Roemer Report – December 2009 

NEW YEAR’S REGULATION: Under the CSA 2010 initiative, the FMCSA wants to reduce commercial motor vehicle (CMV) crashes, fatalities, and injuries. Michael Regan, Chairman of the American Society of Transportation & Logistics says that, “according to some experts, this initiative could reduce the pool of drivers by as much as 15%, making the driver shortages of the mid-2000’s look mild.” The FMCSA has speculated that as many as 175,000 drivers may have unfit safety ratings when CSA 2010 goes into full effect. Briefly, CSA 2010 is the new method by which FMCSA and its state partners will manage compliance and enforcement programs. This new model will feature a more comprehensive measurement system, a safety fitness determination methodology that is based on performance data and not necessarily tied to an on-site compliance review, and a broader array of progressive interventions. According to industry sources, it will affect every carrier who goes into the U.S. and the DOT has already started collecting data on carriers. Key features of CSA 2010 include increased contact with carriers and drivers, improved performance measurements for identifying high-risk motor carrier and driver behaviors, and measures to correct such behaviors before they become chronic and habitual. CSA 2010 has several cost implications including more inspections and record keeping and others associated with driver qualifying, equipment repair and insurance rates. According to Gerson Lehrman Group analyst Jay Thompson, these costs equate to $0.02 per mile for inspection and repairs and up to $0.05 per mile when there is a driver/supply imbalance. Other hidden costs have to do with implementing safety technologies including speed monitoring and G-force meters and distance monitoring sensors.

TIDINGS OF COMFORT AND OIL: Diesel fuel prices are predicted to rise only about 25 cents per gallon over the next 18 months, but that all depends on how fast the economy recovers, said the Federal Reserve Bank of Dallas, in a Reuters’ news story November 23rd. In its latest economic letter, the bank said it expected U.S. crude oil prices to rise from the current $70+ per barrel range to $85 by next winter, pushing diesel up to about $2.92 a gallon. “Sluggish rebound will hold down diesel prices, and a faster bounce back will put upward pressure on diesel prices, raising costs in shipping and other transportation,” said the bank. The spot price for diesel moves about 2.9 cents per gallon for every $1 change in the spot price of West Texas Intermediate crude oil, the benchmark price used for U.S. oil.

HIGH IN THE MIDDLE: Caterpillar Logistics Services, according to an Associate Press story December 8th, plans to open a new parts distribution center in southwest Ohio. Caterpillar Logistics is a subsidiary of mining and construction equipment manufacturer Caterpillar Inc. of Peoria, Ill. Caterpillar said the new center in Clayton will cost an estimated $50 million, is expected to employ 500 to 600 people when fully staffed and span more than 1 million sq. ft. Construction is expected to begin in early 2010 and be completed in 2011. Caterpillar says the center near Dayton eventually will replace the company's Indianapolis Regional Distribution facility and assume some work currently performed at Caterpillar's parts distribution center in Morton, Ill. Meanwhile, Honda announced in early November that it had begun production of its new Crosstour, crossover utility at its East Liberty, Ohio plant. Honda said much of the new, versatile vehicle will come from its production facilities in Anna and Russells Point, Ohio.

HAPPIER NEW YEAR: Growth is poised to return to the U.S. economy, said a recent report by the Manufacturers Alliance, although it will come at a slower pace than in past recessions. The group predicted that inflation-adjusted gross domestic product (GDP) will have declined some 2.5% in 2009, but will rebound to 2.4% growth in 2010 and hit 3.5% in 2011. “We are pleased there is growth in the overall economy, and surprisingly strong growth in manufacturing,” said the group’s chief economist, Daniel J. Meckstroth. Echoing the improving economic picture was the Institute for Supply Management’s PMI index for November which hit 53.6 percent, marking the fourth straight month of growth. A reading above 50% is commonly understood to signal that the manufacturing economy is in a period of expansion.

BETTER THAN A LUMP OF COAL: The advance seasonally adjusted American Trucking Association’s For-Hire Truck Tonnage Index decreased 0.2% in October, following a 0.3% contraction in September. The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 109.6 in October, up 1.6% from September. Compared with October 2008, seasonally adjusted tonnage fell 5.2%, which was the best year-over-year showing since November 2008. The American Trucking Association’s chief economist Bob Costello said that the reading reflects an economic recovery that is gaining balance and on a more solid footing than a year ago. “The trucking industry should not be alarmed by the small decreases in September and October,” Costello said, “the economy is behaving as expected, with starts and stops.” The trend, he points out is being reflected in truck tonnage, as well as most economic indicators.

NO-OH WEED, NO WEED: Recently the Department of Justice (DOJ) issued guidelines for Federal prosecutors in states that have enacted laws authorizing the use of medical marijuana. An Outsourced Logistics report at the end of October noted that in the wake of the guidance, the U.S. Department of Transportation (DOT) received inquiries about the use of medicinal marijuana by transportation workers. Here’s what the DOT said, “We want to make it perfectly clear that the DOJ guidelines will have no bearing on the DOT’s regulated drug testing program based on these guidelines to Federal prosecutors. The DOT’s Drug and Alcohol Testing Regulation 49 CFR Part 40 (at 40.151e) does not authorize medical marijuana under state law to be a valid medical explanation for a transportation employee’s positive drug test result.”

THE GLOBAL GIFT OF WELLNESS: A recent global survey found that by keeping employees healthy and working is a top business objective for employer-sponsored wellness programs around the world—except in the U.S., where reducing health-care cost increases continues to be an imperative. These were among the findings identified by Buck Consultants’ third annual global wellness survey, “Working Well: a Global Survey of Health Promotion and Workplace Wellness Strategies.” The survey, released November 16th, analyzed responses from more than 1,100 companies representing 10 million employees. According to Buck Consultants, “Business leaders around the world are increasingly recognizing the financial value of healthier workers and the need to better engage employees in reducing their health risks.” Stress is cited as the top health risk driving wellness programs in most regions of the world, except the U.S. and Latin America, where lack of exercise and poor nutrition are of top concern. “Employers in the U.S. and Latin America seem to lag behind the rest of the world in addressing stress and its related conditions such as anxiety, depression and fatigue,” said Buck Consultants. “These are among the most significant drivers of productivity loss and absenteeism, as well as increased health-care costs.”

TAIL-END CHARLIE: Research by a European-based public/private partnership named PART (Platform for Aerodynamic Road Transport) found that a boat tail-like appendage protruding about six feet from the rear of a truck’s trailer will lead to fuel savings as high as 7.5% and reduce emissions to a similar degree.

I will honor Christmas in my heart, and try to keep it all the year. Charles Dickens