter half of 2008, the driver shortage quickly turned to a driver and equipment abundance – forcing many trucking companies to either shut their doors or at the least, rationalize their fleet. Freight rates declined in like, but have recently gained some momentum.

With unemployment near 10%, the issue today is not the pool of available drivers, rather it seems to be the ability (financing) or desire of trucking companies to secure additional equipment to add to the marketplace.

Freight volume in 2010 is up on a year-over-year basis and freight rates are returning to more palatable levels for the carrier community. The challenge for carriers is predicting the future. Shippers and industry experts are unable to come to a consensus as to the short-term demand for big industries such as automotive and residential construction. Although both of these industries have seen an increase in demand in the past six months, it is unsure whether this is organic or demand pulled forward by programs such as Cash for Clunkers and New Homebuyer Credits.

With such uncertainty, carriers that can secure financing are reluctant to do so, due to the unpredictability in the marketplace. This leaves everybody in a state of limbo. Like the stock markets of recent weeks, we can expect to see volatility of carrier rates continue to fluctuate until a more clear economic recovery pace is realized.

The Act did many things, including deregulating carrier routes and territories, but perhaps most significantly, it enabled carriers to publish their own rates and price more freely. The government loosened its grip on the industry and waved in a new age of rate competition. It was a good thing, in my opinion. We need government regulation – no argument here – but there are benefits to subscribing to free-market principles.

But now I am hearing talk of some reregulation. Discussion stems from what is taking place at the Port of Los Angeles, one of the nation’s busiest harbors. In 2008 the port implemented the EPA award-winning Los Angeles Clean Truck Program (CTP). The plan entails phasing out independent contractors so only carriers with employee drivers can operate within the port. The claim is that independent drivers cannot afford to purchase and maintain the newer, greener trucks necessary to ensure the plan’s long-term success.

Rep. Jerrold Nadler, D-N.Y., plans to introduce legislation that allows ports to ban owner-operators. Seventy eight members of Congress signed a letter documenting their support and Nadler wants the legislation included in the next surface transportation bill (full story). The American Trucking Association (ATA) opposes the LA Port ban on owner-operators and says it violates federal law, which prevents state and local governments from industry regulation. In fact, the ATA has taken the issue to court; a final rule is in the making. Both the port and the ATA have until today (May 14) to file written arguments. Meanwhile, LA is not allowed to ban owner-operators from its port.

What’s interesting is that the Port of Long Beach also implemented the CTP, but their plan does not involve an owner-operator ban. The Port Authority of New York and New Jersey followed suit – it developed a ban-free CTP. There is also talk that the ban was conceived with a teamsters’ agenda. Check out Dan Gilmore’s recent column.

You’ll find there are a lot of angles and industry-wide ramifications to the LA Port story. It would be nearly impossible for me to cover them here. But the bottom line is that I think everyone should be allowed the opportunity to participate in this marketplace. Yes we need to shrink our carbon footprint; yes we need to get dirty trucks off roads and out of ports. If an owner-operator cannot keep up with reasonable regulations, then that is unfortunate but we shouldn’t ban them. To me it is reminiscent of regulation that dates back 30 years. And I think we’ve come a long way since then.

What do you think?

If you’re like most shippers, you’ve enjoyed your time in the driver’s seat. Plenty of capacity and extremely competitive rates made it easier to move product on time and on budget. But market conditions are changing and the road to shipping success is going to get a little bumpy.

The signs are all there. According to the American Trucking Association, truck tonnage rose 7.5% in March for a year ago; this marks the fourth consecutive increase (see full story). In recent months economic indicators have risen, but some carriers just couldn’t hold out. Approximately 2,220 truckers went bankrupt last year and another 5,500 in 2008 according to consultancy firm Ahern & Associates. And recovery won’t happen fast enough for others; Ahern predicts at least 2,500 to 3,000 carriers will file for bankruptcy before year’s end (see full story).

Fewer carriers mean fewer trucks. Additionally, surviving carriers have reduced their capacities – 14 to 18% for truckload carriers; 8 to 12% for less-than-truckload (LTL) carriers. Couple this with economic recovery and you’ve got a capacity crisis as shippers with increasing freight volumes vie for dwindling truck space. Factor in the laws of supply and demand and you’ve got rate increases.

According to speakers at NASSTRAC’s annual conference on Tuesday, rates have nowhere to go but up (see full story). The truckload sector, which is recovering a bit faster, is leading the way and LTL rates will soon follow suit.

What is a shipper to do? As I’ve said all along – work with your carriers (see 11/5/09 blog: “Rates are Down, But Shippers Can’t Afford to Be Shortsighted”). Shrinking capacity and rising rates can be frustrating, but keep some perspective. As Jon A. Langenfeld of R.W. Baird & Co. said, “If you want a credible supply chain, a precision network, you want your carriers to be healthy. Right now they’re not.”